The subsidised PC bundled with Internet access model has been given a solid testing over the last few months, and is now set to be cranked up a few notches by computer wholesaler Edge Technology and its Internet sibling Edge Internet Services Australia (EISA).
The current version of the deal is a choice of a $499 or $599 low-specification system (suitable for first-time buyers, or as a second system for the student in the house) and an extra commitment of $49.95 per month for 24 months for Net access.
From this month, we can expect a national advertising campaign, including TV, for the package promoted and fulfilled by well-known electronics store Tandy.
Peter Mackow, managing director of EISA, claimed that since launching the bundled package in February, they have supplied more than 5000 systems. Initially it was all done from direct responses to a national advertising campaign, but, according to Mackow, they were nearly overwhelmed by the response and decided to turn to the channel. "You can only handle selling so much yourself," Mackow said.
Consequently, EISA enlisted resellers familiar to it along with Edge to sell the systems on an agency basis for a commission that Mackow declined to reveal.
In much the same way that mobile phones have been marketed, selling a bundled PC with a contract to stay connected to a particular service is a matter of getting the sums right. With 5000 new PC customers on top of its base of thousands of other subscribers, it would appear that the Internet service provider knows what it will cost. And the deal with Tandy is expected to generate around 3000 more customers per month.
EISA, which is one of Australia's better known ISPs, has not been immune from the teething problems that the industry has suffered. When asked about the level of service, Mackow claimed quality was a key selling point. "With servers all over Australia, we are maintaining a national average of one line per eight customers, with a helpdesk team of 25 being increased by 10 at present," he enthused.
According to Mackow, where possible, EISA runs exclusively on Cisco internetworking equipment, and the forward projections for sales are making its Cisco sales representative laugh "all the way to his A4 Audi".
All you can eat
One interested observer is Steve Stuart, whose company Netpaq introduced the subsidised PC concept with Internet access to the Australian market with limited success. "History has told us that the 'all-you-can-eat' Internet deal [unlimited access] is difficult for ISPs to maintain at a satisfactory standard," Stuart said.
"Looking at the pricing and given that the systems are worth say $1000, it's hard to see how they will be able to sustain a reasonable service. Good luck to them if they can," he added.
While the current deal will continue to be available from "around 100 resellers across Australia", Mackow said that, of the major retailers, Tandy has it exclusively for two months.
And unless another supplier can bundle a system and Internet deal that matches or beats it, you can expect them to sign on two or three of the other majors after that.