Western Digital Stays Xbox Course, Despite Rumblings
EMachines Starts Selling Online; Struggling Aspeon Sells Off Javelin System
TECHNOLOGY
by Andrew Simons
Should Western Digital Corp. be worried about its pact with Microsoft Corp.?
Recent word that sales of Microsoft’s Xbox video game console may fall short of expectations could have some at the Lake Forest-based disk drive maker watching their own sales closely.
Western Digital, along with rival Seagate Technology Inc., supplies Microsoft with drives for the Xbox.
Two analysts who follow contract electronics maker Flextronics International Ltd.,producer of the Xbox for Microsoft,recently said output of the console had slowed from a brisk start around the holidays when 75% of retailers carrying the console sold out.
Microsoft had estimated it would sell 5 million Xboxes this year. After Xbox enters more markets, the number was expected to double, though Microsoft hasn’t commented on numbers beyond next year.
The trouble could come down to competition. A survey by Goldman Sachs Group Inc. found retailers showed a “surprisingly clear” preference for Sony Corp.’s PlayStation 2 vs. the Xbox.
Western Digital doesn’t seem worried. The company says it has shipped all the drives Microsoft has asked for so far.
“I would be surprised if anyone here is concerned about it,” spokesman Steve Shattuck said.
With Seagate also supplying Xbox drives, the pressure is on Western Digital to get the parts to Microsoft on time. The most immediate gain for doing so would be to wrest Xbox market share from Seagate.
In time, Western Digital hopes to become the premier maker of drives for game consoles. When Sony Corp. and Nintendo Co. put hard drives in their game machines, Western Digital hopes it’ll be the first company they’ll go to.
EMachines Gets Colorful
Irvine’s eMachines Inc. recently unveiled a line of personal computers sporting a new design. The computers, similar to its other products, feature a new two-tone encasement.
The designs are the company’s latest effort to boost sales of its personal computers and follow similar moves from PC makers such as Compaq Computer Corp. and Hewlett-Packard Co.
“The premium look and feel of our new design places us on par with any PCs currently on the market,” Chief Executive Wayne Inouye said.
EMachines has made other moves to boost sales and cut costs. Four months ago, the company said it would start letting customers buy computers directly from its Web site. Before, the company only offered links to retailers selling eMachines computers. EMachines ships out of a huge facility in Irvine.
Last year, eMachines was sold to a subsidiary owned by eMachines director Lap Shun “John” Hui. Founding Chief Executive Steve Dukker resigned from the company after it had fallen on hard times amid a slowing economy. Inouye took his place.
Aspeon Sells Unit
Irvine-based Aspeon Inc., a maker of software and point-of-sale systems for fast-food chains and other customers, made another move to raise cash. The company recently said it sold British unit Javelin System Ltd. to an undislosed European investment bank.
“In addition to providing working capital for Aspeon Inc., this transaction has the benefit of permitting the UK companies to have a broader product offering,” Chief Executive Robert Nichols said.
The company lost $2.5 million in the most recently reported quarter.
In the past year and a half, Aspeon has looked to sell off several businesses to raise money. Last year, the company couldn’t close on the sale of its foodservice application service-provider business.
The company said the failed sale fell through “due to the inability of the parties to agree on acceptable terms.”
Aspeon didn’t name that potential buyer, but said it was looking for the sale to bring in $3.5 million.
The company’s stock traded as high as 30 last year only to fall to penny-stock status and be delisted. It now trades for around seven cents on the low-profile over-the-counter exchange. The company’s application service provider operation once was touted as its savior.
GameColony Branching Out
Newport Beach’s GameColony.com Inc., an online host of card tournaments and other games, has launched an affiliate program that allows other Internet sites to put GameColony’s offerings into their sites. Under the program, GameColony will reward its affiliates with 20% of the fees from any referrals.
“We offer a common forum for a growing number of players from all over the world to engage in healthy and entertaining online competition,” said Leonard Shneyderman, GameColony’s chief executive.
