eMachines to Ship Appliance

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eMachines to Ship Appliance
R. Krause - October 25, 2000

Event Summary

October 9, 2000

eMachines and Microsoft announced that eMachines expects to begin shipping an Internet appliance in October, 2000. This appliance, called the "MSN Companion", will - amazingly enough - use the Microsoft Network (MSN) as its Internet gateway/portal/service.

eMachines will price the Companion at $349 (without monitor), but customers will be eligible for a $400 rebate if they sign up for 36 months of MSN service.

Current competitors in the MSN-based appliance field include Compaq and Acer.

Market Impact

We see this as a continuation of Microsoft's attempt to accomplish a number of goals:

  • Offer an Internet appliance - This continues the Microsoft strategy (or is it a tactic?) started when Compaq began shipping their iPAQ Internet Appliance in August. By hooking up with eMachine, Microsoft ties in with one of the larger retail desktop presences. (PC Data's figures showed eMachines in the #3 retail sales position.)

  • Become a direct competitor to Gateway/AOL - Even before Microsoft went after Netscape, we believe MS considered AOL a Great Satan. Anything they can do to weaken AOL's competitive presence is probably A Good Thing in Redmond's eyes. We mention Gateway because of their "iPliance" products, which bundle AOL. (See TEC Gateway & AOL Follow Crusoe's Footprints).

  • Boost MSN presence - Despite massive efforts by Microsoft over many years, AOL is still the leader in the ISP/gateway market. Some estimates have AOL with seven times the number of subscribers when compared to MSN (14 Million vs. 2 Million). With the current eMachines offer of a $400 rebate (for a $350 machine without monitor, if you subscribe to MSN for 36 months), we see this as not-too-far-removed from bundling Internet Explorer with Windows.

User Recommendations

This device is primarily for consumers, and is not business oriented. Although it may work well for Web-based computing (e.g., using an ASP), the lack of a hard drive makes it unsuitable as a corporate desktop replacement. (We are not ignoring the recent phenomenon of Web-based storage, but we feel it is currently impractical for most corporate environments.)

One mildly annoying aspect is that the monitor must be ordered separately (in contrast to most other appliances), adding another $100-$150 or so to the price tag. But even with this added cost, the price will still be lower than Compaq's IA-1 by $100-$150, so it looks like a decent deal to us.

Outside of the monitor and hard drive issues, we see this unit as a fairly standard product - neither a ground-breaker nor a dog - that should help expand the presence of Internet appliances in the home.

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