America Online, Inc. and PC retailer CompUSA, Inc. have forged a two-year alliance to sell a new line of personal computers pre-loaded with AOL and CompuServe software. AOL has about 20 million subscribers, and CompUSA is the largest PC retailer in the United States.
Terms of the deal were not disclosed, but all PCs with the CompUSA brand name will now include a customized keyboard with one-button access to AOL. The new products are expected to be shipped to CompUSA’s 210 superstores by September — in plenty of time for the holiday season.
Deal Could Tip E-Commerce Scales
As part of the joint venture, CompUSA is offering special rates for its 24-hour customer support to AOL and CompuServe members. In addition, CompUSA and AOL will jointly develop training classes on how best to use AOL software.
The deal is expected to help AOL, which also owns CompuServe, maintain its position as the top Internet service. The company has been making a concerted effort to bring more consumers online by subsidizing the cost of computers.
Earlier this year, eMachines, a joint venture of South Korea’s Trigem Computer and Korea Data Systems, agreed to have all eMachine PCs loaded with easy access AOL and CompuServe. 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 its membership, cashing in on the burgeoning e-commerce marketplace.
Two Other Big Winners
Additionally, industry observers say that there are at least two other winners in the “Free PC” scenario: consumers and e-marketeers.
According to a study by Intelliquest Information Group, half of all U.S. homes now have computers. Fueled by the wave of under $500 models, it is expected that many more of the estimated 40 million U.S. residents planning to go online will do so sooner rather than later.
In addition, consumers other than first-time computer buyers are benefiting from the promotion. The AOL/eMachines deal has encouraged other rebates that have helped to drive down the average cost of an Intel chip-powered PC to 20 percent below last year’s going rates. Compaq, Hewlett-Packard and Micron Electronics are among those companies who have responded to the trend.
Internet Driven OS?
By aligning itself with the largest brick-and-mortar computer seller, AOL has gained a toehold in what may be the next industry-wide innovation. Analysts believe that if the next operating system for PCs is to be Internet-driven, then AOL has already positioned itself well ahead of Microsoft.