From...

April 12, 1999
Web posted at: 2:59 p.m. EDT (1859 GMT)

by Christian McIntosh

(IDG) -- As Microworkz Computer scrambles to meet frenzied demand for its widely publicized $299 Webzter PCs, some customers are complaining that the company has not met their expectations.

Troy Johnson from Hayward, California, reported sending full payment for a GameWorkz system and then waiting more than eight weeks for delivery before canceling his order.

Johnson customized his purchase on the Microworkz Web site and opted to pay an additional $99 for three-day UPS delivery. A Microworkz official contacted Johnson the next day and explained that special orders can take up to three weeks to fulfill.

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Six weeks later, Johnson still hadn't received his computer. He called Microworkz, only to learn that his GameWorkz system would be ready to ship shortly but without several of his requested upgrades. Two weeks later, an exasperated Johnson canceled his order. "I wouldn't order a screw from Microworkz," Johnson says.

In an open letter to Microworkz Chief Executive Officer Rick Latman posted in a Microworkz forum, Johnson complained that "you are attempting to make your customers bear the burdens of your supply and demand problems. That is not acceptable. We just want what we paid for in a timely manner."

"Silly" delays

In response to Johnson's complaints, Latman urged him to consider the greater good of PC consumers. "Let's stop worrying about silly delays and look at the whole picture," Latman wrote.

"We regret that a lot of you fail to see what we're doing to this market. Our prices are pushing the others to bring computers into the reach of many Americans who could not get PCs before."

Johnson notes that the Microworkz forums contained several nondelivery complaints. "I started to get a little paranoid," he says.

According to a notice posted on the Microworkz site, the company's forums are "temporarily offline" subject to new feature upgrades. The Microworkz online customer survey is also under construction. Microworkz officials cite technical difficulties and say that the company is ramping up server capacity in preparation for the Webzter release.

Taking orders early

Microworkz started accepting online orders March 22 for its $299 Webzters and has since been overwhelmed by consumer interest. Latman expects to receive "about 400,000 orders between March 22 and April 19," he says. "We've been in hypergrowth all year long." Accompanying the requests for information were complaints that Microworkz was just another company operating on hype rather than substance.

But Latman promises that "on or around April 19, about 100,000 computers will be ready to ship." Latman adds that 100,000 is a conservative estimate and notes that "preorders are about as busy as they can be."

Microworkz posted the following caveat on the Webzter site: "Because we are expecting huge demand for this product, please be advised that not all units preordered will be shipped on that date. You will be notified of a shipping date sometime around April 19th."

Latman says that Microworkz will start accepting phone orders as well on April 19, and predicts a "huge blowout" starting on that date.

Where are the profits?

Latman claims that Microworkz will achieve 12 to 13 percent margins on its $299 boxes, although he won't divulge marketing tie-ins and alternate revenue streams that could boost skinny margins on the machines themselves.

Some analysts remain skeptical, pointing out that eMachines is barely making a profit selling $399 computers.

They also question delivery dates. "We are doubtful that they will be able to deliver 100,000 Webzter units on April 19, considering that they shipped 30,000 units all of last year," says Schelley Olhava, a consumer desktop PC analyst with International Data Corporation.

"When consumers call to order the $299 machines, Microworkz will most likely try to push their higher-price products," Olhava says.