from the New York Times


      February 8, 1999

Plan for Free PCs Has a Few Attachments

      By MATT RICHTEL

     The personal computer, already dropping precipitously in price,
     may in some cases become free -- with a few strings attached.

     In a variation on a popular cellular-telephone business model --
     sign up for service and pay nothing for the phone -- a Southern
     California start-up, Free PC Inc., plans to announce Monday that it
     will give away Compaq personal computers and a free Internet
     connection, too.

     The catch: Users of the computers must accept advertisements that
     will constantly be displayed on the 15-inch screen, whether the
     person is on the Internet or operating the computer off line.

     Not only that, but consumers who want to register for a free PC
     will have to answer some 20 questions about themselves, involving
     income, education and the like. The company will then decide who
     actually gets a free computer on the basis of who best fits the
     demographic profiles that advertisers are seeking.

     "The price of hardware and a connection has come down
     dramatically," said Donald La Vigne, Free PC's chief executive.
     "There are a lot of people who still aren't participating and a lot
     of marketers who want to get at those people."

     There could be a chicken-or-egg complication, of course, since
     applying for a free computer will require visiting the company's
     Web site, www.free-pc.com, where Free PC intends to start
     registering applicants Monday.

     Free PC, which is in Pasadena, Calif., plans to make its
     announcement Monday at the Demo Conference, a technology industry
     gathering in Indian Wells, near Palm Springs.

     Free PC is the brainchild of Bill Gross, the chairman of Idealab, a
     Pasadena-based Internet business incubator and venture capital firm
     that has backed other ventures.

     La Vigne said that Free PC planned to give away 10,000 computers
     starting in the second quarter of this year as a way of testing and
     refining the concept.

     La Vigne declined to give details about several key aspects of the
     business. He said the PCs were ones that might normally retail for
     around $600, for example, but he declined to specify their power
     and processing speed. He also would not identify any of the
     participating advertisers with whom he said he was negotiating.

     As the PC has increasingly been identified as an appliance, and
     fallen well below the once-magical $1,000 retail figure, industry
     analysts have suggested that an approach like Free PC's might
     emerge. Already, several companies offer free dial-up e-mail access
     and free Internet connections, which are subsidized by ads.

     But the free Internet business model has proved challenging,
     because it has been difficult to get enough subscribers to attract
     advertisers.


   Copyright 1999 The New York Times Company


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