New Membership Club Offers PC, Discounts
Call it a cross between Free-PC and Costco.
Today, San Francisco-based PeoplePC Inc. launches a membership club that requires a three-year, $24.95-per-month subscription in exchange for a personal computer, Internet access and special discounts on products and services.
Although the movement to give away personal computers in exchange for collecting personal data about their users or to sell Internet services has drawn its share of skeptics, PeoplePC positions itself as a buyer’s club, with the personal computer an enticement to join.
PeoplePC says members can purchase goods or services, either online or offline, at negotiated prices from vendors, who in turn pay PeoplePC a bounty for each customer.
“The cost of customer acquisition is the biggest problem for business-to-consumer businesses, and we’re helping them lower that cost,” said Nick Grouf, the company’s founder and chief executive. “Customers are a hell of a lot more valuable than hardware or software or anything else.”
The company plans to distribute 400,000 computers, from Compaq Computer Corp. and Toshiba America Information Systems Inc., by the end of the year, Grouf said. The company also plans to spend up to $40 million for an advertising campaign starting Oct. 15.
Some observers said the company, which is funded by Softbank Technology Ventures and has former Apple Computer Inc. Chief Executive John Sculley on its board, has a better chance than those that are merely giving away computers to sell Internet access.
An Internet access provider generally spends up to $100 in advertising and marketing to acquire a customer, and giving away a $400 computer is essentially taking the place of those costs, said Joe Laszlo, an analyst with Jupiter Communications.
PeoplePC may also be helped by the fact that it will sell services beyond Internet access and will accept only customers whose credit is good enough to receive a platinum card from First USA, Laszlo said.
But other firms that already have those sought-after customers, such as the credit card companies, may also be able to act as referrals, without the cost of giving computers as a loss leader, Laszlo said.
