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$499 PCs coming to market

The low-cost phenomenon shows no signs of letting up, as a little-known vendor will try to make its mark with systems costing less than $500.

The low-cost phenomenon shows no signs of letting up, as a little-known vendor will try to make its mark on the PC market with systems costing less than $500.

NetRam Computers today announced it has begun shipping $499 desktops, based on inexpensive, Intel-compatible chips from IDT.

The new systems from the Millennium Electronics subsidiary represent another low in the ever-collapsing PC price structure.

The computers run at speeds up to 240 MHz and come with 16MB of memory, 1.7GB hard drives, CD-ROM drives, 33.6-kbps modems, and one year of technical support. NetRam PCs are targeted at back-to-school students and home users, according to Rusty Wilson, the company's vice president of sales and marketing.

Despite the low cost, Wilson asserts that the company can eke out a slim profit margin because of its low overhead.

"As vice president of sales, I've been asked that question by my management as well," Wilson laughed. "It's a slim margin for us, but there is some in it. We have a state-of-the art manufacturing facility and economies of scale that we can bring to bear."

One key factor in the rock-bottom price is the inclusion of the WinChip processor from Santa Clara, California-based IDT. "It's a really low-cost, high-performance X86 processor optimized for Windows applications," said Martin Reynolds, a Dataquest analyst, of the WinChip.

IDT markets its Intel-compatible processors to vendors targeting the emerging sub-$800 PC market. Until the recent introduction of the Celeron, Intel had totally avoided the low-end PC craze, allowing IDT to quietly make a name for itself.

Although the NetRam systems are some of the most inexpensive on the market today, Wilson disputes the notion that his company is contributing to the PC industry's eroding profit margin problems. He compares his company's product to a Volkswagen Beetle--another low-cost, reliable machine for a targeted market, according to Wilson.

"This is not a Maserati or Porsche. We're a low-overhead model focused more on the quality of manufacturing, rather than on a marketing budget. We can do this and make money on it, because we are very lean and aggressive," he said.

Then too, there is a real disparity between the performance of sub-$1,000 and sub-$500 PCs, Reynolds asserted. "As a general purpose PC, it's going to be a relatively poor performer. People will find too many compromises on features, but it's got some potential."