In November of 1998,
eMachines did something rather ridiculous in the world of computer manufacturing:
They started selling PCs at nearly half the cost of the competition,
while making bold claims of a computer that was "never obsolete!"
Just six months later, they'd overtaken companies like Apple, Packard Bell, and Dell,
for the title of fourth-largest computer manufacturer in the United States.
But nowadays, the eMachines brand is long gone,
with tons of their products ending up as computer carcasses littering thrift stores and recycling centers everywhere.
What happened?
This is LGR Tech Tales,
where we take a look at noteworthy stories of technological inspiration, failure,
and everything in between.
This episode tells the tale of eMachines computers!
The story of eMachines begins in early-1980s South Korea,
with a company called TriGem.
They were the country's first native personal computer manufacturer,
selling machines like the SE-8001, and various Apple II clones.
After seeing success at home, they partnered with Seiko Epson in Japan,
and changed their name to TriGem Computer,
establishing themselves in the PC marketplace in that corner of the globe.
Simultaneously, another South Korean tech startup was getting off the ground in another part of the country,
known as Korea Data Systems.
They were founded in 1983, and largely manufactured display hardware like TVs and computer monitors.
By the time the '90s rolled around, both TriGem and KDS had seen their fair share of independent success,
with their respective products complementing each other quite nicely.
They decided to join forces in 1998 and expand deeper into the international PC market than ever before.
The result was eMachines, founded in September of 1998!
They were a computer company built on the idea of selling low-cost computers and capitalizing on the Internet gold rush.
The first part of their plan was simple, but clever.
By studying the revolutionary inventory strategy of Dell
and the retail distribution habits of Hewlett-Packard,
eMachines kept supply and demand in check to an insane degree.
The result was a family of computers priced no higher than $600 and as low as $399,
at a time where most of their competitors were selling for twice that or more.
Granted, they didn't come with a monitor, but...
Oh, look! How convenient!
KDS made monitors, and they provided them cheaply when bundled with eMachines!
The next part of their plan was tapping into the ongoing Internet craze,
that had everyone clamoring onto the information superhighway!
If you only signed a long-term contract with a specific Internet service provider in $19.99 a month,
you would get another huge discount on your brand new eMachines!
This contract also included a free upgrade to a new PC every two years,
under a program known as the "eMachines Network,"
and is what the infamous "Never Obsolete" sticker referred to.
So no, they weren't claiming that all you'd ever need was 32 megs of RAM and Windows 98,
but they were slightly twisting words into an eye-catching claim, in order to advertise an upgrade plan.
All of this worked like a charm,
with eMachines becoming the fourth-largest PC brand in the US,
just behind the giants of Compaq, HP and IBM!
This led to the company filing an initial public stock offering in March of 2000,
which seemed like a good move, but unfortunately for them, proved to be a bit of a disaster.
You see, eMachines sold their computers so cheaply that profit margins were thin,
and they were built even more cheaply, which meant that return rates were high.
Another roadblock was a lawsuit by none other than Apple Computer in 1999.
Apple had introduced their landmark iMac G3 computer the previous year,
and eMachines sought to capitalize on this by way of a cheap knockoff known as the "eOne".
This ran Windows and cost far less, but it was specifically made to look and feel like an iMac,
so much so that the court sided with Apple,
and eMachines was forced to pull it from store shelves and play an undisclosed sum.
By December of 2000, they were reporting a 219 million dollar loss,
and NASDAQ was threatening to delist their fancy new stock offerings entirely.
Ever after hiring a new CEO and firing 16% of their employees,
they were delisted from the stock exchange in May of 2001.
Things were looking grim.
Enter Mr. Lap "John" Hui,
fomer president of KDS, and one of the founders of eMachines!
John decided that enough was enough,
and struck a deal in 2001 to buy back eMachines, and take the company private once again.
Now with freedom from shareholders and under new leadership,
eMachines decided to drastically overhaul the company in two ways:
The first being customer service, and the second being supply chain optimization.
With customer service it was a combination of hiring more competent staff,
and reducing the number of steps a customer would need to take in order to get help.
Even things as simple as putting the serial number on the front of the computer case instead of the back,
and reducing the amount of pre-installed bloatware just made things easier for everyone.
As for optimizing supply chains, they took ideas from the Japanese auto manufacturing operations,
using a relatively small number of modular components that could be reconfigured into an entire line of computers.
They also worked closely with their retailers to ensure that only the precise number of computers needed would be built,
so they woudn't end up with warehouses full of unwanted crap.
Another win for eMachines came in December 2003,
with the release of their T6000 Desktop,
the world's first mass-marketed AMD Athlon 64-based system.
This was not only a 64-bit CPU in a world dominated by 32-bit stuff,
which often made them faster than Intel's processors,
but they also cost far less!
All of this led to a golden age for eMachines,
with nine straight quarters of profitability leading to 1.1 billion dollars in revenue in 2003.
So where did they go?
Well, Gateway is responsible... sort of!
Gateway was a competitor that made computers and other things, and they were doing terribly,
but they ended up purchasing eMachines in January of 2004.
How?
Well, it was kind of an unusual deal where Gateway paid eMachines 290 million dollars in cash and stock,
but the catch was that the executives from eMachines would take over operating Gateway,
in an attempt to return them to profitability,
while simultaneously expanding the eMachines brand with Gateway's retail presence.
Exactly how all that went down is perhaps a story for another time,
but they managed to stick around long enough for Acer to purchase Gateway, and, in turn, eMachines, in 2007.
But while Gateway computers still hang around as a rebadged Acer in 2016,
the days of the eMachines brand were numbered.
During the 2013 Consumer Electronics Show,
Acer announced that eMachines was no more.
And just like that, so ends the story of eMachines.
They were never particularly special computers, at least on the surface;
in fact, they had a reputation for being badly made for almost their entire existence.
But they were the first computer for tons of people with all sorts of income levels,
and as a result, had an immeasurable effect on growing the market share of Windows PCs,
and Internet adoption rates alike!
So while they may have been the ultimate example of ubiquity paired with mediocrity,
eMachines is worth remembering;
either because you had one and have fond memories yourself,
or just as an influential point in tech history.
And if you enjoyed this episode of Tech Tales,
then perhaps you would like a Tech Tales on Dell,
which talks about their distribution stuff that eMachines was so inspired by;
as well as my episode on the calculator wars of the 1970s,
without which, we probably wouldn't have personal computers as we know them today at all!
And as always, thank you very much for watching!