Emachines builds line with multimedia, business PCs

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by Tom Mainelli

(IDG) -- Emachines is looking to move beyond its basic beige boxes for consumers by releasing early next year a portable multimedia unit, two business-oriented desktops, and three new notebooks.

The new selection, especially the snazzy audio-video device, are part of the company's mission to "push the envelope in the crossover between computers and consumer electronics," says Stephen Dukker, president and chief executive officer.

The new E3 series is the company's first crossover product and will merge features of a PC, television, personal video recorder, boom box, and more, he says. The E3 is a new design, not a kludge, Dukker says. It's not simply a PC with audio and video features added. "This is not a crappy television and boom box. It going to be good at everything," he says.

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The device is completely integrated--even the speakers and a subwoofer. It is 17 inches tall, 14 inches wide, 4 inches thick, and weighs about 12 pounds. It will include a 12.1-inch active-matrix display, he says.

Detailed hardware specifications aren't yet available, but it will probably include an 800-MHz to 1-GHz processor, a 20GB hard drive, integrated graphics, and 64MB of memory. It's expected to cost about $1000, Dukker says. The unit will also include an Ethernet card and modem, a PC Card slot, and a Firewire port. Emachines expects to ship the E3 near the end of the first quarter of 2001, selling it through the company's current retailers and directly, including online.

Emachines is clearly thinking outside of the beige box, notes Stephen Baker, vice president of technology products research at PC Data. "The company is definitely thinking about different ways of doing things," he says.

Emachines already markets an Internet appliance. It recently introduced the $349 MSN Companion, designed primarily for consumer e-mail and Web browsing.

Targeting Small Business

Introducing several desktops geared specifically to small and medium-size businesses is also smart, Baker says. Emachines plans to ship two Windows 2000-based systems in January: the ETower 700net and the EMonster 800net, both priced under $1000.

Emachines hasn't had much success selling more expensive consumer systems, so targeting business buyers with less expensive PCs makes sense, Baker says.

"The company has built a strong brand as an entry-level PC maker," he says. If it takes that tack in the business market, it could be a good opportunity, he adds.

In fact, about 15 percent of Emachines' desktop sales are already business sales, says CEO Dukker. Because the company can offer lower price tags, it expects to fill a gap in the business market.

"Big corporations buy from companies like Dell, Compaq, HP, and IBM," Dukker says. Because large companies buy in quantity, each PC carries a low price. Small businesses don't have that luxury, but Emachines aims to offer them PCs that are configured and priced similarly to what other vendors provide to big buyers, he says.

Emachines will market its new desktop business systems through retailers, direct sales, and value-added resellers, Dukker says. The ETower 700net will sell for less than $600 and will include a 700-MHz Celeron, 64MB of memory, a 48X CD-ROM drive, a 10GB hard drive, a V.90 modem, and an Ethernet card. The EMonster 800net has an 800-MHz Pentium III, 64MB of memory, a 48X CD-ROM drive, a 30GB hard drive, a V.90 modem, and an Ethernet card for less than $900. Neither system price includes a monitor.

The company plans to ship three new notebooks by the end of the first quarter of 2001, Dukker says. Emachines shipped a notebook last year, the $999 ESlate, to test the waters, he says. Now it's ready to plunge into the market with more products.

The new S family of ESlate notebooks will initially feature units that weigh less than 3 pounds and have 12.1-inch displays. The N family will be sub-5-pound units with more built-in drives and up to 15-inch displays. The W family will be desktop replacement devices weighing in at about 7 pounds with displays as large as 15 inches.

Emachines will provide detailed specifications upon release, but the entire notebooks family will be available with Celeron and mobile Pentium III processors. Prices will range from $999 to $1999, Drukker says.

Third Place in Retail

Emachines is positioning its lower-cost but full-function notebooks to play in the same market as more expensive units from name-brand vendors.

"There won't be any deficiencies in our value-priced notebooks," Dukker adds. "Our $1499 notebook will be comparable to a $1999 notebook from Compaq or HP."

While PC Data's Baker is optimistic about the Emachines desktop offerings, he says he is less enthusiastic about its notebooks. Price isn't necessarily the top priority for notebook buyers, so Emachines' reputation for low price tags won't necessarily win notebook sales, he says.

That said, Baker is convinced the company is making the smart moves necessary to keep it afloat during what has become a rocky time in retail PC sales.

"They do a good job at positioning themselves as the entry-level guy," he says. Right now, the company is the number three player in retail behind Compaq and HP, he says.

Dukker admits that "making money in retail is tough," and acknowledges that after a strong first quarter and an initial public offering, the company has lost money on PC sales through most of 2000. But now that Emachines has established itself as a true retail player with strong products and customer service, it is ready to "move up the food chain," according to Dukker.

If Emachines can't make a respectable profit while operating as one of the top three players in PC retail sales, something must be wrong with the market, he says.

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