July 19, 1999
What’s the meaning of free PCs?
By Bob O'Donnell
I have to admit I had some serious doubts about the notion of free PCs
when the idea first exploded onto the scene, but given all the recent
activity in this area, my doubts have now been crushed. A crowd of no less
than Microsoft, Micron and PC retailers CompUSA, BestBuy and Circuit City
all joined the fray in the last few weeks, further legitimizing what still
seems like a strange idea to me. But the truth is, everywhere you look,
you can now find a free PC offer from somebody.
So, given that free PCs are going to be more than just a flash in the
pan, what exactly does their appearance mean? For example, whose
"buying" these things? (And, has anyone who signed up for one
received it yet?) Is anyone going to make any money on these deals?
Finally, how will free PCs impact the sale of "not-free" PCs? I
mean, why should I pay for something I can get for free?
If nothing else, the free PC phenomenon marks the final (or first?)
step in the computer industry’s transition away from being a products
industry and towards being a service industry. Like it or not, PCs are now
nothing more than commodities whose specific makeup matters little to even
some fairly sophisticated users. It also solidifies the all-important
position of the Internet as the primary reason for owning or using a PC.
As for the market for these devices, logically, one might presume that
lower-income households that couldn’t previously afford a PC will now be
able to get one as a result of these deals. However, I’m not sure that’s
really what’s happening. First of all, many of the initial offerings
were made via web sites where, presumably, you already needed a computer
to get there. Given that, I’m willing to bet that the vast majority of
these initial free PC offers were gobbled up by people looking to replace
their existing PC or add a second one to their home.
I also wouldn’t be surprised if the same people signed up for all of
these different services. I mention this because despite reports of
immense interest in these offers, I’ve yet to talk to anyone (even with
my weekly computer talk radio program)who actually signed up for one. (I
also spoke with an ABC-TV consumer reporter in San Francisco who had the
same experience.)
Of course, part of the problem now is that the each new free PC deal
tries to outdo the others so that, frankly, some of the initial offers don’t
look very attractive anymore. The advertising-laden FreePC, for example,
which gave the phenomenon its name, seems even less appealling now than
when it was first introduced.
I also have to wonder how many—if any—of these companies can
survive. Given all the competitive offers now available, particularly from
established retail vendors, I don’t see how any of the no-name
Internet-based companies can hope to survive. (Of course, many of the
computer-savvy people who signed up for these free PCs are probably
counting on that and hoping to keep the machines without having to have
paid for the full contract.)
The one truly unknown issue is how these free PCs will affect the sales
of PCs that aren’t free. On the one hand, the old adage of "you get
what you pay for" probably still rings true for PCs, but today’s PC
hardware has so far outstripped the needs of most software that virtually
any computer can run any application that users need. And as for Internet
speed, we all know that the only thing that really matters is the size of
the pipe, not the capabilities of the PC to which it’s connected. So,
the impact on regular PCs could be fairly severe.
Ultimately, I’m hopeful that the free PC movement will in fact lead
to a wider range of households having PCs and Internet access, because we
could all stand to benefit from everyone’s contributions. In the
meantime, however, I think it’s going to be nothing but a big mess.
©
Copyright 1999, by InfoWorld Publishing Corp., a
subsidiary of IDG Communications, Inc. Reprinted from InfoWorld,
155 Bovet Road, San Mateo, CA 94402. Further reproduction is
prohibited.
