AOL is to offer UK customers inexpensive PCs, the company announced Thursday.
Under the deal UK CompuServe customers will get 25 percent or £250 off the cost of a £999 Pentium III Fujitsu Siemens PC. Alternatively a Celeron 433 PC is available for £599 with a cashback payment of £150. In return users will have to sign up to CompuServe -- with a monthly subscription of £7.50 -- for a minimum of three years.
The Fujitsu Siemens offer is one strand of a deal AOL has undertaken with Intel to increase PC penetration across Europe. AOL will get together with a variety of PC manufacturers over the winter to provide Internet-enabled machines to both first-time and experienced users.
"Our agreement with Intel will make putting a computer in your home as commonplace and as straightforward as buying a new telephone or TV," said president of AOL Europe Andreas Schmidt.
Schmidt lost no time attacking Dixons' PC prices. According to a report in the Times newspaper he described the retail giant -- which has an 80 percent share in rival free ISP Freeserve -- as a "dominating retail force".
Dixons hit back at the claims. "We offer the lowest PC prices in the UK," a Dixons spokeswoman said. "The Office of Fair Trading did a report recently and concluded that the market is competitive and consumers have a wide choice of retailers and outlets."
Nick Jones, analyst with research firm Jupiter believes the AOL offer is intended to boost the profile of CompuServe. "It is a technique AOL has tried in other markets and it is interesting they are using the CompuServe brand to deliver it. CompuServe has been on the back burner for a while," he said. Jones believes the offer will drive computer use, with CompuServe subscribers taking advantage of the chance to get a second PC for the home.
He also thinks Freeserve may hit back. "Dixons has been picking up flak for a long time for its PC prices. It is quite possible it will use the Freeserve brand to promote special offers on PCs," he said.