SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549

                            FORM 10-Q

X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
    For the quarterly period ended June 30, 1998
                               OR

    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
    For the transition period from            to

             Commission file number     0-22784

                       GATEWAY 2000, INC.

     (Exact name of registrant as specified in its charter)

            Delaware                      42-1249184
(State or other jurisdiction of        (I.R.S. Employer
 incorporation or organization)      Identification No.)

                       610 Gateway Drive
                         P.O. Box 2000
              North Sioux City, South Dakota 57049
       (Address of principal executive offices, zip code)

      Registrant's telephone number, including area code:
                      (605) 232-2000


      Indicate by check mark whether the registrant (1) has filed
all  reports required to be filed by Section 13 or 15(d)  of  the
Securities  Exchange Act of 1934 during the preceding  12  months
(or  for such shorter period that the registrant was required  to
file  such  reports),  and (2) has been subject  to  such  filing
requirements for the past 90 days.  Yes - X        No           .

      As of August 11, 1998, there were 155,768,360 shares of the
Common   Stock  of  the  Company,  $.01  par  value  per   share,
outstanding.  As of August 11, 1998, there were no shares of  the
Company's  Class  A  Common  Stock, $.01  par  value  per  share,
outstanding.

<TABLE>
                            I.  FINANCIAL INFORMATION

 Item 1. Financial Statements


                               Gateway 2000, Inc.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
            For the three and six months ended June 30, 1997 and 1998
                    (in thousands, except per share amounts)
                                   (Unaudited)
                                        
               Three Months Ended June 30,          Six Months Ended June 30,
<CAPTION> 
                                        1997              1998              1997              1998
<S>                                  <C>                <C>              <C>                <C>
Net Sales                            $  1,392,658       $  1,618,909     $  2,811,994       $  3,346,837
Cost of goods sold                      1,132,300          1,285,221        2,285,843          2,676,655
   Gross profit                           260,358            333,688          526,151            670,182
Selling, general and                      180,507            249,699          351,422            476,992
   administrative expenses
   Operating income                        79,851             83,989          174,729            193,190
Other income, net                           6,382             10,917           14,583             20,265
   Income before income taxes              86,233             94,906          189,312            213,455
Provision for income taxes                 29,750             34,166           65,313             76,844
   Net income                         $    56,483        $    60,740      $   123,999         $  136,611
                                                                                                        
Share and per share information:                                                                        
   Net income per share:                                                                 
      Basic                           $      0.37        $      0.39      $      0.81        $      0.88
      Diluted                         $      0.36        $      0.38      $      0.79        $      0.86
   Weighted average shares                                                                              
     outstanding:
      Basic                               153,740            155,427          153,649            154,990
      Diluted                             156,231            158,887          156,101            158,231
</TABLE>
<TABLE>
                                        
                                      Gateway 2000, Inc.
                                  CONSOLIDATED BALANCE SHEETS
                              December 31, 1997 and June 30, 1998
                      (In thousands, except share and per share amounts)
<CAPTION>
                                            
                                                             December 31,             June 30,
                                                                1997                    1998
                                                                                     (unaudited)
<S>                                                        <C>                     <C>
ASSETS                                                                    
Current assets:
   Cash and cash equivalents                               $    593,601            $    799,608
   Marketable securities                                         38,648                  92,243
   Accounts receivable, net                                     510,679                 528,340
   Inventory                                                    249,224                 154,823
   Other                                                        152,531                 168,336
          Total current assets                                1,544,683               1,743,350
Property, plant and equipment, net                              336,469                 378,354
Internal use software costs, net                                 39,998                  36,457
Intangibles, net                                                 82,590                  74,174
Other assets                                                     35,531                  44,051
                                                           $  2,039,271            $  2,276,386
LIABILITIES AND STOCKHOLDERS' EQUITY                                      
Current liabilities:                                                      
   Notes payable and current maturities of long-           $     13,969            $     15,122
     term obligations
   Accounts payable                                             488,717                 523,074
   Accrued liabilities                                          271,250                 321,137
   Accrued royalties payable                                    159,418                 161,226
   Other current liabilities                                     70,552                  56,062
          Total current liabilities                           1,003,906               1,076,621
Long-term obligations, net of current maturities                  7,240                   1,793
Warranty and other liabilities                                   98,081                  95,845
          Total liabilities                                   1,109,227               1,174,259
                                                                          
Contingencies (Note 5)                                                    
                                                                          
Stockholders' equity:                                                     
   Preferred Stock, $.01 par value, 5,000 shares                               
     authorized; none issued and outstanding                          -                       -
   Class A Common Stock, nonvoting, $.01 par value                                             
     1,000 shares authorized; non issued and out-                                              
     standing                                                         -                       -
   Common Stock, $.01 par value, 220,000 shares                                                
     authorized; 154,128 shares and 155,643 shares                                             
     issued and outstanding, in 1997 and 1998                                                  
     respectively                                                 1,541                   1,556
   Additional paid-in capital                                   299,483                 336,659
   Retained Earnings                                            634,509                 771,120
   Accumulated other comprehensive income                       (5,489)                 (7,208)
          Total stockholders' equity                            930,044               1,102,127
                                                          $   2,039,271           $   2,276,386
</TABLE>
<TABLE>

                               Gateway 2000, Inc.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the six months ended June 30, 1997 and 1998
                                 (in thousands)
                                   (Unaudited)
<CAPTION>
                                        
                                                            Six Months Ended June 30,
                                                             1997                   1998
<S>                                                         <C>                   <C>
Cash flows from operating activities:                                      
Net Income                                                  $   123,999           $   136,611
Adjustments to reconcile net income to net cash                                              
  provided by operating activities:
   Depreciation and amortization                                 39,041                49,652
   Provision for uncollectible accounts receivable                2,910                 1,923
   Deferred income taxes                                       (25,314)              (26,412)
   Other, net                                                       307                   695
   Changes in operating assets and liabilities:                                              
      Accounts receivable                                      (25,014)              (19,584)
      Inventory                                               (185,119)                94,400
      Other assets                                             (43,281)                 1,045
      Accounts payable                                          116,312                33,942
      Accrued liabilities                                      (13,577)                50,329
      Accrued royalties                                          40,789                 1,809
      Other current liabilities                                (42,200)                 3,182
      Other liabilities                                          17,197               (1,492)
         Net cash provided by operating activities                6,050               326,100
Cash flows from investing activities:                                                        
   Capital expenditures                                        (43,757)              (74,377)
   Internal use software costs                                  (5,786)               (4,253)
   Purchases of available-for-sale securities                  (29,066)              (99,248)
   Proceeds from maturity of held-to-maturity                                                
      securities                                                  8,985                11,864
   Proceeds from sales of available-for-sale                                                 
      securities                                                      -                33,898
   Purchase of other assets                                     (3,376)               (1,145)
       Net cash used in investing activities                   (73,000)             (133,261)
Cash flows from financing activities:                                                        
   Proceeds from issuance of notes payable                        5,000                     -
   Principal payments on long-term obligations and                                           
     notes payable                                              (7,531)               (4,294)
   Stock options exercised                                        3,058                18,918
        Net cash provided by financing activities                   527                14,624
Foreign exchange effect on cash and cash                                                     
   equivalents                                                    (218)               (1,456)
Net increase in cash and cash equivalents                      (66,641)               206,007
Cash and cash equivalents, beginning of period                  516,360               593,601
Cash and cash equivalents, end of period                    $   449,719           $   799,608
</TABLE>

Notes to Consolidated Financial Statements

1. General:

        The    accompanying   unaudited   consolidated   financial    statements
of   Gateway  2000,  Inc.  (the  "Company")  as  of  June  30,  1998   and   for
the   three   and   six  months  ended  June  30,  1997  and  1998   have   been
prepared   on   the   same   basis   as  the  audited   consolidated   financial
statements   for   the   year   ended   December   31,   1997   and,   in    the
opinion    of    management,    reflect   all   adjustments    (consisting    of
normal    recurring    adjustments)    necessary    to    fairly    state    the
consolidated   financial   position,   and   the   consolidated    results    of
operations   and   cash   flows   for   the   interim   period.    The   results
for   the   interim   period   are  not  necessarily   indicative   of   results
to   be   expected   for  any  other  interim  period  or   the   entire   year.
These   financial   statements  should  be  read   in   conjunction   with   the
Company's    audited    consolidated    financial    statements    and     notes
thereto   for   the   year  ended  December  31,  1997,   which   are   included
in    the    Company's    1997   Annual   Report   to   the    Securities    and
Exchange    Commission    on    Form   10-K.     The    preparation    of    the
consolidated    financial    statements    in    conformity    with    generally
accepted     accounting    principles    requires     management     to     make
estimates    and   assumptions   that   affect   the   reported    amounts    of
assets    and    liabilities,    disclosure    of    contingent    assets    and
liabilities,    and   the   reported   amounts   of   revenues   and    expenses
during    the    reported   period.    Actual   results   could   differ    from
those estimates.

2. Comprehensive Income:

     Effective   January   1,   1998,   the   Company   adopted   Statement   of
Financial     Accounting     Standards    (SFAS)     No.     130,     "Reporting
Comprehensive   Income."    SFAS   130   establishes   new   rules    for    the
reporting   of   comprehensive   income  and   its   components;   however   the
adoption   of   this   statement  had  no  impact  on  the   Company's   current
or   previously   reported   net   income   or   shareholders'   equity.    SFAS
130    requires   the   display   and   reporting   of   comprehensive   income,
which    includes    all   changes   in   shareholders'    equity    with    the
exception      of     additional     investments     by     shareholders      or
distributions    to    shareholders.     Comprehensive    income     for     the
Company     includes     net     income,    foreign     currency     translation
effects,    and    unrealized    gains   or   losses    on    available-for-sale
securities   which   are   charged  or  credited  to   the   accumulated   other
comprehensive income account within shareholders' equity.
     
     Comprehensive    income   for   the   three   and   six    month    periods
ended June 30, 1997 and 1998 was as follows:
<TABLE>
     
                                       Three Months Ended                Six Months Ended
                                            June 30,                         June 30,
<CAPTION>

                                     1997             1998             1997            1998
                                                          (in thousands)           
                                                           (unaudited)

Comprehensive Income:                                                              
<S>                                  <C>              <C>             <C>             <C>
Net income                           $  56,483        $  60,740       $  123,999      $  136,611
Foreign currency translation             3,219          (1,621)            1,817         (1,873)
Unrealized gain (loss) on                                                                       
  available-for-sale securities              -             (34)                -             154
                                                                                                
Total Comprehensive Income           $  59,702        $  59,085       $  125,816      $  134,892
</TABLE>
     
     
3. Share and Per Share Information:
     
     In    1997,    the    Financial   Accounting   Standards    Board    (FASB)
issued    Statement    of    Financial    Accounting    Standard    No.     128,
"Earnings    per   Share"   which   replaced   the   calculation   of    primary
and    fully    diluted   earnings   per   share   with   basic   and    diluted
earnings    per    share.    Unlike   primary   earnings   per   share,    basic
earnings    per    share    excludes   any   dilutive   effect    of    options,
warrants    and   convertible   securities.    Earnings   per   share    amounts
for    all    periods    presented   have   been   restated    to    SFAS    128
requirements.
     
     The    following   table   sets   forth   a   reconciliation   of    shares
used in the computation of basic and diluted earnings per share.
<TABLE>
     

                                        Three Months Ended                 Six Months Ended
                                             June 30,                          June 30,
<CAPTION>
                                        1997            1998             1997             1998
                                                            (in thousands)
                                                              (unaudited)
<S>                                     <C>            <C>              <C>              <C>
Net income for basic and diluted                                                                   
  earnings per share                    $  56,483      $  60,740         $  123,999      $  136,611
Weighted average shares for basic                                                                  
  earnings per share                      153,740        155,427            153,649         154,990
Dilutive effect of stock options            2,491          3,460              2,452           3,241
Weighted average shares for                                                                        
  diluted earnings per share              156,231        158,887            156,101         158,231
</TABLE>
     


4.  Selected Balance Sheet Information:

                                 December 31,         June 30,
                                   1997               1998
                                                    (unaudited)
                                         (in thousands)
Accounts receivable, net:
   Accounts receivable        $  530,743             $ 541,793
   Less allowance for un-
   collectibe accounts          (20,064)              (13,453)
                              $  510,679            $  528,340

Inventory:
   Components and subassem-
   blies                      $  226,588            $140,423
   Finished goods                 22,636              14,400
                              $  249,224            $ 154,823


5. Contingencies:

       The   Company   is  a  party  to  various   lawsuits   and
administrative proceedings arising in the ordinary course of  its
business.  The Company evaluates such lawsuits and proceedings on
a case-by-case basis, and its policy is to vigorously contest any
such  claims  which it believes are without merit. The  Company's
management believes that the ultimate resolution of such  pending
matters  will  not  materially  adversely  affect  the  Company's
business,  financial  position, results  of  operations  or  cash
flows.

     Over the past several years, state tax authorities have made
inquiries  as  to  whether or not the Company's alleged  contacts
with  those states might require the collection of sales and  use
taxes  from customers and/or the payment of income tax  in  those
states.   The  Company evaluates such inquiries on a case-by-case
basis,  and has favorably resolved these tax issues in  the  past
without  any  material  adverse consequences.   Based  on  recent
favorable  resolution  of  certain of  these  issues,  management
believes that the amount of any state sales and use tax or income
tax  the  Company might ultimately be required to pay  for  prior
periods  would not materially and adversely affect the  Company's
business,  consolidated financial position, results of operations
or cash flows.

6.   Reclassifications

      Certain  reclassifications have been made to  prior  years'
financial  statements  to conform to current  year  presentation.
These reclassifications had no impact on previously reported  net
income or stockholder's equity.

Item 2.   Management's Discussion and Analysis of Financial
Condition and Results of Operations

Results of Operations

      The  following table sets forth, for the periods indicated,
certain  data derived from the Company's consolidated  statements
of operations, expressed as a percentage of net sales:
<TABLE>
                                  Three Months Ended            Six Months Ended
                                       June 30,                     June 30,
<CAPTION>
                                 1997           1998           1997           1998
<S>                              <C>            <C>            <C>            <C>
Net sales                          100.0%         100.0%         100.0%         100.0%
Cost of goods sold                  81.3%          79.4%          81.3%          80.0%
   Gross profit                     18.7%          20.6%          18.7%          20.0%
Selling, general and                                                                  
  administrative expenses           13.0%          15.4%          12.5%          14.2%
   Operating income                  5.7%           5.2%           6.2%           5.8%
Other income, net                    0.5%           0.7%           0.5%           0.6%
   Income before income taxes        6.2%           5.9%           6.7%           6.4%
Provision for income taxes           2.1%           2.1%           2.3%           2.3%
   Net income                        4.1%           3.8%           4.4%           4.1%
</TABLE>

Second   Quarter   1998   Compared   to   Second   Quarter   1997   and    First
Quarter 1998

       Sales   increased   16%  in  the  second  quarter  of   1998   to   $1.62
billion   from   $1.39   billion   in  the  second   quarter   of   1997.    The
increase   from   the   second   quarter   of   1997   is   primarily   due   to
strong    consumer   demand   for   the   Company's   products   and   continued
growth    in    sales   of   the   Company's   portable   products.     Portable
products   sales   were  14%  of  total  sales  for  the   second   quarter   of
1998,   an   increase   of   32%   versus  the  comparable   period   of   1997.
Unit   shipments   in   the   second  quarter   of   1998   increased   33%   to
736,000    from   554,000   in   the   second   quarter   of   1997.    Weighted
average   unit   prices   (AUP)   were   approximately   12%   lower   in    the
second    quarter   of   1998   versus   the   comparable   period   of    1997.
Generally,    unit   prices   for   specific   PC   products   have    decreased
over    time,    reflecting   the   effects   of   competition    and    reduced
component    costs    associated    with   advances    in    technology.     The
Company    has   generally   offset   the   impact   of   these   declines    in
component   costs   by   adding   or   improving   product   features   and   by
introducing    new    products   based   on   newer   technology    at    higher
prices,   resulting   in   fairly   stable  unit   prices   over   time.    When
the    timing    of    component   cost   reductions    and    new    technology
introduction    is   different,   AUP's   can   fluctuate.    Sales    in    the
Americas   region   for  the  second  quarter  of  1998   increased   to   $1.37
billion,   an   increase   of  20%  versus  the  $1.14   billion   recorded   in
the   second   quarter  of  1997  and  unit  shipments  grew  36%.    Sales   in
the   European   region   in   the   second  quarter   of   1998   were   $130.7
million,   down   approximately  22%  compared  to   the   second   quarter   of
1997   while   unit   shipments  in  the  region   decreased   7%.    Sales   in
the   Asia   Pacific   region   grew  to  $116.9   million,   an   increase   of
33%   versus   the   comparable  period  of  1997  while  unit   shipments   for
the   second   quarter   of   1998  in  the  Asia  Pacific   region   grew   70%
over the second quarter of 1997.

        Sales   and   units   shipped   in   the   second   quarter   of    1998
decreased    6%   and   4%,   respectively,   from   the   first   quarter    of
1998.    AUP's   in   the   second  quarter  of   1998   decreased   2%   versus
the   first   quarter   of   1998  primarily  due   to   product   mix   changes
within   the   desktop   product  line.   Sales  in  the  Americas   region   in
the   second   quarter  of  1998  decreased  6%  from  the  first   quarter   of
1998   while   units   shipped  decreased  4%  from   the   first   quarter   of
1998.    In   the   European   region,  sales  and   units   shipped   decreased
22%   and   13%,   respectively,  from  the  first  quarter  of   1998.    Sales
in    the    Asia   Pacific   region   in   the   second   quarter    of    1998
increased   13%   from   the  first  quarter  of  1998.    Unit   shipments   in
the   Asia   Pacific   region  for  the  second  quarter   of   1998   increased
18% from units shipped in the first quarter of 1998.

       Gross   profit   in   the   second   quarter   of   1998   increased   to
$333.7   million,   an   increase  of  approximately   28%   from   the   second
quarter   of   1997.   As  a  percentage  of  sales,  gross   profit   for   the
second   quarter   of   1998  increased  to  20.6%   from   18.7%   and   19.5%,
respectively,   in   the  second  quarter  of  1997  and   the   first   quarter
of     1998.      The     gross    profit    improvements     were     primarily
attributable    to    tactical   product   pricing   decisions    intended    to
offset    high    marketing   costs   incurred   during   the    quarter.     In
addition,    gross   profits   were   impacted   favorably   by   new    product
initiatives,    improved    product    mix,    some    greater    than    normal
declines   in   component   costs  and  reductions  in   overall   royalty   and
warranty costs.

       Selling,   general   and   administrative   (SG&A)   expenses   for   the
second    quarter    of   1998   increased   approximately    38%    and    10%,
respectively,   versus   the  second  quarter  of   1997   and   first   quarter
of    1998.    The   increase   from   the   first   quarter   of    1997    was
primarily    due    to    increases   in   personnel    and    marketing.    The
increase   from   the   first   quarter   of   1998   results   primarily   from
increased    marketing   investments   and   new   product   initiatives.     As
a   percentage   of   sales,   SG&A  increased  in   the   second   quarter   of
1998    to   approximately   15.4%   from   13.0%   and   13.2%,   respectively,
in the comparable period of 1997 and the first quarter of 1998.

       Due   to   the   factors  discussed  above,  operating  income   in   the
second   quarter   of   1998   increased   by   5%   to   $84.0   million   from
$79.9   million   in   the   second  quarter   of   1997   but   decreased   23%
from    the   first   quarter   of   1998.    As   a   percentage   of    sales,
operating   income   for  the  second  quarter  of  1998   decreased   to   5.2%
from   5.7%   in   the   second  quarter  of  1997  and  6.3%   in   the   first
quarter of 1998.

        Other   income,   net   includes   other   income   net   of   expenses,
such    as    interest    income    and    expense    and    foreign    exchange
transaction    gains   and   losses.    Other   income,   net    increased    to
$10.9   million   from   $6.4   million  and  $9.3   million,  respectively,  in
the   second   quarter   of   1997  and  first  quarter   of   1998,   primarily
due   to   the   additional   interest  income   generated   by   increases   in
cash balances and marketable securities.

       The   Company's   annualized  effective  tax  rate  was   36%   for   the
second   quarter   of   1998,  an  increase  from  the  34.5%   rate   for   the
second   quarter   of  1997.   The  increase  from  1997  is   due   to   shifts
in the geographical distribution of the Company's earnings.

First Six Months of 1998 Compared to First Six Months of 1997

       For   the   first   half   of  1998,  sales  increased   19%   to   $3.35
billion   from   $2.81  billion  in  the  comparable  period   of   1997.    The
increase    is   primarily   due   to   strong   consumer   demand    for    the
Company's    products   and   the   continued   growth   in   sales    of    the
Company's   portable   products.    Unit   shipments   for   the   first    half
of   1998   increased   36%  to  1,503,000  units  from   1,114,000   units   in
the   first   half   of   1997.    AUP's  were  approximately   12%   lower   in
the   first   half   of   1998   versus   the   comparable   period   of   1997.
Sales   in   the  Americas  region  for  the  first  half  of  1998   grew   23%
versus   the   comparable   period  of  1997   to   $2.83   billion   and   unit
shipments   increased   39%.    Sales  for  the   first   half   of   1998   for
the   European   region  were  $293.7  million,  a  decrease   of   14%   versus
the   first   half   of   1997   while  unit  shipments   remained   comparable.
Sales   in   the   Asia   Pacific  region  grew  to  $220.3   million   in   the
first   six   months   of   1998,  an  increase  of   33%   versus   the   first
half of 1997 and unit shipments increased 59%.

       Gross   profit   in   the  first  half  of  1998  increased   to   $670.2
million   from   $526.2   million  in  the   first   half   of   1997.    As   a
percentage   of   sales,  gross  profit  for  the  first  half   of   1998   was
20.0%,   up   from   18.7%   in   the  comparable   period   of   1997.    Gross
profit    percentages    were   impacted   favorably   by    improved    product
mix,    declines    in    component   costs   and    reductions    in    overall
royalty and warranty costs.

       SG&A   expenses   in   the   first  half  of  1998   increased   36%   to
$477.0   million  from  $351.4  million  in  the  first  half   of   1997.    As
a   percentage   of   sales,   SG&A  increased  to  14.2%   during   the   first
half   of   1998   from   12.5%  in  the  comparable  period   of   1997.    The
increase    in    SG&A    represents    increases    in    personnel    expenses
reflecting    the    general    growth   of   the   business    and    marketing
expenses   attributable   to  an  investment  in   the   Company's   brand   and
new product initiatives.

       Due   to   the  factors  discussed  above,  operating  income   for   the
first   half   of   1998   increased  11%  to   $193.2   million   from   $174.7
million   in   the   first   half  of  1997.   As   a   percentage   of   sales,
operating   income  decreased  to  5.8%  in  the  first  half   of   1998   from
6.2% in the comparable period of 1997.

       Other   income,   net   increased  in  the  first   half   of   1998   to
$20.3   million   from   $14.6   million  during  the   comparable   period   of
1997.     The    increase    results    from    additional    interest    income
generated by increased cash balances and marketable securities.

       The   Company's   annualized   effective   tax   rate   was   36.0%   for
the   first   half   of   1998  compared  to  34.5%  recorded   in   the   first
half   of   1997.   The  increase  in  the  effective  tax  rate   is   due   to
shifts in the geographic distribution of the Company's earnings.

Liquidity and Capital Resources

       At   June   30,   1998,  the  Company  had  cash  and  cash   equivalents
of   $799.6   million,   marketable  securities  of   $92.2   million   and   an
unsecured      committed     credit     facility     with     certain      banks
aggregating    $225    million,   consisting   of   a    revolving    line    of
credit   facility   and   a   sub-facility   for   letters   of   credit.     At
June   30,   1998,   no   amounts   were   outstanding   under   the   revolving
line    of    credit.    Approximately   $3.5   million   was    committed    to
support     outstanding     standby    letters    of     credit.      Management
believes     the    Company's    current    sources    of    working    capital,
including     amounts    available    under    existing    credit    facilities,
will    provide    adequate    flexibility   for   the    Company's    financial
needs for at least the next 12 months.

       The   Company   generated  $326.1  million  in   cash   from   operations
during   the   first   six  months  of  the  year,  including   $162.5   million
of    net    income   adjusted   for   non-cash   items.    Other    significant
factors   increasing   available   cash  include   a   decrease   in   inventory
levels   of   $94.4   million   and  an  increase  of   accounts   payable   and
other    liabilities    of    $87.7   million,   partially    offset    by    an
increase    in    accounts   receivable.    The   Company   used   approximately
$78.6   million   for   the   construction  of   new   facilities,   information
systems    and   equipment   and   $53.5   million   to   purchase   investments
in marketable securities, net of proceeds of securities sold.

       At   June   30,   1998,  the  Company  had  long-term  indebtedness   and
capital    lease   obligations   of   approximately   $16.9   million.     These
obligations   relate   to   the   Company's   investments   in   equipment   and
facilities.

       The   Company   anticipates  that  it  will  retain   all   earnings   in
the   foreseeable   future   for  development   of   its   business   and   will
not distribute earnings to its stockholders as dividends.

New Accounting Pronouncements

       In   June   of   1998   the  Financial  Standards   Board   issued   SFAS
No.     133    "Accounting    for    Derivative    Instruments    and    Hedging
Activities"    (FAS    133)    which   is    effective    for    fiscal    years
beginning   after   June  15,  1999.   The  objective  of   the   statement   is
to    establish    accounting   and   reporting   standards    for    derivative
instruments    and    hedging   activities.    The    Company    uses    foreign
currency    forward    contracts,   a   derivative    instrument,    to    hedge
foreign    currency    transactions    and    anticipated    foreign    currency
transactions.     The   adoption   of   this   new   accounting    pronouncement
is    not    expected    to    be   material   to   the   Company's    financial
position or results of operations.

Year 2000

     The     Company    recognizes    the    need    to    ensure    that    its
operations   will   not   be   adversely  impacted   by   Year   2000   software
failures.     Software   failures   due   to   processing   errors   potentially
arising   from   calculations   using  the  Year   2000   date   are   a   known
risk.
     
     In    1997,    the   Company   created   a   corporate-wide    Year    2000
project   team   representing  all  business  units   of   the   Company.    The
Company's      Year      2000      remediation     efforts      include      the
implementation    of    upgrades   to   existing    system    applications    as
well     as     the    addition    and    implementation    of    new     system
applications.
     
     The    Company    anticipates   the   implementation    phase    of    this
project   to   begin  no  later  than  the  third  quarter  of   1998   and   to
be   completed   by   the   second  quarter   of   1999.    If   the   necessary
modifications   and   implementations  are  not  made   on   a   timely   basis,
the   Year   2000   issue  could  have  a  material,  adverse  effect   on   the
business,    consolidated   financial   position,    results    of    operations
or cash flows of the Company.
     
     In    addition    to   internal   Year   2000   software   and    equipment
implementation    activities,   the   Company   is   in   contact    with    its
suppliers   to   assess   their  compliance.   There   can   be   no   assurance
that   there   will   not  be  a  material  adverse  effect   on   the   Company
if   third   parties  do  not  convert  their  systems  in   a   timely   manner
and   in   a   way   that  is  compatible  with  the  Company's  systems.    The
Company    believes   that   its   actions   with   suppliers   will    minimize
these risks.
     
     During    the    first    half    of    1998,    the    Company    expensed
incremental   costs   of   approximately   $1.4   million   related    to    the
Year   2000   remediation  efforts,  and  has  expensed  $1.7   million   on   a
life-to-date   basis.    The   current  total   estimated   cost   to   complete
the   Year   2000   remediation   efforts  is   from   $10   to   $15   million,
exclusive    of   upgrades   to   existing   applications   and   implementation
of     new     systems.     Internal    and    external    costs    specifically
associated   with   modifying   internal-use  software   for   the   Year   2000
will   be   charged   to  expense  as  incurred.   All  of   these   costs   are
being funded through operating cash flows.
     
     The   Company's   current   estimates   of   the   amount   of   time   and
costs   necessary   to   implement   and   test   its   computer   systems   are
based   on   the   facts  and  circumstances  existing  at   this   time.    The
estimates    were   derived   utilizing   multiple   assumptions    of    future
events    including   the   continued   availability   of   certain   resources,
implementation    success   and   other   factors.    New    developments    may
occur   that   could  affect  the  Company's  estimates  for   the   Year   2000
compliance.    These   developments   include,   but   are   not   limited   to:
(a)   the   availability   and  cost  of  personnel  trained   in   this   area,
(b)   the   ability   to   locate  and  correct  all  relevant   computer   code
and    equipment,    and    (c)   the   planning   and   modification    success
needed   to   achieve   full   implementation.    In   addition,   since   there
is   no   uniform   definition   of  Year  2000   "compliance"   and   not   all
customer     situations    can    be    anticipated,     the     Company     may
experience   an   increase   in  warranty  and  other   claims   as   a   result
of the Year 2000 transition.

Factors That May Affect Future Results

       Factors   that   could  cause  future  results   to   differ   from   the
Company's    expectations    include    the    following:    growth    in    the
personal     computer    industry;    competitive    factors     and     pricing
pressures;    component    supply   shortages;   inventory    risks    due    to
shifts    in   market   demand;   changes   in   the   product,   customer    or
geographic   sales   mix   in   any   particular   period;   the   outcome    of
pending    and    future   litigation;   access   to   necessary    intellectual
property     rights;     changes    in    government     regulation;     foreign
currency    fluctuations;   risks   of   acquired   businesses;   and    general
domestic and international economic conditions.

       In   addition   to   other   information  contained   in   this   Report,
the   following   factors,   among   others,  sometimes   have   affected,   and
in    the    future   could   affect,   the   Company's   actual    consolidated
financial    position,   results   of   operations   or    cash    flows,    and
could    cause    future    results   to   differ    materially    from    those
expressed   in   any   forward  looking  statement  made  by,   or   on   behalf
of the Company.

       The   Company   has   experienced,  and  may  continue   to   experience,
problems    with    respect   to   the   size   of   its    work    force    and
production     facilities    and    the    adequacy    of     its     management
information   and   other   systems,   purchasing   and   inventory    controls,
and   the   forecasting   of   component  part  needs.    These   problems   can
result    in   high   backlog   of   product   orders,   delays   in    customer
support response times and increased expense levels.

        Short    product   life   cycles   characterize   the    PC    industry,
resulting     from     rapid    changes    in    technology     and     consumer
preferences   and   declining   product   prices.    The   Company's    in-house
engineering    personnel    work   closely   with   PC    component    suppliers
and     other     technology    developers    to     evaluate     the     latest
developments   in   PC-related  technology.    There   can   be   no   assurance
that   the   Company  will  continue  to  have  access  to  or  the   right   to
use   new   technology   or   will   be   successful   in   incorporating   such
new technology in its products or features in a timely manner.

        Certain    key   management   employees,   particularly    Ted    Waitt,
Chairman    and    Chief   Executive   Officer   and   a    founder    of    the
Company,   have   been   instrumental   in   the   success   of   the   Company.
The   Company   has   not  entered  into  an  employment  agreement   with   Ted
Waitt.    The   loss   of   Ted   Waitt's   services   could   materially    and
adversely affect the Company.

Item    3.     Quantitative   and   Qualitative   Disclosures    About    Market
Risk
     
     There has not been a material change in the Company's
exposure to foreign currency risks since December 31, 1997.



                     II.  OTHER INFORMATION


Item 4.  Submission of Matters to a Vote of Security Holders

       The   Company's  Annual  Meeting  of  Stockholders  was   held   on   May
21,   1998.    At   the  meeting,  stockholders  voted  on  (i)   the   election
of   two   Class  II  directors  of  the  Company  to  hold  office  until   the
annual   meeting   of  stockholders  of  the  Company  to  be   held   in   2001
and   until   a   successor   is   duly  elected   and   qualified,   and   (ii)
approval   of   an   amendment  to  the  Gateway  2000,  Inc.   1996   Long-Term
Incentive Equity Plan.
<TABLE>
<CAPTION>

                                Votes         Votes         Withheld/      Broker
                                 For         Against        Abstentions    Non-Votes
<S>                           <C>            <C>            <C>            <C>
1.  Election of Directors                                               
                                                                        
        Jeffrey Weitzen       142,684,124            --        236,184           --
        Douglas L. Lacey      142,686,270            --        234,038           --
                                                                                   
2.  Approval of amendment                                                          
    to 1996 Long-Term                                                              
    Incentive Equity Plan     103,889,983    15,624,007        340,743   23,065,575
</TABLE>

Item 6.  Exhibits and Reports on Form 8-K

  (a)     Exhibits:

  Exhibit                  Description of Exhibits
    No.
   10.19     Gateway 2000, Inc. 1996 Long-Term Incentive Equity
             Plan As Amended
   10.20     Gateway 2000, Inc. 1996 Non-Employee Directors
             Stock Option Plan
    27.1     Financial Data Schedule

  (b)     Reports on Form 8-K:

      No Reports on Form 8-K were filed by the Company during the
quarter ended June 30, 1998.


                            SIGNATURE

      Pursuant to the requirements of the Securities Exchange Act
of  1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                 Gateway 2000, Inc.


Date:  August 14, 1998           By:  /s/ David J. McKittrick
                                   David J. McKittrick
                                   Senior Vice President, Chief
                                   Financial Officer and
                                   Treasurer (authorized officer
                                       and    chief    accounting
                                   officer)

Exhibit                     INDEX TO EXHIBITS
  No.
        
 10.19  Gateway 2000, Inc. 1996 Long-Term Incentive Equity Plan
        As Amended
        
 10.20  Gateway 2000, Inc. 1996 Non-Employee Directors Stock
        Option Plan As Amended
        
 27.1   Financial Data Schedule