If you thought the sub-$500 PC was a threat, keep looking over your shoulder because one local assembler is close to announcing Australia's first "free" PC.
Phillip Tran, sales and marketing director for the Australian operation of Asian-based Compucon Computers, last week revealed plans to emulate a "Free PC" offer that attracted 3500 orders in the first two days in Hong Kong.
"We are aiming to market a fully-functional PC with no up-front cost and just a $40 to $50 monthly fee for Internet connection," Tran said. "We are looking at several options in the way that we will take this to market, but it will most likely be an exclusive deal with a major national retailer."
Tran said Compucon derives its purchasing strength from Asia-Pacific operations across six countries which enable it to deliver systems superior in performance to similar low-entry price offers from Harvey Norman and Tandy Electronics.
The system Compucon marketed in Hong Kong included a Celeron 333 processor, 32MB Ram, 4MB graphics, 3.2GB hard drive, internal modem, sound card and Windows 98. The monthly ISP charge was $HK148 ($30) with a 15in monitor pulling a further $HK20 ($4).
While the company acknowledges there is no sales tax on computer hardware in Hong Kong against an average of 18-19 per cent in Australia, Compucon claims it has still managed to make the equation profitable.
In Australia, the company will aim to use Celeron 366 processors and include a monitor in the package, Tran said. He indicated, however, that Compucon may only be able to negotiate 50 hours of Internet access per month rather than unlimited access.
"We have proven the concept to be successful in Hong Kong and are almost ready to get an offer happening here," he said. "The important thing is to have no up-front charges and to keep the monthly fees under $50. We are sure we can do that.
"We are targeting first-time buyers and first-time Internet users. There are lots of people out there in the SOHO market who are wanting to upgrade from old 486s and such. They will find this offer very attractive and the computer good value."
Logan Ringland, market analyst with research company IDC, said he was sceptical of "Free PC" offers and likened them to mobile phone deals that lock subscribers into long-term service contracts which easily cover the cost of the hardware.
"Prices will never get to zero without there being strings attached," he said. "There are already rental finance and other deals such as Gateway's that turn the PC into no more than monthly payments with no up-front cost, but they are not free."
Ringland sees the convergence of communications and the emergence of companies with pay-TV, phone services, ISP and hardware interests as being a catalyst to all sorts of market changes.
"With that sort of scenario, maybe it is possible that one of these companies will start throwing in a PC for free if you sign up to several of their services," he said.