Zsystems' Linux System Cracks $199 Price Tag

Brandweek,  May 1, 2000  by Todd Wasserman

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A new entrant to the cutthroat desktop PC market will attempt to break the $199 price barrier with what could be the first Linux-based system to hit retail.

Zsystems, a unit of Taiwanese component and no-name "white box" PC supplier Onspeed America, is planning to release a new system in limited retail placement late this month, said Zsystems president Randy Scott.

Scott declined to discuss system particulars, but he boasted that it would "create a new price paradigm."

According to one retailer who was briefed on the release, Zsystems is eyeing a $199 price point--the lowest ever--for a PC based on Canadian software maker Corel's version of the Linux platform, a free alternative to Microsoft's Windows, and some low-cost software applications. The system will be based on a 500 MHz processor from Advanced Micro Devices.

"I see it as a great PC for a college student who just needs word processing," said Wayne Jarvis, computer department manager for Wolfe's Camera Shop in Topeka, Kan.

Excluding rebate offers, new PCs currently bottom out at $399.

Scott said the City of Industry, Calif.-based Zsystems hopes to continue with a national rollout during the back-to-school season. The Zsystems PC also claims to offer a double-digit margin for retailers, versus the usual single- digit margins of competing PC makers, Scott said.

Like PC maker eMachines, which shot to the No. 3 spot at retail after just two years, Zsystems will do only minimal advertising, he said, relying instead on retailer co-op ads and pricing.

Though Linux is often named as a threat to Microsoft's OS hegemony, it is mostly targeted at the server market, where it holds a 35% share. Researcher Gartner Group, Stamford, Conn., projects Linux will only garner 5% of the desktop market by 2005.

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