Veitch Speaks: It's a free world

With more free online services on the way, universal access to the Internet will change the way products and services are bought forever, says Martin Veitch

The fuss over Free-PC.com, the site that is giving away PCs with Internet access, proves that nothing in marketing succeeds better than the perception of a bargain. When all the hype has gone quiet, the success of such giveaways will have a very real effect on the UK, providing a wired mass audience that will make e-commerce and many other digital dreams come true.

Despite all the talk about security and bandwidth, lack of customer access remains the number one problem for companies selling products and services online. There just aren't enough people out there with a computer on their desks and still fewer with access to the Internet. Less than half the percentage of UK citizens are on the Web than US citizens. The US has five times our population. When some politician asks why we haven't become an e-commerce Mecca, the American suggestion comes to mind: 'Go figure.'

A large part of that access problem is about to go away. PCs are cheaper than ever before even though we've probably hit the plateau; microprocessor prices could still fall a little more but RAM prices are heading north. For the first time ever, the average selling price for PCs in Europe last year was lower than in the US, according to Intel who should certainly know.

Whatever the vagaries, the fact is that personal computers are cheaper than ever and I believe that we will see a lot more ideas along the lines of Free-PC.com, a site which picked up 1.2 million unique visitors despite the catch that you get bombarded with ads and have to divvy up some personal data. As set-top boxes capable of Internet access are given away by broadband service providers, there is no reason why we shouldn't see Net access numbers multiply.

In the UK, the Dixons FreeServe free Net access service has proven a watershed. We may pay over the odds for local phone calls but now we can all get free Internet service provision. Even if you don't believe the seven-figure user numbers quoted by FreeServe, a quick glance at the email addresses on the letters pages of broadsheet national newspapers points to the popularity of the service among the highly desirable ABC1 segment of society.

The example has been followed by Virgin, Tesco and others. In computing these things never go back; free Internet access is here to stay and will make a big difference to the number of people who are online. As Virgin hopes to show, the push now must be to provide better front-ends and free content on these free portals.

These are exciting times for anyone who wants to sell products over the Web. Once, the potential buyers were early adopters who probably bought into VCRs when Betamax was king and piano-sized was the format. The new audience will buy mainstream products and will be looking for value. The impact of this change in audience size has attracted little comment but will be more important to the future of e-commerce in the UK than government policy or the onset of broadband communications through DSL and cable.

The demographics and numbers are highly attractive and the net result is that according to IDC figures, there will be more Europeans on the Web by 2002 than US citizens.

The principle being applied here is the age-old one of using loss leaders to increase overall sales -- it continues in mobile phone rental and supermarket loyalty card schemes. The data you provide to get your free email, free Net or free PC is gold dust to the vendors and service providers figuring out their futures in a wired world. Some will see it as an invasion of privacy; I prefer to think that everybody will be a winner.