PC Expo: It's the battle of the (dirt) cheap PCs

How much cheaper can PCs get? Two companies at PC Expo in New York this week are trying to answer that question, and they are coming up with decidedly different answers.

Microworkz.com, a Seattle-based, PC maker has received some attention over its iToaster -- a Model T of a desktop that can do anything you like, so long as you only want to word process, surf the Net and e-mail friends. The iToaster, which is equipped with a variation of Linux and Be Inc.'s operating system, will retail for $199 (£121) when it starts selling on July 1. "It kind of sells itself," said Microworkz e-commerce marketing specialist Michael A. McNaughton, although he allowed that, at first glance, PC Expo's foot soldiers are "pensive" about what's under the hood of a $199 PC.

The other ultra-bargain basement original equipment maker at PC Expo -- Vega Technologies of Emeryville, California, -- undercuts even the iToaster, with its $149.95 Buddy PC boxes. "It's very popular," said Vega CEO Arvind Patel. But there's just one catch: The Buddy is more a terminal than a computer.

Whereas, with the iToaster, for $199 consumers get a stand-alone fully functional PC, the Buddy works by piggybacking on a parent PC with a Windows 98 or 95 operating system, 18MB of RAM and a processor with at least 100MHz. Patel said the Buddy, which launched in the United States in January and has clocked up more than 70,000 worldwide sales, operates as a clone of the parent or host PC -- running all its applications. "Time-sharing with your host PC is what it's doing," he said. Both the Buddy and its host can operate simultaneously.

On the floor at PC Expo, the Buddy seemed to generate more interest than the sparsely populated iToaster booth, but appearances can be deceiving. Whereas the Buddy had its own red-letter booth, the iToaster was tucked away unobtrusively in a corner of Be Inc.'s booth. If you weren't looking for the iToaster, you probably wouldn't have found it.

Microworkz's McNaughton said the iToaster already had "several thousand" orders; the company started taking pre-orders days ago. He also said the company is in negotiations for a deal with a parent company that owns several hotel chains that could see an iToaster plunked in up to a third of the hotel rooms in the United States.

One of the iToaster's key selling points, beside the price, is the easy-to-use interface, which features 15 buttons that lead users to various Web sites and open word processing and e-mail applications. According to McNaughton, Microworkz will make a profit on the iToaster. "What's saving money on this is that we are not using Windows," he said. The company also plans to collect revenue by selling desktop button positions to Web sites.

As for Be, the alternative OS developer, which has a licensing deal with Microworkz, is delighted with the iToaster. "It's good for people who wouldn't maybe buy a computer or someone who already has a computer, because it's cheap," said Lamar Potts, Be vice president of internet appliances.