Two new offers of PCs bundled with Internet access in the US represent what is becoming a growing - and some say alarming - trend.
US company DirectWeb is offering unlimited Internet access and a free PC to 25,000 people in Philadelphia with an eye to eventually gaining revenue from electronic commerce transactions.
Its customers will not be subjected to always-on advertisements, as are takers of at least one other free-PC offer, the company said. Instead, customers will pay a monthly subscription fee ranging from $US19.95 for a PC running a 333MHz Intel Celeron chip to $49.95 for one with a 450MHz Pentium III chip.
For $19.95 per month, customers will get a Windows 98-based computer from Ingram Micro, featuring an Intel Celeron 333MHz processor with 64MB of RAM, a 6.4GB hard disk, a 32x CD-ROM and a 15in monitor. At the top end for $49.95, customers get a computer with a 450MHz Pentium III processor, 128MB of RAM, a 10.2GB hard disk, DVD 6x and a 17in monitor.
Revenue from subscription fees
"We will deliver advertising where appropriate and not overwhelm subscribers," said Glenn Goldberg, vice president of marketing at DirectWeb. "The bulk of the revenue will come from subscriber fees. Over time, as our users become more familiar with the Internet and as we grow, we will shift the emphasis of our revenue over to commerce."
The company envisions receiving a percentage of every transaction its subscribers make online, and eventually making money from subscribers using a DirectWeb credit card which is in the works, Goldberg said.
Meanwhile, Gobi, a New York-based PC and Internet solutions company, has debuted a US-wide service that offers unlimited Internet access and a full-featured computer for $US25.99 per month, plus a one-time setup fee of $29.99.
The company promises to ship its customers a new system every three years and upgrades to key features, such as cable modem access, as they become available.
"We want to make personal computing as simple and affordable as cable television," said Ganesh Ramakrishnan, Gobi's chief executive.
The service includes a 300MHz Celeron-based Solectron PC, a 15in colour monitor with speakers, a 56Kbps fax modem, a 40x CD-ROM drive, and preloaded Windows 98.
But Gobi dissociates itself from the free-PC hype. "We're not like Free-PC.com," Ramakrishnan said. "We are not giving away computers. We feel that is somewhat of a flawed business model predicated on expectations that may not be realised. We would rather emphasise a sustainable model that focuses on the simplicity of acquisition and use."
There are a few catches, however. Gobi customers must sign a three-year contract with cancellation penalties commensurate with the length of membership: $699 after one year, $499 after two years, and $249 after three years. But Gobi customers who prematurely opt out of the service agreement keep their PC and all peripherals.
In February, California company Free-PC.com announced plans to give away 10,000 Compaq Computer Presarios with free Internet access to customers willing to provide the company with detailed private information about themselves. The company planned to ship the 333MHz computers with software to monitor how the PCs are used and to display advertising in borders around the 15in screen, whether the system is online or not. The company was barraged with orders within the first days of the offer.