Korean Makers Start Low-Priced PC War
April 22, 1999 (TOKYO) -- An hour and a half drive from the hustle and bustle of Seoul, Korea is the production base of the "US$399 personal computer" of U.S.-based emachines Inc.
Trigem Computer Inc., a leading personal computer maker in Korea, is in charge of manufacturing in conjunction with emachines. Trigem has been manufacturing on a 24-hour basis for the past five months, but it still is having a hard time catching up with demand. It appears that the more they make, the more they sell.
In the United States, the popularity of super low-priced personal computers, i.e., priced at US$499 or US$399, has been growing rapidly. Overall, products below US$600 account for 19.9 percent of all PC products, and US$600-1,000 products account for about 42 percent of all PC products, according to U.S.-based PC Data Inc.
The super low cost PC, the US$399 machine, which emachines specifically launched for the Christmas season of 1998, was the greatest success. In February 1999, emachines' share was ranked as high as the fourth in terms of America's desktop retail sales.
emachines is a U.S. distribution company founded by Trigem, and jointly funded by a Korean display maker. Although Trigem is ranked second after Samsung Electronics Co., Ltd. in terms of sales share, it retains the top position in Korea in terms of production, including exports.
Trigem products have already been imported and marketed in Japan. Proton Co., Ltd. is one of Trigem's importers. The "Velocity TG 333 M2," one of Trigem's products, is priced at 69,800 yen. (117.69 yen = US$1) T. Zone shops, one of the largest retailers which sells Proton products, confirmed that one of the most popular products is the "Velocity TG 333 M2," and said it is ranked the top in terms of the number of units sold. In addition, Sotec Co., Ltd. also has been selling discount products priced below 100,000 yen.
Why is it possible to cut prices so drastically? The major reason for that is a basic approach to "mass production of a few varieties of products." emachines and Proton, as well as Sotec, all share major components used for their products such as the motherboard, memory and hard disk drive. Depending on the product, they are simply making minor modifications, for example, on CPUs and the design of cases.
Trigem's plants use the manufacturing process common to emachines, Proton and Sotec, and allots a certain time on the production lines for each PC vendor. This brings about more efficient production.
Trigem's 1999 OEM sales plan for super low-cost computers calls for more than 2.5 million units in the United States and 250,000 to 300,000 units in Japan. If this comes true, sales shares both in Japan and the United States are expected to bring the company to the fifth rank.
At the moment, "products are selling at a pace almost as expected in the United States, and in Japan, sales of even 400,000 unit are on the horizon," said Chris Chung, executive vice president of Trigem.
(Nikkei Personal Computing)
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