October 9, 1998 9:20 AM PDT

$399 PC maker signs retailers

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A company called emachines, a start-up backed by South Korean PC giant Trigem and display maker Korean Data Systems, says it has signed up two U.S.-based retailers to sell its sub-$500 PCs.

The president and CEO, Stephen A. Dukker, said earlier this week that production of systems has begun and that the initial manufacturing run of 200,000 units has been allocated to retailers.

Office Depot and Best Buy will be the first to carry the computers, according to emachines.

The start-up's strategy is predicated on a conviction that PC penetration of the home market is now stuck at about 45 percent because the price of "low-cost" PCs is still too high.

"$799 [PCs] have mostly served to cannibalize $1,200 [systems], not add new buyers," according to the company.

The venture made a splash a few weeks ago when it said it would come out with an Apple iMac look-alike based on the Windows-Intel architecture next spring.

The "eTower" will be priced at $399 and come with a Cyrix processor from National Semiconductor, a 2GB hard drive, a CD-ROM drive, 3D graphics capability, and a 56-kbps modem. For an extra $100, a monitor is included.

emachines also will come out with a $499 PC with an Intel Celeron processor and a 3GB hard drive. The company will further sell a Cyrix-based computer with similar features that attaches to a TV screen and features a DVD drive. This will also be priced at $499.

One of emachines' founders, Korean Data Systems, got in the low-cost market when it bought out the assets of Radius (which had trademarked emachines) after the Macintosh clone vendor went bankrupt. Trigem, the other partner, recorded more than $800 million in sales in 1997, and has the largest share of the Korean PC market.

Microcenter, a computer retailer, is also offering a $399 PC.

Intel is an investor in CNET: The Computer Network, publisher of News.com.

 

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