Australia's much-hyped "free PC" marketing campaign has found a niche in the retail landscape, but failed to live up to its revolutionary dreams.
Whilst retailers agree first-time PC buyers have jumped on the bandwagon, slower than expected sales have forced some to realign their expectations.
Tony Gattari, Harvey Norman's outgoing general manager, computers and communications, said the campaign was "a great exercise" but indicated the initial drive has started to die down.
"The concept is not going to revolutionise the market as a lot of people thought it would," Gattari said.
"It was successful to the point that we sold a number of PCs and got a hell of a lot of customers into the store," he said.
Harvey Norman plans to continue its Free PC offer, but has realigned its expectations. "Our forecasts are more realistic now and we're happy about that," said Gattari.
The Free PC model won't do for computers what access-style contracts did for the mobile phone market, he added. In fact, he described the sales model as an initiative designed to test the market. As a result, Harvey Norman discovered customers are reluctant to get locked into 36-month contracts based on concerns over technology obsolescence and the possibility of rising ISP charges.
"Those resellers who were worried that it would totally alter the dynamics of the market have nothing to worry about," Gattari said.
"I think it's only going to expand the market by about 10 per cent and it will become a very niche way of selling PCs."
Overall, consensus in the industry seems to be that low-cost PCs bundled with Internet access are good for first-time users.
"For first-time users it's still a good way to buy a computer," said Ian Bertram, PC specialist and prin-cipal analyst at market researcher GartnerGroup. "It eases them into it," he said.
Peter Geer, buyer for Myer Grace Bros (MGB), said demand for the company's low up-front cost Hewlett-Packard Pavilion PC bundled with Internet access exhausted stock supplies earmarked for the promotion ahead of the forecast timeframe.
"It's a good model which revved-up the whole [computers] section. People coming in for the PC Internet deal also picked up other things while they were here," Geer said.
While MGB's Big Net Set promotion is finished, Geer said the retailer is looking to announce similar promotions in the future.
Contract flexibility and a wider scope of hardware/software offerings would be explored, he added.
Geer felt new users needed a lower entry point than "unlimited" Internet access. "The value is very apparent if you've used the Internet before. I think offering access on a limited-hours basis for a lower cost with the option to upgrade would be good."