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Musings/Ramblings re: the new "Free PC with Internet Access" offers
No one asked my opinion on this topic, so here it is: <G>
The new "Free PC with Internet Access" offers seem to be getting a lot of publicity lately and a lot of people seem excited about it, so I thought I'd spend a few minutes reviewing what a "great" offer it is.
There appears to be two key parts to the message that excite everyone. First, you get a free PC. Second, it's just like the cell phone model (free cell phone with service). So let's look at those two areas.
With respect to the "free PC" part, a typical offer looks like the one you can find at www.gobi.com. For $26 per month plus $75 setup and S&H, you get a free PC and internet access (a 3 year contract is required). That means you pay $1008 (let's round to $1000) over three years.
Now let's look at the individual components you'd have to pay for -- the internet access and the PC.
The current best deal you can get on Internet access is "Free" (see www.netzero.com). So the internet access cost of the equation is $0.
The PC that comes with the Gobi deal is about a $500 PC. So you could put the equivalent deal together for $0+$500=$500 (with no limit on how long you could use your Netzero account). So you can pay $500 now, or $26 per month for 3 years. Sounds like a leasing arrangement to me, and by my calculations they're charging you an interest rate of about 52% (and even that's low since I amortized the initial $75).
So you're much better off buying the $500 PC and opening a NetZero account than taking their offer. In fact you could even afford to get a better computer and still be ahead money-wise.
That is, unless you want to pay a 52% finance charge rate. In which case I have a car worth about $2000 that I'd be happy to sell you for 36 payments of $111.
Next, the "cell phone model". There's a big difference between a PC and a cell phone. Without cellular service, a cell phone is a paperweight with rechargeable batteries. Without internet access, a PC is a way to do your taxes, write letters, play games, keep your recipes filed, et cetera. Exactly what it was 3 years ago before the Internet blasted off. So without the 2 services, a PC has much more inherent value.
What this means to our two models is that, in the cellular world, you cannot get a better price on the service if you don't take the phone versus if you do (or the difference is extremely small because the service provider has to pay a teeny-weeny fee to buy the phone). If the phone had any real value, the service provider would have to pay much more for it, and charge you accordingly.
In the PC world, it means that you'll never see the "free PC with Internet access" offers approach the price of the internet-access only offers (which is $0, right?). You'll always pay a premium. So it's up to you to figure out if the lease costs of the PC are what you really want to pay for.
JMHO,
Dave |
