Yogi and all, it's e-machines again. I just love an underdog who makes good. From Barron's...
The Price is the Brand
"The enemy of my enemy is my friend." Who said that? Was it really Mao
Tse-tung?
Whatever. But for direct-sales PC makers Dell Computer and Gateway, that
enemy is Emachines. The new kid in town has been wildly successful hitting up
middle America, forcing the two superstars to take note -- and, perhaps, cut
prices -- based on some new demographic trends.
In a clear contrast to Dell and Gateway's rehearsed, harmonized delivery here
Wednesday, Stephen Dukker, CEO of the cocky newcomer (which is
profitable and number four in retail computer sales in a mere four months,
according to PC Data), calls his company the Wal-Mart of the PC world.
He delightedly told investors at a panel discussion at the Hambrecht & Quist
conference that 51% of his $399-$599 machines go to first-time buyers, who
can't shop online, anyway. And 69% of those bare-bones machines end up in
households that have annual incomes between $20,000 and $34,000,
traditionally a tough market for PC makers to crack. And word-of-mouth
referrals help establish loyalty.
Clearly flustered, CFOs John Todd of Gateway and Tom Meredith of Dell
made noises about brands, broadband, service and sustainable profits. It's
interesting to note that these two began as the low-price upstarts taking on the
industry giants.
Are the tables about to turn on them?
interactive.wsj.com
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