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To: Rusty Johnson who wrote (1315)	3/16/1999 2:58:00 AM
From: Rusty Johnson	Respond to of 2617

Microworkz to Sell Full-Featured PC For $299, Turning Up Heat in Sector By DAVID P. HAMILTON Staff Reporter of THE WALL STREET JOURNAL Microworkz Computer Corp. said it will sell a full-featured personal computer for just $299, turning up the heat in the increasingly competitive sub-$500 PC market. Like most other sub-$500 PCs, those from Seattle-based Microworkz won't include a monitor, which can cost an additional $100 or more. But the company's Webzter Jr., which features a 300-megahertz microprocessor from National Semiconductor Corp.'s Cyrix unit, will come bundled with a year of free, unlimited Internet service, courtesy of fast-growing Internet provider EarthLink Network Inc., and a software suite from Corel Corp. Indeed, with the Internet service alone valued at about $240, Microworkz President Rick Latman jokes that the effective price for the Webzter Jr. is only $50. The foray by closely held Microworkz, a relative newcomer to the PC business that started out as a custom-software designer, reflects an accelerating plunge in computer prices and a scramble to find ways to subsidize PC sales. Free-PC.com, a startup in Pasadena, Calif., in February announced plans to give away computers to people who agreed to view advertising and give up personal information about themselves. Microworkz said it isn't collecting personal information, but is relying on financial support from partners such as Cyrix and Earthlink. "We're not going to exploit the user," said Mr. Latman. "We're exploiting the people who make the components." Mr. Latman said that the company's partners are helping to "defray the costs of production and services to make the machine profitable," although he said the support doesn't include cash payments. He said that Microworkz ultimately expects to earn a 13% margin on the Webzter Jr., which is about average for the cutthroat PC industry. "It's a new model for how to build PCs," Mr. Latman said. "We're putting PCs in peoples' homes, Earthlink gets more customers and Cyrix gets more recognition -- it's good for everyone." Earthlink expects to benefit when those new customers decide to renew their Internet service. While that strategy has some risks, it "brings us the opportunity to reach a vast amount of the public we wouldn't normally meet," said Bob Johnson, an Earthlink vice president. The sub-$500 PC market was pioneered by eMachines Inc., of Fremont, Calif., which said it sold 200,000 sub-$500 PCs in the fourth quarter of 1998, and by all indications is still going strong. In January, for instance, eMachines was the No. 4 seller of PCs in office superstores, and was the fifth-strongest seller in traditional consumer-electronics outlets, according to market-research firm ZD Market Intelligence of La Jolla, Calif. Matt Sargent, an analyst with ZD Market, said eMachines could end up selling as many as 1.2 million machines this year. "This all adds to the pressure on mainstream PC makers," Mr. Sargent said of the Microworkz announcement. Traditional PC makers, several of whom have recently reported slowing sales or expected revenue shortfalls, will be increasingly looking for ways to make money by bundling new services and software with PC hardware, Mr. Sargent predicts. Microworkz plans to sell the Webzter Jr. only via the telephone and the Internet, and will start full production by mid-April. Mr. Latman said the company originally planned to sell 500,000 units of the Webzter Jr. and two related models by the end of the year, but is considering boosting its production plans in light of initial interest.