eMachines Inc. is about to make the jump from low-cost PC maker to low-cost PC maker and Internet service provider.
The Irvine, Calif., PC company plans to launch its own ISP, eMachines.net, in the quarter.
The ISP move is a popular one. Dell Computer Corp. (Nasdaq:DELL) has announced plans to offer its own ISP, called Dell.net, in North America. Micron Electronics Inc. also recently purchased an ISP and partnered with EarthLink (Nasdaq:ELNK) to offer its own "free" PC.
eMachines, however, won't just offer a PC plus Internet access. The company hopes to pull together a more complete package than competitors such as Dell (Nasdaq:DELL), Micron and even Gateway Inc. (NYSE:GTW), which offers its own Gateway.net ISP and portal service.
AOL-Netscape bundle
eMachines and eMachines.net will partner with America Online Inc. (NYSE:AOL) and Netscape Communications Corp., in order to package its PCs with a rebate, Internet access, online content and electronic commerce services.
As part of their agreement, disclosed in eMachines' S-1 filing, the three companies are developing, an "e-commerce package," consisting of an eMachines PC with pre-installed AOL software, a special keyboard design and custom desktop icons.
Once online, the eMachines.net subscriber will find links to custom America Online services. eMachines.net will also offer a custom portal on a Netscape Netcenter home page. Here, eMachines.net subscribers will be able to access custom third-party content.
"Our planned Netscape Netcenter portal will become the primary point of access to the Internet. This will allow us to not only provide an easy point of subscriber access to third-party content providers, but also to direct subscribers to advertising displayed on dedicated advertising space on the portal," the company said in its S-1 Registration Statement.
All companies that seek to go public must file this form, which spells out, among other things, the company's business partnerships, financial situation, new initiatives and possible challenges for potential shareholders. eMachines, which filed the document Aug. 31, plans to list its shares as soon as possible on the Nasdaq stock market's National Market under EEEE, the document said.
Another part of the eMachines.net service will be a simple sign-up screen, which guides users through the subscription process. The screen will appear the first time a new eMachines PC is turned on before the Windows operating system completes its initial boot-up.
"Our widely available, integrated computing and Internet access solution is designed to attract first-time PC buyers that do not have an existing relationship with an Internet service provider," the company said in the filing.
Perks galore
eMachines will launch two complimentary programs along with its AOL-Netscape bundle. The first is an ISP rebate direct from eMachines at the time of purchase. Similar to eMachines' current Compuserve Internet rebate, it will require a long-term Internet access service contract.
For buyers who balk at signing up for multiple years of service, eMachines will launch a program called PC rEnewal. This will allow customers to sign up for eMachines.net service on a month-to-month basis. Those who sign up and remain with the service for 24 consecutive months will be able to upgrade to a new eTower configuration for a "low fee."
MCI WorldCom (Nasdaq:WCOM) company UUNET will host the eMachines.net service. Under the agreement between the two companies, eMachines.net will offer two levels of service: a "basic" service package and a "premium" service package. Pricing was not available.
eMachines, which sold its first PC in November 1998, has now sold more than 1 million units through retail stores such as CompUSA. The company now has roughly 50 employees.
Company officials declined to comment, citing the company's "quiet period" between now and its IPO.
