Free PCs: The Price You Really Pay

SAN FRANCISCO (03/03/2000) - Our tests of half a dozen "free" computers show performance is middling and the price is far from zero.

The free PC sounds like a great idea. You get a nice, shiny new system sent to your doorstep, at little or no up-front cost. In return, you put up with a few on-screen ads or cleverly disguised marketing pitches. So how can a bargain-conscious consumer lose?

Look under the glossy surface of the latest offers of free or nearly free PCs, however, and you're likely to discover underpowered systems, long-term ISP commitments, undesirable privacy intrusions, and annoying on-screen advertising. To top it off, what you save in dollars you may lose via limited warranties and dubious tech support policies. In short, "free" may include hidden costs you're unwilling to pay.

But are all free PCs a bad deal? We tested half a dozen systems from EMachines, EPCdirect, Gobi, InterSquid, MyFavoritePC, and PeoplePC. Our conclusion:

So-called free PCs work best as entry-level computers for people who are more concerned with accessing e-mail and cruising the Web than with crunching spreadsheet numbers and editing digital video. But that verdict should come as no surprise. Computer-savvy users are more likely to push a PC to its limits, yet long for even more performance--which is something you simply can't get for nothing.

Free PCs in Free-Fall

The first generation of free PC companies found they had a lot to lose. Many couldn't make enough money to stay in business. As a result, Enchilada and Microworkz closed shop, leaving some customers waiting in vain for undelivered free PCs or stuck with no one to call for technical help. Another company, Free-PC, recently merged with PC maker EMachines and has no plans to accept new applications. Major desktop makers Hewlett-Packard and Micron--which briefly claimed to offer free or low-cost PCs--have withdrawn from that market to focus their efforts on producing higher-powered--and more profitable--models with traditional pricing arrangements.

The industry has grown less bold about touting these systems as free.

InterSquid still calls its machines "free," but PeoplePC refers to its program as a "buying community" in which the first deal a new member gets is a PC. The hype seems less pronounced at retail outfits, where vendors are beginning to offer $400 rebates on pricier PCs and notebooks if the buyer agrees to sign up with an ISP. And in some stores, these rebates apply to almost every piece of hardware on the showroom floor--from printers to refrigerators.

Despite their drawbacks, a few of these systems do have enough positives to earn a place in at least some homes. But if you don't weigh the pros and cons of signing a long-term contract before making the commitment, that no-cost PC could become a high-priced ball and chain.

A Web of Commitments

Free PC vendors use various schemes to give users no-fee PCs. Most variations involve rebates, ISP commitments, or both--and make you pony up a certain amount of cash. Some programs, such as the one that EMachines offers, require you to buy a low-priced system online or at a local retailer. Then you get a rebate if you sign up for three years of ISP service from CompuServe or Prodigy. InterSquid takes a more direct approach: Sign up for 30 months of PSINet's ISP service (at a high $30 per month), and it gives you a 400-MHz Celeron computer.

Unfortunately, a long-term Internet service contract--a commitment practically every free PC arrangement requires--can lead to months of frustration if things don't work out. Facing busy signals and slow connections? Sorry, you signed the contract. In our reader survey on free PC experiences, nearly 69 percent of our respondents said they were most put off by the long-term ISP deals.

ISP plans also lock you into a particular service at a time when the market is fluctuating significantly. If your free or low-cost system came via a rebate program, you're probably married to your ISP for the next three years.

(InterSquid's PSINet plan lasts six months less, and some programs let buyers choose from one-, two-, or three-year plans, with corresponding rebates.) As cable modem and digital subscriber line (DSL) services arrive nationwide, you may not want to get locked into a three-year commitment to an analog modem, especially if you can't switch without paying extra.

Some free PC vendors understand this problem. Gobi, for instance, says it may add a DSL option sometime this year. At press time, however, the company hadn't yet established whether customers would be able to switch in midcontract and how much making the change would cost.

If the ISP you agreed to use doesn't have a local number in your area, you'll have to pay toll charges. Vendor EPCdirect emphasizes this point by including on its Web page a warning window about toll charges. Big phone bills will quickly eat into any hardware savings you achieve.

Free PC vendors such as PeoplePC and Gobi give users a customized home page full of links to ads and promotions that encourage online buying. Gobi includes small advertising links at the top of the screen, too, but you can expand windows over them, so they don't take up useful desktop space. EPCdirect bundles membership in its parent company's online buying service, MyShoppingClub.

Other options from companies like Gobi and PeoplePC amount to loan agreements in which you promise to pay a certain amount per month for three years. In return, you get a 366-MHz PC, Internet service, and access to special "members-only" promotions and sales through a company's portal-like Web site.

These deals change continually. At press time, PeoplePC was offering a $100 bonus for joining the Etrade online stock trading service, $20 off any purchase of $50 or more at Art.com, and $10 off a first purchase at Buy.com. Another point: Read the configuration details carefully before you sign up. Some vendors (like EPCdirect and EMachines) don't include a free monitor in the deal.

Surveying the Free Range

We anonymously bought free PCs from some vendors and ordered review units from the others. We also conducted a survey of 3541 PC World readers to find out whether anyone uses free PCs. More than 90 percent of the 396 survey respondents who reported owning a free PC said they used it for e-mail, and 84 percent cited Web surfing. Just over 62 percent listed gaming as one of the main activities they use their free PC for. And not quite 55 percent said they use it for running office productivity software.

Readers who didn't own a free PC but who planned to get one intended to use it as a secondary machine, saving their primary computers for more important tasks.

But no-cost systems aren't suitable for everyone. Power users and serious game players would do better to select one of the low-priced PCs that appear on the budget side of our Top 15 Home PCs chart, for example. PCs in this price range carry surprisingly large monitors, ample hard disk space, and sometimes DVD-ROM drives. Free computers generally hail from the shallow end of the PC gene pool, mustering small hard drives, tiny monitors, weak graphics cards, minimal memory, and bargain-basement processors--hardly the ideal home for Quake III or Photoshop.

What Do You Expect for Nothing?

Scrutinize the fine print, and you may get the impression that most free PC plans are written by automobile dealers. None of the packages in this roundup, for example, offers customers a fully outfitted computer and monitor without any payment or shipping fees. Yet not infrequently they're marketed as free systems.

The logistics of acquiring a free PC can range from supremely simple to agonizing. In our experience, the online deals took minimal effort to consummate. We ordered a PeoplePC and a MyFavoritePC from the companies' Web sites, after supplying our shipping info, credit card number, and basic demographic data (such as birth date and household income). Both systems arrived a few days later, complete with all the documentation we needed to set them up and go online.

Our experiences at big-name home appliance stores were bumpier. Many retailers (including Circuit City and Best Buy) offer low-priced systems that become free--or nearly so--after you purchase incentives and ISP contract rebates.

When we tried to purchase a free EMachines system anonymously, we encountered salespeople who were often ill informed about the machines and the rebate deals. Worse, they pressured us to buy additional peripherals and extended service plans (in many cases, the standard warranty does not cover the length of the ISP contract). At least with online offers of nominally free PCs, a salesperson doesn't prod you to reach deeper into your wallet.

What happens if, four months after you get your free PC, high-speed DSL or cable-modem access arrives in your neighborhood? What if reliable ISP service drops to $3 per month in 2001? Can you revoke the remainder of contract? Not always--and certainly not for free.

A lot depends on the details of your contract. MyFavoritePC, for instance, lets you return the system within 10 days for a full refund (minus shipping charges of $60 to $113, usually). But that's generous by free PC standards. EPCdirect has you buy one, two, or more years of ISP service from MSN via a reduced-cost, lump-sum payment you make before receiving your system. If you purchase 49 months of service and then decide to switch ISPs before the contract ends, you won't get a refund.

If you want to cancel your CompuServe account after participating in one of its rebate programs, you'll have to remit a $50 cancellation fee and a prorated portion of the rebate (up to the full $400). With PeoplePC, you enter into a three-year loan agreement when you sign up (unless you prepay a lump sum for ISP service at the start). To end your contract early, you must arrange with the vendor to pay off the loan. So if you can't see sticking with any ISP for 36 months (or in the case of EPCdirect, 49 months), you're better off buying your own PC and signing up separately for Internet access.

Your Intimate Details

Just as you should read the fine print of your contract carefully, you should pay attention to the personal information required in exchange for a free PC.

Most companies are content with the basics: name, address, age, income, and credit card number. For some vendors, most information you supply is optional.

(Gobi asks for details about your age and income, for instance, but you needn't provide it to get your PC.) For others, such as PeoplePC and MyFavoritePC, submitting the information is mandatory unless you prepay. PeoplePC also requires you to divulge your Social Security number, since you're applying for a loan on the system.

Gobi promises to offer only aggregate information to its partners: Your name and phone number won't show up on telemarketing target lists. But other companies, such as EPCdirect, concede that they intend to sell the data to third parties that want it for solicitations.

All online companies that offer free PCs post privacy policies on their Web sites, telling you what will happen to personal data you enter. If you don't like what you see, try another free PC site, or buy a system outright and protect your privacy.

Out of the Box

Free PCs are aimed squarely at new users who can't afford or don't want to buy a PC the traditional way, so you might think they'd be designed for easy setup.

The ideal beginner's system should include a straightforward setup poster, color-coded ports and cables, and thorough documentation that covers all the basics of using a PC. Not one free system we tested met all three criteria.

InterSquid's system, for example, included a useful color setup poster, but its thin documentation assumes that users possess more technical knowledge than most beginners actually do. Even the system we found easiest to set up--PeoplePC's Toshiba V3100--came up short on useful information. It delivered a clear and interesting setup manual, but the documentation provided little help on basic PC tasks other than getting connected to (and shopping on) the Internet.

Free systems tend to provide extremely skimpy software bundles, too. None of the ones we reviewed comes with an up-to-date office suite such as Microsoft Office 2000. Instead, most offer a copy of the less powerful Microsoft Works, plus a virus scanner. Gobi and InterSquid go a step further by adding Corel's WordPerfect Suite 8 word processor (not the most recent version); PeoplePC throws in a copy of Intuit's Quicken 99 (not Quicken 2000); and EPCdirect includes Microsoft Bookshelf. MyFavoritePC dispenses with the formality of including outdated software altogether: It ships with the Windows 98 OS only--you must supply any other software you want yourself.

Free-PC Performance

Most free PC companies no longer use phrases like "cutting-edge" to describe their machines. That's wise, because standard configurations include CPUs ranging from Celeron-366 to -466 and RAM allotments of 32MB to 64MB. By the time you read this, however, beefier free PCs will be available, since many vendors update their systems' configurations every three months. The current specs overlap those on this month's Top 10 Budget PCs and the budget section of Top 15 Home PCs: The chartmakers carry CPUs ranging from Celeron-400 to Pentium III-550 and RAM amounts of 64MB to 128MB. But the worst performer among our Top 10 Budget desktops (a Polywell) scored nine points higher on PC WorldBench 98 than the fastest free PC (the EPCdirect), while only the slowest Home budget system lagged behind the free PC pacesetter.

Free systems are fine if you just want to use them to send e-mail, browse the Web, and write a few letters. But for serious multimedia use or high-impact gaming, you'll need extra horsepower.

Our test systems demonstrated satisfactory to outstanding performance on business and graphics tasks versus similarly configured nonfree PCs.

InterSquid's 400-MHz Celeron system from Nutrend performed especially well.

In some ways, benchmark tests are less revealing than hands-on experience. To get a feel for the EMachine Etower 366i2 and the PeoplePC Toshiba V3100 test systems, we ran a blind "taste test" pitting them against a comparable, nonfree Dell Dimension L466C (which costs $1229). Two people performed various tasks--from word processing to gaming to image editing--on each machine. The testers reported little difference among the three computers on basic tasks.

That doesn't make any of these systems fast in the grand scheme of things, however.

One major bottleneck in our tests was the video. To guarantee top performance in the latest games you have to use a high-end graphics card. But many of these free PCs use integrated AGP graphics from Intel and ATI. While speedy enough for basic tasks, these can't compete with the latest Voodoo3- and TNT2-class processors in 3D performance. And if they can't compete now, they'll be real dogs by the time your three-year contract runs out.

If the performance of your free PC fails to meet your needs, don't plan to upgrade your way out of trouble. None of the vendors whose free PCs we tested prevents you contractually from installing a new graphics card or adding RAM--but they don't make it easy, either. PeoplePC, for example, won't honor the system warranty if it determines that your upgraded hardware is responsible for a problem you later experience. Meanwhile, the systems that use integrated AGP graphics don't provide a slot for AGP upgrades; you'll have to settle for a lower-performing PCI graphics card, instead. Only the machines from InterSquid and EPCdirect include AGP slots.

Good Help is Hard to Find

Many free PCs find their way into the homes of inexperienced users, which makes high-quality tech support even more important than usual. Unfortunately, only about half the free PC companies provide a no-cost tech support number to call--and these vendors limit their support hours.

PeoplePC and InterSquid do keep their support lines open 24 hours a day, but you pay toll charges to use them. EMachines offers free tech support, but only for 15 days after the first time the customer contacts tech support; after that, you foot a $20 bill for each support call. And MyFavoritePC doesn't offer phone support at all--instead you have to rely on limited-hours answers available only via e-mail.

PeoplePC offers a parts-and-labor warranty that lasts for the full three years of your contract, and the company even throws in three years of on-site service for major problems. A "lemon" clause lets you exchange your PeoplePC for a new one if the original breaks down repeatedly. Unfortunately, PeoplePC is the only company to offer such a policy; the other vendors' labor warranties end after 12 months. Some parts warranties are more generous: InterSquid, PeoplePC, and EPCdirect offer three-year replacement coverage for defective components.

Even if your PC comes with long parts warranties, however, you could still have a recipe for trouble on your hands. More than a quarter of the free PC owners in our survey had at least one problem with their machine during the first year, and 80 percent of such owners had problems reaching the company's tech support.

On the other hand, nearly 32 percent of surveyed readers who own a free PC reported that they had received answers to their questions in less than three days. And Lynda Camba, a survey respondent who obtained her machine from Gobi, says that she received excellent, quick advice in both of her experiences with the company's telephone tech support.

But more than 19 percent of free PC owners in our survey reported that they had to wait more than a week to get problems resolved. And over a quarter of respondents with support issues said that they had finally given up.

Among survey respondents who had to contact their free PC maker, nearly 48 percent said they were somewhat or very satisfied with the experience; an almost identical percentage described themselves as somewhat or very dissatisfied.

If you're not very technically proficient, make sure that you deal with a vendor like PeoplePC that offers a relatively strong warranty and solid tech support policies.

Free Advice

The best free PC deals offer an all-in-one solution: a computer with Internet access, software, and solid support policies at a reasonable price.

For about the same money you'd spend overall for a free PC, however, you could purchase a budget-priced system from a vendor of known reliability, complete with a comprehensive warranty, expansion options, and no long-term contracts.

Gateway, for instance, offers one year of free AOL Internet access when you buy a PC from its Essential line. Free ISP offers are available too, but approach them with caution.

If you're a typical PC World reader, you're probably pretty savvy. But if you're giving advice to someone who doesn't have a PC or you're looking to get online, you may have other options. If someone in your family has come to you for advice, you might suggest WebTV. It's cheap and requires little more than a TV set, a phone line, and the ability to use a remote control. Another alternative is to use low-cost e-mail-only services, which some local phone companies offer. The EMessage services from Pacific Bell and Southwestern Bell, for instance, let users send and receive e-mail for $8 a month, plus $180 for the keyboard-equipped connection device. They won't be able to send pictures of the family or access Web pages with them, but you will join the millions of people for whom e-mail is a way of life.

For certain buyers, free PCs may still be a good deal. If you're planning to sign up for an ISP deal anyway, you don't mind the long-term commitment, and you need a low-priced primary or secondary computer, then a free PC deal may work for you. Just be sure you come to the game with realistic expectations--and don't assume that the price is right just because the box has a "free" sticker on it.

For more on free PCs, visit www.pcworld.com/apr00/freepcs. Chris Lindquist is a freelance writer in the San Francisco Bay Area.

Best Deal

PEOPLEPC

It isn't the cheapest or the fastest, but PeoplePC's package offers the best coverage of the lot, including a three-year warranty and a lemon policy if your machine goes sour. PeoplePC's home page and documentation make it easy to get started on the Net. But this PC is best for folks who don't plan to upgrade their hardware later (you may void the warranty if you do).

Worst Deal

MYFAVORITEPC

Its price is low--but there's no preinstalled software beyond Windows 98, so you have to buy apps that other vendors bundle with their systems. The one-year parts-and-labor warranty is too short. Answers come via e-mail--not over the phone--and the company's tech support is open just 12 hours daily. The only upgrades you can buy from MyFavoritePC are a monitor and an extended warranty plan.

WOULD Lynda Camba RECOMMEND A Free PC?

Yes

OCCUPATION: Medical biller

FREE PC: Gobi

PRIMARY USE: Graphics and Web design.

BEST THING ABOUT IT: Since May 1999, she reports, she has encountered practically no busy signals when accessing the included Internet service.

WORST THING ABOUT IT: The service lacks both newsgroups and POP3 e-mail support--she has to get her e-mail via a less-convenient Web-based interface.

ADVICE FOR THE COMPANY: "I would tell them to improve their online support.

Right now, as far as I'm concerned, it is nonexistent."

EMachines

www.e4me.com, 877/566-3463

Buy an EMachines PC and get a $400 rebate when you sign up for three years of CompuServe Internet service.

EMachines offers free phone-based tech support for only 15 days after your first tech support call; subsequent calls cost $20 each--or you can purchase a three-year extended service plan for $89. You must buy a monitor separately.

Celeron-366 CPU (At time of testing; CPU is now a Celeron-466) 64MB of RAM, 128KB of L2 cache, 4.3GB hard drive, ATI Rage Pro Turbo graphics card with 4MB of RAM, 16X-40X CD-ROM drive, Conexant SoftK56 PCI modem, integrated Crystal Sound Fusion PCI Audio sound, SP-12 speakers, minitower case, Windows 98, Microsoft Works 4.5.

$475 PC (without monitor)

$792 ($22 x 36 months of CompuServe)

$129 15-inch monitor

($30) monitor rebate from retailer

($75) EMachines rebates

($400) CompuServe mail-in or in-store rebate$0 shipping and handling (bought at retail)$891 totalGotcha WatchRead The Fine PrintThinking of buying a no-fee PC? Bring out your magnifying glass. In the PeoplePC package highlighted here, as in all free-PC deals, many of the essential details lurk in the tiny type.

1 PeoplePC's price omits the $48 shipping and handling fee.

2 Since you apply for a loan, failure to pay could hurt your credit.

3 Breaking your contract could cost you anything from the remainder of the ISP commitment to the full cost of the computer.

4 Adding new software or hardware could void the warranty.

5 If your home or business is not located near an MSN local access number, toll charges may apply.

*One-time shipping fee ($48) not included.

1 See PeoplePC Membership and Program Fee Agreement for details. By applying for PeoplePC membership, you are requesting to finance your membership through Servus Financial Corporation.

2 Your PeoplePC membership is subject to credit approval of your membership fee loan. Your membership fee of $762.09 will be financed at an APR of 11%, totaling 36 equal payments of $24.95 each. **Some restrictions apply.

3 Call 1 800 PEOPLEPC for the terms of our limited warranty. 4 In certain areas, toll charges may apply for Internet access. 5 All names mentioned herein are trademarks and/or registered trademarks of their respective companies.

(c)1999 PeoplePC

WOULD Cameron Brooks RECOMMEND A Free PC?

No

OCCUPATION: Student and office clerk

FREE PC: PeoplePC

PRIMARY USE: Internet access and personal finance applications.

BEST THING ABOUT IT: It offers good performance for the price.

WORST THING ABOUT IT: The strict warranty guidelines limit expandability.

ADVICE FOR THE COMPANY: "Provide more knowledgeable tech support, set fewer restrictions on warranty service, and add more up-to-date components."

EPCdirect

www.epcdirect.com, 877/372-8833

Sign a fixed contract for MSN Internet access (12, 24, 36, or 49 months) and get rebates up to the price of your PC.

The machine you get is an off-brand computer, and you have to purchase the monitor separately.

Celeron-466 CPU, 64MB of RAM, 128KB of L2 cache, 6.4GB hard drive, Joytech graphics card with 4MB of RAM, 18X-40X CD-ROM drive, U.S. Robotics 56K/V.90 Win modem, integrated VIA AC97 sound, High Tech Design DC-691P speakers, minitower case, Windows 98; Microsoft Works 4.5A, Money 99 Basic, and Bookshelf 99.

$980 ($20 x 49 months of MSN and a one-year subscription to My Shopping Club) $130 for 15-inch monitor$50 shipping and handling$1160 total Or $759 prepay option.

Gobi

www.gobi.com, 888/937-4624

Sign up for three years of Gobi's Internet access, and get a free computer and access to special online deals.

The Gobi desktop places small paid advertising links at the top of the screen.

You can expand windows over them, however, so they don't reduce your on-screen work space.

Celeron-366 CPU, 32MB of RAM, 128KB of L2 cache, 4.3GB hard drive, Hyundai DeluxScan 5560 15-inch monitor, integrated ATI Rage Pro AGP graphics with 4MB of SDRAM, 14X-40X CD-ROM drive, Lucent 56-kbps LT Win modem, integrated ESS Solo-1 sound, Labtec LCS-1012 speakers, minitower case, Windows 98, Corel WordPerfect Suite 8, Gobi software.

$936 ($26 x 36 months of Gobi ISP service)$0 17-inch monitor$30 one-time processing fee$60 shipping and handling$1026 totalAt time of testing; CPU is now a Celeron-433 or -466, depending on availability and warranty.

Or $799 prepay option.

Free PCs Are No Big Performance Deal

You're a Candidate for a Free PC Program If...

* You don't mind owning far-from-the-cutting-edge hardware.

* You live in an area served locally by the free PC company's Internet service provider. (Long-distance calls get expensive.)* You're prepared to pay extra if you need a monitor larger than 15 inches, a printer, or other peripherals.

* You're not worried about signing up with an ISP for three years, even as DSL and cable modem access start to go nationwide.

* You don't mind making a toll call for tech support or having limited hours of support available.

* You don't expect a large bundle of the latest software with your system.

InterSquid

www.intersquid.com, 888/724-3733

Agree to 30 months of PSINet's Internet access service, and get a free "state of the art" PC.

The hardware you get, while not a bad configuration, is far from state of the art, and the $30 monthly fee is anything but a bargain.

Celeron-400 CPU, 64MB of RAM, 128KB of L2 cache, 8.4GB hard drive, Cybervision C50 15-inch monitor, integrated Intel 810 graphics with UMA and 4MB of display cache, 18X-48X CD-ROM drive, Zoom 56K PCI V.90 modem, integrated Roland MPU-401 sound, minitower case, Windows 98, Grolier Multimedia Encyclopedia CD-ROM.

$900 ($30 X 30 months)

$0 15-inch monitor

$40 start-up fee

$60 shipping and handling fee

$1000 total

At time of testing; CPU is now a Celeron-466.

MyFavoritePC

www.myfavoritepc.com, 888/621-3436

Buy a $550 PC; then collect a $100 instant rebate, a $50 mail-in rebate, and a $400 voucher when you sign up with MSN at $22 per month for 36 months.

If you want a monitor, it'll cost you at least $99 more ($149 minus a $50 mail-in rebate). The only software you get is Windows 98. The vendor provides no phone support--only e-mail. The deal may be nearing its end by the time you read this.

Celeron-400 CPU, 32MB of RAM, 128KB of L2 cache, 4.3GB hard drive, integrated Intel 810 graphics with 4MB of UMA, 17X-40X CD-ROM drive, Archtek Telecom V.90 voice modem, integrated Soundmax Digital Audio sound, Z691 speakers, minitower case, Windows 98.

$792 ($22 x 36 months of MSN ISP service) $149 15-inch monitor ($50) mail-in monitor rebate ($400) mail-in voucher from MSN $113 shipping and handling fees $604 total PeoplePCwww.peoplepc.com, 800/736-7537Finance a computer over three years (or buy it up front for $798) and get three years of free MSN Internet access. The only free PC that includes a year of on-site tech support.

Adding software or hardware could void the warranty.

Celeron-366 CPU, 64MB of RAM, 128KB of L2 cache, 6.4GB hard drive, Toshiba TechBright 510T 15-inch monitor, integrated Intel 810 graphics with UMA and 4MB of display cache, 17X-40X CD-ROM drive, U.S. Robotics 56K/V.90 Win modem, integrated Soundmax digital audio sound, Sun-691H speakers, minitower case, Windows 98 SE, Microsoft Works 4.5, Norton AntiVirus, Quicken 99 Basic, Microsoft Works Calendar.

$900 ($25 for 36 months of ISP service)

$0 15-inch monitor

$48 shipping and handling

$948 total

Or $798 prepay option.

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