New Market for Budget Computers
Toshiba America Information Systems Inc. today enters the fast-growing market for desktop computers priced below $600, joining its neighbor eMachines Inc., but tackling a completely separate market.
On the eastern edge of Irvine, eMachines has made its name in the retail market, selling more than a million PCs since it began shipments last November. The company, which announced plans in August to go public, now accounts for one of every nine PCs sold in U.S. stores.
On the other side of town, however, Toshiba plans to target small- and medium-sized businesses with its new line of computers, starting at $549. They would be sold through computer resellers serving that market.
Normally, small- and medium-sized businesses looking for computers that don’t give them sticker shock would buy generic computers, often called “white boxes.” Toshiba says it will be the first PC manufacturer to focus exclusively on that market with a sub-$600 computer.
Resellers would be able to customize the machines and put their own brand on the machines, which will also carry the Toshiba logo.
“Because the box is built to order, we don’t have inventory costs,” said Mona Pal, Toshiba’s product manager for commercial desktops. The company has also cut costs by eliminating commonly used marketing tools such as volume rebates and price protections.
But eMachines and Toshiba are competing against industry leader Compaq Computer Corp., which has aggressively marketed its own line of sub-$600 computers. Last week, Compaq launched an advertising campaign against eMachines that appeared in several major newspapers.
Most other major computer manufacturers, including IBM, Dell, Hewlett Packard and Gateway, have computers either near or below $600.
Santa Ana-based Ingram Micro Inc. has also introduced a line of branded white boxes, called Everest. The company started shipping the computers Aug. 30 but does not plan an extensive marketing campaign, in large part because it must walk a fine line between being a manufacturer and a distributor.
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Jonathan Gaw covers technology and electronic commerce for The Times. He can be reached at (714) 966-7818 and at jonathan.gaw@latimes.com.
