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Will Microworkz get burned by new iToaster PC?

The ultra-low-cost PC maker touts its new $199 Internet device, which features a Linux hybrid, but pledges that its supply problems are a thing of the past.

Microworkz will announce a $199 PC on Monday, hoping that some of the people who flooded the company with requests for its earlier low-cost systems will be intrigued by its version of an Internet device that runs on a variant of the Linux operating system.

Microworkz gained attention in April when it announced the $299 Webzter PC, one of a number of companies floating "free" and ultra-low price PC initiatives at the time. But the demand proved too great for the start-up, and the company was forced to delay and cancel some orders until a new manufacturing site came online.

Monday, Microworkz will announce a $199 PC called the iToaster, a move that will certainly drive more interest in the company. But will it get burned by the iToaster? The company says no.

This time around, Microworkz says it has procedures in place in the case the iToaster garners the same level of attention--and sales--as the Webzter. And based on early details about the system, that's a pretty safe bet.

Microworkz expects demand to be high for the $199 appliance, so much so that it is putting certain restrictions in place. The company will only ship 10,000 units in the next two months. "We'll stop selling until we gear up for the rest," a spokesman said. "We're going to allocate as we can produce, not the other way around, like we did with the Webzter," he said. "This time, we're a wiser, older company."

The iToaster will be available directly from Microworkz, starting July 13. It will be available in retail stores by the holiday season.

The company's move seems to come at a fortuitous time: Companies such as Microsoft and Intel as well as a host of PC and consumer electronics manufacturers have all postulated that in the near future, consumers will conduct e-commerce and pay for a variety of services through single or limited-use Internet appliances, rather than bulky and expensive PCs weighted down with bloated legacy applications. It appears that Microworkz, an unlikely candidate among such industry heavyweights, is leading this charge.

The iToaster, so named because it is appliance-like in its ease of use, the company says, runs on a hybrid operating system, taken from both Linux and BeOS, rather than the Microsoft Windows platform. In addition, the e-mail, word processing, Web browser, and spreadsheet applications offered with the system are non-Microsoft.

However, the iToaster does not include the one-year of free Internet access that was included with the Webzter, a significant omission considering the iToaster's placement as an Internet device.

The differences between a typical "Wintel" machine--that is, one running on an Intel processor with Microsoft Windows software--do not stop there. Unlike a typical computer, the iToaster turns on instantly, a company spokesman said. Also, the iToaster does not yet support some Web technologies, such as Macromedia's ShockWave, Real Networks' Real Audio, or Microsoft's Windows Media Player.

Also, because the operating system and office applications are new, there are no existing viruses or bugs which affect the platform, the company says. However, there are no third party applications, either.

Several companies are getting into the low-cost Linux PC market, including Penguin Computing, the Linux Store, IndyBox, Sunset Systems, Next-Dimension Computing Systems, and the Computing Underground. These companies usually use Red Hat or other relatively conventional versions of Linux.

The company will not divulge all of the specifications of the hardware, except to confirm that the iToaster runs on an Intel Pentium class processor, and includes a 2.1GB hard drive.

Saving money through open source
Because the iToaster runs on open-source software, Microworkz is able to avoid losing a huge chunk of its profit margins to Microsoft licensing fees. The company says it will make a profit on the hardware, without charging for Internet services or offsetting costs with advertising revenue, like other "free PC" companies do.

"This is not a replacement for a PC," the Microworkz spokesman said. "But it is a great way to get on the Internet without getting a slew of advertising shoved down your throat," he said. Although the iToaster will not compete with full-featured PCs, the company is beating Microsoft, America Online, and a slew of PC manufacturers to the punch in manufacturing and shipping a cheap Internet device, he said.

"We're throwing down the gauntlet of what a Net PC appliance should look like," he said, confirming that the company is in negotiations to license the iToaster design to third parties. "Everyone talks about it, but we're the first company to have a demonstrable product shipping in the next 15 days. It says something about our capacity and ability and wherewithal to do it."

Microworkz plans to expand the iToaster line over the next year. By the end of the summer, the company expects to market a version of the device for kids, with built-in Web filtering. Also, a portable version of the iToaster priced under $500 will be introduced by next year.

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