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Louis Proyect lnp3 at SPAMpanix.com
Tue Dec 7 14:59:37 MST 1999



>Any ideas/suggestions?
>
>José

I think you are the victim of Free PC economic collapse. Have you seen the
Gateway TV commercial about how nobody's really seen a Free PC. Well, I
guess they didn't know that there was one person at least who got one, Jose
Perez in Atlanta. The problem is that this sector of the industry was even
more dicey than all the dot.com tulip bubble startups.

===

The New York Times, November 30, 1999, Tuesday, Late Edition - Final

No More Giveaway Computers. Free-PC to BeBought by eMachines.

By SAUL HANSELL

As it turns out, there is no such thing as a free PC.

Free-PC.Com, one of the most audacious experiments in advertising, said
yesterday that it would no longer give away computers and Internet access.
Rather it has agreed to be acquired by eMachines, a maker of low-cost
personal computers that intends to use Free-PC's software to put
advertising on the screens of its computers and to collect data about what
users do.

Free-PC's original business plan was to give away computers in exchange for
being allowed to send on-screen ads to its users and to gather data about
users' Internet surfing and PC use habits.

Terms of the deal were not disclosed. Both Free-PC and eMachines are
private, although eMachines has filed for a public offering that it hopes
to complete early next year.

The sale reflects a sharp turn around for Bill Gross, the chairman of
IdeaLab, a Pasadena, Calif., company that has been involved in dozens of
Internet start-ups, including eToys, Goto.Com and Ticketmaster-Citysearch,
as well as Free-PC.

Mr. Gross, a peripatetic entrepreneur, once boasted that Free-PC would
someday be bigger than Microsoft, according to people he had tried to
recruit as investors. His idea was to turn the computer from an appliance
into an advertising-sponsored medium, much like network television.

To get a computer from Free-PC, users were to fill out a detailed financial
and demographic survey. Strips on two sides of the screen were always
filled with advertising. And everything done with the computer, including
which Internet sites were used, would be monitored so that advertisers
could aim ads specifically.

Analysts said that Free-PC needed to take in $30 a month per user in
advertising to cover the cost of providing the computer and Internet
access. That is a high hurdle, particularly with such a small base of
users. More than a million people applied to get the free PC's, but as of
yesterday the company had delivered only 30,000 machines.

Mr. Gross said that he had not been looking to sell the company, but that
when eMachines approached him he decided that selling would be more
lucrative than a business model that was developing very slowly.

"We believed that to get the business model to work we needed at least one
million users," he said. "We were scaling as fast as we could, but at
10,000 a quarter, we couldn't get to one million fast enough."

In the year since it sold its first computer, eMachines has become one of
the largest PC makers in the country by focusing on machines in the $400 to
$800 price range. Since several Internet service providers are now offering
$400 rebates for people who commit themselves to three-year contracts, its
lowest-cost models appear to be free. Of course, the user then must
typically pay $22 a month for Internet service. Free PC's Internet service
was also free.

Stephen A. Dukker, the founder and chief executive of eMachines, said the
company had no interest in giving away computers.

 "Our business model has caused people like Packard Bell and I.B.M. to
throw in the towel," he said, alluding to recent decisions by those
companies to pull out of the low-end PC market.

In October, eMachines was the No. 3 computer maker, after Compaq Computer
and Hewlett-Packard, with 12.4 percent of the market, according to PC Data.






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