iMac knock-offs due in '99

A joint venture out of Korea is developing new low-cost computers, including an iMac look-alike, to be introduced in the spring of 1999.

E-Machines, made up of Korean PC manufacturer TriGem and former Mac clone vendor Korean Data Systems, will market the new sub-$600 PCs to consumers via electronics retailers and office supply stores, according to Ashok Kumar of Piper Jaffray,

E-Machines will introduce a $599 system with the sleek lines and all-in-one design of Apple Computer's iMac, Kumar said.

The big difference: This model will come with an Intel Celeron 333-MHz processor, not a Cyrix or Advanced Micro Devices chip typically found in the sub-$800 systems.

E-Machines executives could not be reached for comment.

Unlike the iMac, which retails for $1,299, E-Machines' system would include a floppy drive and be "fully upgradable," Kumar said. "Ten percent of iMac buyers are Wintel customers. What percentage of those guys are just taken with the form factor?"

The new systems are expected by the spring of 1999.

E-Machines is also expected to introduce a Cyrix-based system as well, with 32MB of memory, a 3.2GB hard drive, 56-kbps modem, and 14-inch monitor for $499, after a $50 rebate, Kumar said.

The joint venture is also expected to roll out a $599 Celeron 300-MHz machine, with the same hardware specifications.

E-Machines is expected to bundle Internet service with the low-cost systems, in a business model similar to that of cell phones: Give away the hardware for almost nothing, and profit on services.

"The business model is back-end loaded and service-contract-centric," Kumar said, comparing E-Machines to Gateway's Your-Ware financing program.

"This is a Pandora's box the PC industry does not want to open," the analyst added. "Two years ago, the low-end machines were not adequate to address high-end applications, but they are today."