Microworkz Enters DM Computer Market

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Microworkz Computer Corp., Seattle, a manufacturer and direct marketer of computers and related products, is targeting schools and low-income families with its new line of personal computers dubbed the WEBzter series, which will set a new price floor for PCs.

The company plans to begin taking orders on its Web site (www.microworkz.com) next week for the machines, which will be priced as low as $299 for a box that includes one year of free Internet access but does not include a monitor or a CD-ROM drive. The line is expected to begin production next month.

The price tag beats by about $100 the lowest offering from emachines, another prominent budget-priced computer maker that markets its products through third-party sellers. Low-priced computers from emachines, however, come with a CD-ROM drive, though they also are shipped without a monitor,.

"Add in the CD-ROM and the cost of installation, and they cost about the same as we do," said Stephen Dukker, president/CEO of emachines Inc., Freemont, CA.

While emachines is able to keep its prices low by using Korean manufacturing, Rick Latman, president and majority owner of Microworkz, said his company's status as a direct seller and its close relationships with vendors help keep costs to a minimum.

Analysts blame the availability of low-priced computers like those from emachines for contributing to a plunge in PC prices, which is affecting revenue growth at the larger PC manufacturers.

Latman said Microworkz, which last year pledged to give away 5,000 computers to schools, has a "good connection" with hundreds of school districts around the country.

"They've been calling us all day," he said last week, a day after his company revealed its plans for the WEBzter line. "They know who we are."

The three computers in the WEBzter line include the $299 WEBzter Jr., powered by a Cyrix 300 MII processor and loaded with the Microsoft Windows 98 operating system and Corel WordPerfect Suite 8. Internet access is being provided by Earthlink Network Inc.

"It's the perfect device for surfing the Web," said Latman.

The other two computers are the $499 WEBzter, which includes a Cyrix 366 MII processor, a bigger hard drive and other features; and the $699 WEBzter Sr., which features an even bigger hard drive and other features.

Latman, who is the majority owner of Microworkz, said he expects to begin offering the line through retail channels by the end of the year. In the meantime, however, he said Microworkz will continue to offer its products to consumers only through the Web and by telephone. About half its sales, which totaled $39 million last year, come directly through its Web site. Microworkz also has a 27-person direct sales force to market its products to business, government and education accounts.

Emachines launched its low-priced line late last year and said it sold about 180,000 units in the fourth quarter. The company plans to expand its product line beyond desktops in July with the introduction of a notebook PC, priced at $1,999, and an all-in-one machine similar to Apple's iMac that will use chips made by Intel. The iMac clone will start as low as $799, Dukker said.

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