Microworkz Cooks Up $199 Web Device

On Tuesday PC maker Microworkz will formally announce its $199 Internet device, called iToaster. The device lets you do word processing, surf the Net, and handle your e-mail, but it doesn't run Windows.

By the holiday season, Microworkz says it hopes to drop the price of its Internet appliance down to $99.

Shaped like a pizza box, the system is powered by a 266-MHz Intel Pentium, and will ship with a sound card, 56-kbps modem, USB ports, and a 2.1GB hard drive. (Some of these specifications changed as recently as last Friday, the company says.)

The system doesn't include a monitor, floppy drive, or CD-ROM drive. But for $29.99 you can add an adapter that lets you use your TV as a monitor.

Also missing is the one year of free Internet access that was included with its popular Webzter PC. "If you are going to sell an Internet device, it is key that you bundle the Internet into the deal," comments Lucas Graves, Jupiter Communications analyst.

Greg Mead, director of business development at Microworkz, says that out-of-the-box Internet access will be available for $19.99 a month from at least one unnamed partner.

Cutting Corners to Cut Prices

Because the iToaster uses a proprietary operating system based on Linux, the company says, it doesn't support any Windows applications. Nor does it support browser add-ons such as Macromedia's ShockWave, Real Networks' Real Audio, or Apple's QuickTime player.

The iToaster does come bundled with its own spreadsheet, word processing, e-mail, and Web browsing software. Mead says that by leaving out Microsoft's operating system, Microworkz has cut the cost of the iToaster in half.

The device also can turn on and off almost instantly, Microworkz says.

To subsidize the cost of the system, 20 not-yet-named e-commerce partners will "own" high-profile Internet shortcuts on iToaster's desktop pointing you to their Web properties. The desktop will not be customizable, Mead says, nor can the computer hard drive be reformatted to run the Windows operating system.

Stumbling Out of the Gate

Microworkz originally made a splash last April when it was overwhelmed by a stampede of eager PC buyers anxious to buy its super-cheap $299 Webzter PC. Demand proved greater than Microworkz's ability to deliver and the fledgling PC maker was forced to delay and cancel some orders.

"We got an education in a hurry," says Mead. "We learned our lesson and got busy."

This time around the 135-employee company says it will ramp up slowly to meet demand. Starting July 13 no more than 10,000 iToasters will be available direct from the Microworkz Web site. Based on the success of sales, the iToaster should be available in retail stores by the holidays, it says.