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The return of the ‘free’ PC

IBM to supply 200k PCs

A British start-up is to offer up to free PCs to the public. The catch? The PC fills the screens with ads for 60 seconds every 20 minutes.

Each month, the company, Metronomy, mails a CD containing targeted advertising. Your PC will work only if the CD is installed. You must also agree to use the PC at least 30 hours a month and you must sign up to use the Internet. It is unclear from weekend newspaper reports if the punters must pay for Internet access, but if this service is free, Metronomy will have pulled off a extraordinary feat of economic engineering.

Customers sign up for three years, but can simply return their PCs, if they don't want to continue with the scheme, company founder John Thornhill told the Mail on Sunday.

Metronomy will monitor computer usage - but not Internet surfing activities - as well as as ad-watching activity. If enough people sign up, this will give the company an opportunity to flog market research, we figure.

And Metronomy is thinking big. In the first phase of the campaign, 200,000 PCs, supplied by IBM, are up for grabs. The company hopes to roll-out the scheme to up to two million homes within three years. The first free PCs will start rolling out early next year.

The venture is funded to the tune of "several million pounds" by Terry Fisher, a former chairman of Huddersfield Town FC, who made his fortune from the travel industry. And several institutions are underwriting the deal, according to the Mail on Sunday. We guess Metronomy needs enough capital to satisfy IBM that it can meet long-term leasing commitments for the PCs.

Also unnamed advertising companies are said to be backing the venture.

Metronomy's Big Idea is interesting, but we been in this territory before. The US was awash with free PC offers in 1999 and 2000. In 1999, for example, Microsoft, AOL and Prodigy ran free or nearly free PC promotions. But those were the days when there was plenty of gross margin in Internet access to play with. And if these promotions had worked out financially, we'd all be using free PCs now, no?

The free PC idea, as with the mobile phone and games console industries, is to subsidise the hardware in return for software and services income. But it is difficult to see how Metronomy can generate enough advertising income from what will inevitably be a downmarket demographic. Add in a couple of quid a month for Internet access, and bring down the PC costs by running Linux desktop software, and it is still difficult to see how this stacks up. Especially, when the customers call for help.

The problem with mass market PCs is that after-sales service is a logistical nightmare, especially as there is little or profit to be had in the hardware.
We suspect that Metronomy customers will quickly tire of having to stop what they are doing on their PC for three minutes an hour. Returns could be a big headache. ®

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