PC bundles make a comeback

SYDNEY Harvey Norman has suggested it may re-enter the subsidised PC market at a time when PC bundles are back on the mass-market agenda.

Virtual Communities, an exclusive IBM reseller, has announced it will take its PC and Internet bundle to first-time PC buyers in the general public after success with packages for members of the ACTU, the Catholic Church and the Australian Retirement Fund.

Since launch in November last year, the company claims to have shipped 30,000 PCs and has an aggressive target of moving 100,000 by year's end. Union members (predominantly male) currently make up 80 per cent of sales.

However, the move puts Virtual Communities into competition with mass-market retailers and resellers, despite its claims to the contrary.

According to Harvey Norman's general manager of computers and communications, John Slack-Smith, a Virtual Communities' customer is not different to one from HN.

"They are all people out there in the mass market. These people are all [potential] customers." Despite market rejection of the so-called "zero dollar PC" in 1999, Slack-Smith has not ruled out the possibility HN may offer some form of subsidised package deal in the future.

"There is a space in the future when subsidisation will form part of the marketplace," he said.

Virtual Communities sells just one model PC, the IBM Aptiva currently sporting a 450MHz AMD chip, soon to be replaced by the 500MHz AMD. Internet access is courtesy of Primus.

The entry-level option with PC, Internet and software costs $11.95 per week or $1989 up front, which includes 3.5 years warranty and four hours on the Internet per week.

Edward Smith, VC's director of operations, said the success of its bundle differs significantly from failed attempts by the likes of Dick Smith, Tandy and Harvey Norman last year to offer zero dollar bundled Internet-ready PCs.

Smith said the company offers a true end-to-end service where customers order the product over the phone, fax or web, then have the product delivered and installed.

VC's model also uses the services of an outsourced sales and support call centre, in addition to outsourced logistics and finance services. The company buys its PCs directly from IBM, using its own national warehousing facilities.

"We are in many ways a virtual organisation," he explained. "We don't actually define ourself as a PC reseller."

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More about ACTUAMDAustralian Retirement FundHarvey Norman HoldingsIBM AustraliaNormanPrimus AustraliaTandyVirtual CommunitiesVirtual Communities

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