Emachine targets first-time computer buyers, taking prices lower than low

By Chris Barton

The first signs that a new wave of low-cost PCs has hit New Zealand shores arrived last week in a trial shipment of $1686 Emachines.

That is $313 cheaper than other low-cost personal computers.

PC Company managing director Colin Brown said he had brought the shipment in from the United States because he felt the need to have a PC aimed at the first-time buyer.

"If all the multinationals come out with a low-cost PC, we had to have one to compete. Most of our sales are to the high-performance end of the market. We felt we were missing out on the low end."

He believed New Zealand was the first country outside the US to be selling the Korean-manufactured Emachines which have taken the American market by storm.

The $US399 Emachines (without monitor) first showed up in the US in the last quarter of 1998, recording dramatic sales that put the company in the No. 6 spot in the retail market, right behind Apple Computer, which had 6.3 per cent.

Local assembler the PC Company airfreighted 200 Emachines from the US to test demand in New Zealand.

If they sell well, Mr Brown said he would import direct from Korea, which would save on freight costs.

The Emachines come with a "dual switching" power supply, thus easily adapting to New Zealand's voltage. The PC company has added a separately-imported 15-inch screen and claims to have secured a Telecom Telepermit for the internal 56Kbps modem.

Mr Brown said he had not imported the Cyrix-based $US399 model but rather a slightly more expensive $US499 model (with $50 rebate) but with a cacheless Intel Celeron 300 chip.

More recent Celeron chips have 128Kb of built-in cache that speeds performance.

The Emachines also feature CD-Rom drive and speakers, 32Mb of memory and 3.2Gb of storage disk plus a suite of Windows software.

Mr Brown said the machine was ideal for the first-time buyer who wanted Internet access, but it also catered for families wanting a second machine in their homes. The education sector was another potential market.

In the US, the low-end PC market has had some unforeseen benefits. Vendors have noticed that customer behaviour is very different at a PC sale of $US500 compared with one of $US1000, resulting in about half the rate of returns.

Because customers are getting a machine for much less, they do not expect quite as much and seem more willing to deal with some of the intrinsic headaches of PCs.

The bugeoning low-cost PCs market in the US has now split into three tiers: $US899 now buys a relatively powerful machine, $US600 is about mid-range, while the low-cost leaders sell for $US399.

And it is not over yet. Emachines is about to push costs down further, with plans for high-performance machines for under $US600.

Pictured: PC Company managing director Colin Brown with his new Emachine imports. HERALD PICTURE / RUSSELL SMITH