Free PCs Boosting E-Commerce

An avalanche of computer sales sparked by the “Free PC” promotion between America Online and South Korean-owned eMachines is banishing the ordinary seasonal lull experienced by most electronics retailers this time of the year.

According to Reston, Virginia-based PC Data, computer sales have climbed 35 percent because of the giveaway promotion and other manufacturer’s rebates.

“Sales the last week of June more than doubled versus the prior week,” said Stephen Baker, PC Data’s director of hardware analysis.

Earlier this year, eMachines, a joint venture of South Korea’s Trigem Computer and Korea Data Systems, agreed to have all eMachines’ PCs loaded with easy access AOL and CompuServe, which is also owned by AOL. Under the promotion, buyers of eMachines receive a $400 (US$) rebate — which covers the purchase price of any of its three computers — when they sign up for a three-year membership to CompuServe.

So far, analysts say the promotion has been a win-win situation: eMachines reached No. 3 in U.S. sales for the first time ever — while AOL is quickly beefing up the membership of its existing 2 million CompuServe subscribers.

Two Other Big Winners

Besides these companies there are at least two other winners in the “Free PC” scenario: consumers and e-marketeers.

For the first time, market researchers are saying that half of all U.S. homes now have computers. Fueled by the wave of under-$500 models, it’s expected that many more of the estimated 40 million U.S. residents planning to go online will do so sooner rather than later, according to a study by Intelliquest Information Group.

In addition, consumers other than first-time computer buyers are benefiting from the promotion. The AOL/eMachines deal has encouraged other rebates which have helped to drive down the average cost of an Intel chip-powered PC to 20 percent below last year’s going rates. Moreover, even though they’re not giving their PCs away, Compaq, Hewlett-Packard and Micron Electronics are all offering deep discounts via rebates.

E-Commerce Marketplace Wins

The other big winner from the sudden skyrocketing PC sales is every e-marketer on the Internet. The more people who scramble to cyberspace, the more goods and services can be sold by those who are building their futures on the new economy of e-commerce.

Even though AOL’s CEO Steve Case was looking out for his own interests by launching the “Free PC” deal, it has directly benefited the whole e-commerce community.

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