Microworkz fuels PC price battle

Retail Launch of $299 PC sparks flurry of interest, as president makes claims of big margins.

US direct vendor Microworkz has turned up the heat in the hardwareakes claims of big margins. price war with the upcoming launch of a $299 PC.

The Webzter PC range is scheduled for release on 19 April and already the company has been flooded with telephone enquiries. Microworkz's Website was also swamped by 7.4 million customers seeking information on the deal.

Rick Latman, president of Microworkz, revealed that pre-orders for the Cyrix MII 300-based system had begun on 22 March. The deal also includes one year's free internet access from ISP, Earthlink.

Latman claimed that he would make 13 per cent margin on the box due to preferential deals made with both Cyrix and Earthlink. He would not be drawn on whether there would be a European launch of the systems.

Paul Berry, managing director of Simply Computers, which was recently bought by Global Direct Mail, was unsure if it was a viable model and questioned the level of margin. 'The trouble is it takes the same amount to support a #400 PC as it does to support a #1,000 PC. I can't see any of the key manufacturers going for that price point,' he said.

Pete Day, analyst at Inteco, added: 'Some may ask if Microworkz is simply buying market share. In the UK, prices will keep on going down, but there is a point where that stops. Our latest research shows the average spend is still #1,100. People may walk in attracted by a #499 price tag, but they walk out with a more expensive, better specified machine.'

Jeremy Davis, analyst at Context, said: 'It's moving towards the consumer electronics model. You can get a personal stereo for #9.99 or #99.99.

The home PC is in its last iteration really - they are going to change significantly over the next few years.'

Founded in 1991, and based in Seattle, Microworkz is a privately-held company that began as an independent software vendor. The company sells all of its products direct to users via advertising in mail-order catalogues as well as from its Website. Microworkz has the capacity to produce 200,000 PCs per month.