Irvine-Based eMachines Heads for the Higher-End Ground

Irvine-based eMachines Inc., which has become the No. 3 desktop computer manufacturer in less than a year by selling bargain basement personal computers, last week said it is expanding into the laptop market.

Citing the exodus this year of personal computer manufacturers from the retail store market, including former stalwarts IBM Corp., NEC and Packard Bell Inc., eMachines officials said the company wanted to fill the vacuum.

The company had previously confined itself to the sub-$600 computer market, but in October introduced an $899 system aimed at power users. The company’s laptop computer, which will hit the shelves in December, is priced at $999.

“We will never go to full pricing,” Chief Executive Stephen Dukker said. “But we definitely will be moving up.”

Higher-priced machines could translate into higher profit margins, an area where eMachines has lagged behind its major competitors.

The company, which in August filed for an initial public stock offering, had gross margins of 3.6% during the first half of this year, far below market leader Compaq Computer Corp.’s 22.6%.

The higher-end computers will also help eMachines attract customers with higher incomes and more computer experience, Dukker said.

Customers of the company’s core line of low-priced computers generally had household incomes of less than $50,000, while the higher-end computers are boosting that figure by $10,000, Dukker said.