A Tabloid exclusive investigation has revealed a plot by one of Australia's biggest retail chains to derail the bundled PC/Internet - so-called cheap PC - business.

A routine investigation into one of the more interesting aspects of the channel business in 1999 has led Tabloid to expose what some would describe as a machiavellian scheme by none other than Harvey Norman to put an end to the `cheap PC and Internet bundles'. And in doing so, it continues to retain some control over the future of PC retailing, without recourse to subsidisation.

Sources close to Myer/Grace Bros (MGB) revealed that the June release of the proclaimed Big Net Set - the $299 HP Pavilion 4411 with Optus Internet access and a 36-month commitment of $79.95 per month - was a big flop. On finding out about the Big Net plan, Harvey Norman went about `tagging' the deal; that is, it made an offer that would cruel the Myer/Grace Bros pitch, sources claim.

It is a matter of public record that a week after the MGB offer was advertised, the indomitable Harvey Norman released its `Zero dollar' IBM Aptiva 11a combined with One.Net Internet access and a 30-month commitment of $79.95.

The total cost: $2398.50 compared to MGB's offer at a total cost of $3177.20.

Coincidence? One would find it hard to believe. But the immediate effect of the HN deal was to bring the whole bundled and Internet lock-in to a screaming halt. One source asserted that of approximately 7000 units ordered by MGB, the mass retailer was until recently sitting on more than 5000, when some of the stock was `dumped' at prices as low as $1299.

This was also at the time when Edge and eisa were claiming to be selling `thousands of Internet PC bundles per month' through Tandy and other independent resellers.

One industry analyst described the ploy by Harvey Norman as a stroke of genius, leaving its giant retailing nemesis `holding the bag - filled with HP Pavilions'.

No one at Harvey Norman will confirm or deny the plot, nor will they reveal how many of their `Zero dollar PCs' they really sold, and questions to HP and Myer/Grace Bros about its stock of Pavilion 4411s remain unanswered.

The bottom line is that the `cheap PC bundled with an Internet contract has, for now, gone the way of the 24x CD ROM - nobody wants it.

So Bill Gates buys a house . . .

Bill: There are a few issues we need to discuss.

Contractor: Ah, you have our basic support option. Calls are free for the first 90 days and $75 a call thereafter. It's been over 90 days, so, this'll cost you $75, okay?

Uh, yeah . . . the first issue is the living room. We think it's a little smaller than we anticipated.

Yeah. Some compromises were made to have it out by the release date.

Well, we won't be able to fit all our furniture in there.

Well, you have two options. You can purchase a new, larger living room; or you can use a stacker.

A stacker?

Yeah, it allows you to fit around twice as much furniture into the room. By stacking it, of course, you put the entertainment centre on the couch . . . the chairs on the table etc. You leave an empty spot, so when you want to use some furniture you can unstack what you need and then put it back when you're done.

Mmmmm, I dunno . . . Well, let's go on to issue number two: the light fixtures. The bulbs we brought with us from our old home won't fit. The threads run the wrong way.

Oh! That's easy. Those bulbs aren't plug and play. You'll have to upgrade to the new bulbs.

And the electrical outlets? The holes are round, not rectangular. How do I fix that?

Just uninstall and reinstall the electrical system.

You're kidding!?

Nope. It's the only way.

Well . . . I have one last problem. Sometimes, when I have guests over, someone will flush the toilet and it won't stop. The water pressure drops so low that the showers don't work.

That's a resource leakage problem. One fixture is failing to terminate and is hogging the resources preventing access from other fixtures.

And how do I fix that?

Well, after each flush, you all need to exit the house, turn off the water at the street, turn it back on, re-enter the house and then you can get back to work.

That's the last straw. What kind of product are you selling me?

Hey, nobody's making you buy it.

And when will this be fixed?

Oh, in your next house - which will be ready sometime near the end of next year. It was due to be ready this year, but we've had some delays . . .

Meet the Japanese channel connection

On a recent trip to Japan, a Tabloid reporter happened to bump into one of the leading lights of the local IT channel. Note the tell-tale pen collection and the ready-to-do-business-anywhere-anytime look. Like so many others in Tabloid's global network of spies, our newest source, who obviously cannot be named (we'll call him Sato san) is well placed to provide the inside running exclusively to ARN Tabloid readers.

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