Microsoft Rolls Out Low-Cost Net Device

Targeting consumers who do not yet own a PC, Microsoft Corp. and low-cost computer manufacturer eMachines announced Monday the roll-out of an Internet device that will enable access via the software giant’s MSN network.

The new device has been named “MSN Companion.” Although similar Internet-only appliances have failed to find widespread success, Microsoft is banking on those consumers who want a simple way to connect.

“Today more than 40 percent of U.S. homes don’t own a PC or have an easy way to access the Internet,” said MSN vice president Yusuf Mehdi. “With the MSN Companion by eMachines, consumers have an easy and affordable way to experience the Internet.”

Net Surfing and E-Mail

MSN Companion, essentially a stripped-down computer, will provide access to e-mail and the Internet. Designed to work with a standard PC display, it comes with a full-sized keyboard, mouse and built-in 56-kbps modem. Matching 15- and 17-inch monitors from eMachines will be sold separately.

The device will be powered by Microsoft’s operating system for non-PC appliances, Windows CE, and the Geode processor from National Semiconductor. It is expected to be available by the end of October from various PC retailers.

Something for Nothing?

Although eMachines, a two-year-old firm launched by South Korean hardware companies, plans to sell the appliance for $349 (US$), MSN will offer a $400 rebate if consumers sign up for a three-year MSN Internet service contract for $21.95 a month. The offer means that Microsoft will be absorbing the cost of the Net device for buyers.

If the strategy proves successful, the company will have created the equivalent of a “free PC” offering that garners subscribers for its Internet access service.

Similar Deals Struck

Microsoft’s deal with Irvine, California-based eMachines is not the first of its kind. Compaq Computer introduced its own Internet appliance in August. Unlike the device from eMachines, the iPaq includes a 10-inch LCD monitor as well as a full-sized keyboard.

Similar devices with access to the Net through America Online are being built by other manufacturers and are slated to come out later this year.

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