DirectWeb Offers US$30 PC-Plus-Internet Deal

SAN FRANCISCO (01/26/2000) - In the latest variation of the computer giveaway sales models, DirectWeb Inc. said today it is offering customers three years of Internet access, with a PC thrown in, all for US$29.95 a month.

Enrolled customers will receive a 450MHz IBM Corp. Aptiva, including IBM On Call Service for three years.

DirectWeb, which said the deal costs only $8 more than three years of Internet service from America Online Inc. (AOL), is being financed by MBNA Corp., a bank holding company.

Luring customers to sign up for the Internet by dangling low-cost PCs in front of them became a mini boom industry last year as companies rushed to find innovative offerings. Some, like FreePC Inc., which gave away computers in exchange for the right to use information about customers' buying habits, are no longer in operation.

Others, including PeoplePC, which sells a computer and Internet access for $24.95 a month, are viable operations today. In addition, established companies such as AOL offer a $400 rebate on eMachines Inc. computers for people signing up for a three-year subscription to CompuServe 2000 interactive service.

While the computer sales will make little or no money, DirectWeb plans to earn profits from subscriptions, referrals and annuities based on customer links to other electronic commerce transactions through DirectWeb, Dennis Cline, company president and chief operating officer, said today in a telephone interview.

DirectWeb is also bolstered in its strategy through the company's partnership with IBM, Cline said. "Customers are asking for high quality, so we are shipping them IBMs," he said.

Although there has been much interest from companies in the "free" or discounted PC sales model, the jury is still out on whether such a plan is truly viable, analysts said today.

"There are no clear winners," said Anne Bui, an analyst with International Data Corp. (IDC), headquartered in Framingham.

However, DirectWeb's relationship with IBM and MBNA links the vendor to companies with solid reputations and will ensure reliable PC supplies, Bui said.

Still, earnings will be years away, said Roger Kay, another IDC analyst. "A lot of these revenue concepts are dreamy," Kay said. "It's a pretty risky business.

But (DirectWeb) has seen the mistakes of the past."

DirectWeb, in Mount Laurel, New Jersey, can be reached at +1-888-929-2932, or at http://www.directweb.com/.

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