AOL PC giveaway - not you Brits...

AOL's latest strategy, to give away low-end machines to its high-end CompuServe users, has experts baffled. Oh, and unless you live in America, you can forget about replacing your PC with a freebie...
Written by Jane Wakefield, Contributor

The free PC bonanza soon to be enjoyed by new CompuServe customers in the US will not be coming to the UK according to AOL. Experts agree UK surfers will be paying for their PCs for some time to come.

Under the PC giveaway deal announced Wednesday by America Online, new CompuServe subscribers in America will get a free system from eMachines worth around £250. In return, customers will sign up to CompuServe -- at a cost of $21.95 (around £13) per month -- for the next three years.

Microsoft is offering a similar deal with its MSN service in the US. Microsoft UK knew nothing about the giveaway deal and the US office was also unaware of the offer. A spokesperson said she wasn't sure, but a similar offer in the UK "is very unlikely".

Experts are not surprised such campaigns will remain US only. "The markets are very different and it is by no means inevitable AOL will pursue the same policy in Europe," said Noah Yasskin, analyst with research firm Jupiter. "In the US the market is reaching saturation point, whereas in the UK there are still a large number of PC households not online. In the UK, free PCs are not as important as getting these households online," he said.

Experts agree that this, coupled with different access models -- Americans are charged a flat-rate subscription fee, UK customers pay per minute -- will prevent ISPs from jumping on the free PC bandwagon. "It would be risky for UK ISPs to get their money back," said IDC analyst Mikael Arnbjerg. "In the US they have to pay a subscription anyway so a free PC is an added incentive. In Europe consumers wouldn't think of it as getting a free PC but rather as buying a PC in instalments," he said.

Senior IDC analyst Ken Fraser agrees it is free access, not free PCs that will remain the marketing strategy in the UK. "At the moment UK ISPs are heading down the free access road and I think that is where it will stay," he said. If AOL do offer giveaway deals in the UK it will not be PCs he predicts. Instead, in line with its 'AOL, Anywhere' strategy, the ISP is more likely to offer free or subsidised handhelds or a dedicated high-performance Internet box to UK customers.

If AOL prides itself on its 'AOL, Anywhere' strategy, its attempts to pursue that strategy could fairly be described as all over the place. Last week's U-turn on free access, followed by its decision to offer cheap PCs to its high-end clients (CompuServe has always been positioned as a premium service for premium customers) have left experts baffled. "I wouldn't have thought bottom-end offerings would be ideal for the CompuServe user base. I don't know why they are doing it," said IDC's Fraser.

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