eMachines Considering Internet Appliance

  • Written By: R. Krause
  • Published: November 24 1999

Event Summary

[ZDNet News, 11/18/99] eMachines Inc., the Irvine, Calif., company best known for making cheap PCs, is eyeing appliances. Its top executive hinted that the company is ready to jump into the market for even cheaper, special purpose Internet-enabled devices. eMachines "will put one in our roadmap soon," said president Stephen Dukker.

"I do believe there is a market for these devices. We view it as truly a different market from the PC space. (It is) for the other 40 percent that don't want a PC," he said. "It's a way to get connected (to the Internet) for people who really don't perceive needing a PC."

In tandem with another announcement it made -- that it will move into the market for more expensive PCs -- Dukker's proclamation suggests that the two-year-old company is making an effort to grow up. What's more, it raises an intriguing prospect: Will eMachines do the same thing for appliances it did for PCs -- set a new standard for low, low pricing?

Market Impact

EMachines made its name by selling PCs as prices significantly lower than any other alternative. This caused many other PC manufacturers to respond in kind, thereby setting off a new round of price wars in the low-cost PC arena.

If eMachines carries out this plan, it should lead to market growth. With the appliance price range already expected to reach as low as $199, we can only speculate how low eMachines can go - $100? $50? Anything lower than $100 will set a standard difficult for others to match, and will certainly cause the major vendors to address their pricing strategy earlier than might otherwise happen.

Mr. Dukker has indicated that 2000 will be the year for product introduction. By the end of the 2000, we expect as many as ten manufacturers with similar offerings. We do not expect eMachines to extend the appliance offerings to the server space.

User Recommendations

We reiterate our previous recommendations (see TEC News Analysis article: "Here Come the 'Information Appliances' ", November 15, 1999) : Users looking for a lower-cost PC alternative should take a close look at appliances. Corporate users who intend to make a major infrastructure change from PC to appliance should carefully review the advantages and disadvantages associated with reducing costs at the expense of user flexibility. By definition, most users with appliances will not have the "typical" set of applications resident on their machine, as corporate appliances are expected to be tied into the ASP/software "rental" model of business computing. Generally, so-called "power users" will see little if any benefit to having an appliance, and may lose effectiveness/productivity. However, casual users may find appliances a plus.

In addition, as pricing becomes better defined, users may want to reconsider their strategy. Present monthly prices range from $10 for Corel's hosted office suite, to an estimate of $50 or more for an administered version of MS Office 2000. Users may decide that a high software cost effectively negates the advantage of the appliance.

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