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eMachines turns up in Europe with Dixons

What does this mean for Packard Bell?

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eMachines, the US vendor of bargain basement PCs, is turfing into Europe on the back of the Dixons retail chain.

Dixons will flog eMachines kit in its 850 stores in the UK and Ireland, and through its other retail chains in Denmark, Sweden, Finland, Norway, Spain and Portugal.

Dixons will also have exclusive eMachine wholesale rights to retailers in European countries where it does not operate stores.

The deal represents a big coup for eMachines, especially in the UK, where Dixons is the dominant high street force in computer retailing.

But what does it mean for Packard Bell, the loss-making retail PC maker which has put all its UK eggs into the Dixons basket? The company may find it has a fight on its hands with eMachines. At last it has a rival which looks like it is willing to lose even more money to secure shelf space with retail giants.

Founded only in 1998 by two Korean companies, Trigem and Korean Data System, eMachines was the US' third biggest seller of PCs in 1999, according to market research firm PC Data.

However, it isn't doing so well this year. Unit shipments for Q2,ended July 1 2000 were 326,000 units, a 29 per cent slump from the second quarter in the prior year, and a decrease of 37 per cent from Q1, 2000.

Q2 revenues were $124.5 million, compared with $213.9 million in the second quarter of 1999. The average selling price for its PCs in Q2, 2000 were US$501, down from $566 in the previous quarter. ®

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