eMachines was a maker of low-cost home PCs based in Irvine, California. It employed about 135 employees and sold between 1 and 2 million computers per year, before its purchase on January 30, 2004 by rival Gateway Computers, who purchased the company in an effort to return to profitability.
The company appeared in September 1998 as a joint venture between Korean monitor maker KDS and Korean computer manufacturer TriGem, announcing models at price points of $399, $499, and $599, all without a monitor. At the time, few PCs sold for less than $699, and $999 was a more common price point for entry-level PCs. The first units shipped in November of the same year. eMachines PCs quickly became common in retail stores and touched off a ruinous price war involving Compaq, HP, IBM, and Packard Bell. eMachines PCs were frequently offered with large rebates, provided the consumer signed a long-term contract with an ISP, driving down the price further.
In 1999, eMachines introduced the eOne , an all-in-one PC manufactured by Japan's Sotec that closely resembled Apple Computer's iMac. Apple quickly sued and the eOne was withdrawn from the market.
By early 2000, eMachines was the fifth-largest seller of PCs, in terms of volume, in the world, and had driven Packard Bell and IBM, as well as several smaller value-oriented vendors, from the US retail market.
In March 2000, hoping to further cash in on the dot-com boom, eMachines filed an Initial Public Offering with its share price set at $9. But with thin profit margins and declining sales due to a souring economy, the company quickly started losing money and received a threat of being delisted by NASDAQ in late December 2000. Its stock price, which had peaked at $10, had fallen as low as 14 cents. The company went private in December 2001.
Continuing price pressure from eMachines, along with Dell's aggressive pursuit of the home computer market, contributed to the merger between HP and Compaq. At the end of 2003, eMachines was the #3 personal computer maker in the world, in terms of sales figures, behind Dell and HP.
eMachines PCs historically fared poorly in service and reliability surveys conducted by PC World and PC Magazine.
On January 30, 2004, Gateway announced its intent to purchase eMachines for $30 million in cash and 50 million shares of stock, valuing the deal at approximately $234.5 million. The deal called for Wayne Inouye, eMachines' CEO, to become CEO of Gateway, displacing founder Ted Waitt.