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Emachines goes Intel only for low-cost PCs

The leading star in the low-cost computer market has decided to dance only with chip giant Intel as it refreshes its product lineup.

The leading star in the low-cost PC market has decided to dance only with chip giant Intel as it refreshes its product lineup.

Emachines is proving that Intel's low-end Celeron chip is cheap enough and fast enough to fit into every spot in its new line of PCs, ranging from $399 to $599.

The company, which says it has now shipped one million computers, is also offering deals with Internet service providers which can result in a free PC in one case and greatly reduced pricing for two other models.

Emachines, which specializes in boxes priced below $600, has had a meteroric rise in the PC industry. Virtually unknown a year ago, it has shot up to become one of the top five suppliers in the retail market. Remarkably, this happened in only about four months. Last November, Emachines had no market share to speak of.

PC makers are not sitting on their hands. Compaq Computer recently filed suit against Emachines for allegedly infringing on 13 Compaq patents. Some analysts see this as defensive move by Compaq and evidence that Emachines is making surprising inroads into the Compaq customer base at retail stores.

Emachines' shift to Intel-only belies its beginnings, which were systems oriented around processors from Cyrix, whose PC processor business has since been sold by National Semiconductor to Via Technologies.

"It's pretty impressive that they've managed to get into the Intel world at that price," said Roger Kay, an analyst at International Data Corporation.

Emachines refreshes line with Celeron-only systems
Model Processor Hard drive Price
eTower 366i2 366 MHz 4GB $399
eTower 400ix 400 MHz 6.4GB $499
eTower 400idx 400 MHz 8.4GB $599
366i2 is free with ISP sign-up and rebate; the 400ix and 400idx are $99 and $199 respectively with rebates and sign-up.
Source: Emachines
Interestingly, chips from Advanced Micro Devices, also a supplier for low-end systems, are not used. With the release of its new Athlon chip, AMD is making a play for the high end of the market, abandoning, to some extent, it's costly strategy of dominating the market for sub-$1,000 PCs.

For $399, without a monitor, Emachines is offering an eTower model with a 366-MHz Celeron chip, 4.3GB hard drive, CD-ROM drive, a modem, and Microsoft Works application suite.

Compaq offers a comparable Presario 5304 model with a 366-MHz Cyrix processor for about $520.

The $399 Emachines model will be free if a customer signs up for a $400 AOL-CompuServe Internet access and a $50 Emachines product rebate package, the company said.

Emachines' $499 model features a 400-MHz chip and ups the hard drive to 6.4GB. The price drops to $99 if the AOL-CompuServe service and rebate are purchased. At $599, a DVD-ROM drive is added and the drive capacity is increased to 8.4GB. With rebates, it is priced at $199.

A similar configuration from Compaq with a CD-ROM drive and a 400-MHz AMD K6-2 processor is about $720.

Kay says that users should always be a little wary of inexpensive PCs. "This stuff can be a little flaky sometimes," he said, because of design shortcuts.

But because all PCs, regardless of manufacturer, can be "flaky," that may be the least of Emachines' problems. The company has caused a sensation recently by shipping an iMac look-alike at nationwide stores such as Circuit City.

Apple is watching the moves of these companies very closely, and in July filed a lawsuit against Korean conglomerate Daewoo and U.S.-based affiliate Future Power over a $799 computer that looks nearly identical to the iMac.