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.