The Microworkz Website was quickly overwhelmed by people making inquiries or placing orders for the machine, which was called the Webzter Jr, says a report in The New York Times. Within weeks, the company had taken orders for thousands of systems, and Latman told eager buyers he could deliver 100,000 units in the first round of shipments.

The announcement struck such a clear chord with consumers that other start-ups quickly offered their own free or nearly free PCs combined with Internet service.

But many analysts and competitors said the Microworkz offer sounded too good to be true. And in hindsight, it was.

Since the announcement of Webzter Jr, the company has been accused of bad management, shabby service and failure to deliver machines that had been paid for.Earthlink Networks, the Internet service that was a key component of the Webzter Jr. deal, terminated its agreement this summer and filed a lawsuit accusing Microworkz of breach of contract.

Microworkz eventually killed the Webzter Jr, and Latman announced last month that he was stepping down as president. The company has hired an interim chief operating officer and is conducting a search for a president.

The Better Business Bureau of Western Washington and Oregon has received dozens of complaints about the company's failure to deliver orders within 30 days, and Latman says that both the attorney general's office in Washington state and the Federal Trade Commission are investigating the matter.

Latman, whose career has included stints as a bond trader and owner of a small bridal business that failed, attributes his company's troubles to the surprising demand, unseasoned management and Earthlink. ``We're just a small company with a great idea that got burned and is trying to rebuild itself,'' Latmansaid.

But Latman, who remains the Microworkz chief executive, also acknowledges that he blundered by charging credit cards long before orders could be filled. ``We were in violation of the FTC's 30-day rule, which we didn't even know about-that's how novice we were,'' he said. To make matters worse, Latman says, several employees stole from Microworkz by crediting their personal credit cards rather than the customers' cards.

But he insists his company can refocus on the new product he hopes will save it: the iToaster, a $199 Internet device that uses a pared down version of the operating system. The company began taking ``reservations'' for iToasters in mid-July, but did not start charging credit cards until the week before the product began shipping in very limited quantities on August 15.

Today, Latman says, Microworkz is filling orders within a few weeks, though the company is about to switch from direct sales on the Web to retail warehouse chains.

For Internet access, the company signed a deallast month with AT&T Global Networks valued at $300 million to provide a service subsidised by on-screen advertising. An AT&T spokeswoman, Janet Wyles, said it was a simple pay-for-service deal, adding, ``AT&T has a contract and we expect to be paid.''

Latman acknowledges that it will be some time before the company is able to untangle Webzter Jr orders, the value of which he declined to reveal. Meanwhile, his staff has shrunk from nearly 200 earlier this year to 65, though Latman says much of that is because of the outsourcing of iToaster manufacture.

End of retail stores

It marked the end of an era in Washington. The other shoe fell at Hechinger Co. last week, effectively marking the end of an era in Washington retailing, writes The Washington Post.

One by one, starting with three major drugstore chains in the 1980s, all but a few once-prominent names in local retailing have fallen victim to stiffer competition or management's seeming inability to respond to rapid changes in theindustry and consumer preferences.

Home-grown companies whose names had become household words to several generations of Washingtonians-People's Drug Stores, DrugFair, W Bell & Co., Garfinckel's, Raleigh's, Woodward & Lothrop and now Hechinger-have become little more than footnotes.

Sixty-three years after Giant Foods opened its first store in the district, it continues to be the leading supermarket chain in the area. But not even Giant, though still operating under the same trade name, is the company that it was two years ago, having been sold last year to a Dutch conglomerate.

Hechinger truly was the last local retail icon to achieve prominence under the guidance of its founding family. And even though the Hechinger family sold the home-improvement chain two years ago, last week's announcement that the new owner plans to liquidate the company surely must be a painful blow to the descendants of founder Sydney Hechinger. The fall of the house of Hechinger is in many ways a tragedy. But it is more a signof the times than the consequence of the greed, arrogance or internal feuding that eventually toppled some local companies.

Although once the trendsetter among home improvement chains, Hechinger eventually lost sight of a trend: Smaller retail chains are being swept aside by industry giants with deep pockets and voracious appetites for expansion.

Hechinger's demise actually began at least four years ago, when back-breaking competition forced management to close several stores and retreat from North and South Carolina.

Same-store sales, a key measure of a retailer's performance, were either negative or essentially flat throughout 1995. Hechinger clearly was beginning to feel the heat of competition from its two biggest rivals, Home Depot Inc. and Lowe's Co. Even competing in its own backyard became a struggle for Hechinger.

As it turns out, Hechinger's former management made at least four major mistakes from which the company never recovered. First, management badly misread the market when it venturedoutside the Washington region. Then it failed to adapt soon enough to merchandising strategies that were being employed successfully by its chief competitors.

Finally, Hechinger lost sight of what had made it a strong regional chain: quality service, strong inventory and innovation.

But in the final analysis, Hechinger wasted too much time and resources trying to be too much like the ubiquitous warehouse retailers instead of reinforcing its own niche by being Hechinger the innovator and trendsetter.