August 5, 1999 4:30 PM PDT

Emachines unveils iMac knockoff

Upstart PC maker Emachines, which has grabbed headlines and market share by offering ultracheap computers, is training its sights on Apple with a computer that resembles the iMac.

Irvine, California-based Emachines today introduced the eOne PC, an all-in-one computer that looks like the popular iMac. Unusually for a PC, the design incorporates the monitor and the system's electronic guts into one case.

The eOne comes with a translucent "cool blue" case, while the original iMac had a two-toned case with "Bondi Blue" accents. Emachines hopes to avoid legal trouble because the shape of the computer is different from the iMac.

Clearly, the success of Apple's desktop has largely owed to its unconventional look, which is why PC makers have begun eyeing different designs. Apple is watching the moves of these companies very closely, and in July filed a lawsuit against Korean conglomerate Daewoo and U.S.-based affiliate Future Power over a $799 computer that looks nearly identical to the computer that inspired it.

Shape isn't the only difference. At $799, the eOne is also priced less than the $1,199 iMac. CNET News.com first reported on Emachines' plan for a more stylish PC last year.

The company had planned a launch for the first half of 1999 but delayed it as it focused on making enough of its hot-selling but more staid-looking PCs. Emachines has also been focusing on going public, which could happen as early as this month, said sources familiar with the company's plans.

The iMac has been Apple's growth engine since its introduction last year. As of April, when Apple last reported such numbers, the company claimed that 32 percent of fiscal second-quarter iMac sales were to first-time buyers, while 11 percent were "converts" from Windows-based machines--consumers that Emachines is also targeting.

Most PC makers haven't ventured too far from "beige box" standard, but Gateway, among others, recently released an "all-in-one" desktop that fuses a PC and a flat-panel monitor into one unit. Sony has also experimented with color, and magnesium ensconced notebooks are the latest design fad in portable PCs.

"[Emachines] is trying to go up the food chain, and that's the difficult proposition," said Ashok Kumar, a financial analyst with US Bancorp Piper Jaffray. "The problem is that there is no brand loyalty in this space."

Currently the bulk of Emachines' sales come from $399 PCs, which by Kumar's calculations are being sold at a loss. Kumar figures that to make money, the computers have to be priced closer to $599.

Inside, the Emachines computer will be similar to other standard Windows-based systems. The eOne will have a 433-MHz Intel Celeron, 64 megabytes of memory, and 15-inch monitor.

The system will include a floppy drive, unlike the iMac, and comes with some technology for networking PCs over home phone lines that the iMac doesn't currently include. Also, the system can accept PC cards, which are commonly used to expand the capabilities of notebooks. The iMac does not feature such slots, but its capabilities can be added to with the use of Universal Serial Bus peripherals.

The eOne will be available exclusively at Circuit City, the company said.

Emachines looks to be betting that the new system will help boost sales enough to make its IPO a more attractive option. Sources say the company is currently hoping to raise upwards of $650 million from its offering, but it has already received enough financing to take the company through the end of the year. One of those financiers is America Online, which has a ten percent stake in the company, said sources. (See related story)

 

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