Major PC makers catch rebate fever
July 23, 1999
by Tom Spring
(IDG) -- Compaq, Hewlett-Packard, and Micron each joined the PC rebate throngs on Wednesday, announcing that you can get $400 back on a PC when you sign up for three years of Internet access. The PC makers are the latest in a string of computer makers attempting to boost sales and offset weak profits by subsidizing low-cost systems with Internet access contracts.
Copying similar promotions by smaller PC manufacturers, the moves make it clear that major PC makers see Internet access as a way to underwrite the cost of systems.
Micron and Internet access provider Earthlink will offer consumers who sign a three-year Internet contract a rebate of $400 on the purchase price of Pentium III powered Micron computer. Not priced as aggressively as its competitors, Micron's cheapest Millennia PC will go for $970 after rebate for a system powered by a PIII 450-MHz processor, with an 8.4GB hard drive, 64MB of memory, 40X CD-ROM, modem, and 17-inch monitor.
Hewlett-Packard has a more aggressively priced system, coming in at $350 after a $400 Internet service contract with CompuServe 2000 and a $100 "back-to-school" rebate. The Pavilion 4530 is powered by an AMD K6-2-350 processor, and comes loaded with a 4GB hard drive, 32MB of memory, a 32X CD-ROM drive, and a modem. Hewlett-Packard is offering its rebate with it entire Pavilion family of systems.
Compaq offers a limited time $400 rebate with the purchase of any Presario PC through its "iSAVE" Internet Savings Rebate Promotion. You must sign up for three-years of CompuServe 2000 Internet access at $21.95 a month. Compaq offers a further $200 in savings if you purchase a three-piece Presario Internet PC bundle (printer, monitor, and PC). The total cost for a Presario 5304 after rebates is $299.
The system is powered by a Cyrix-M2 366 processor, and includes 64MB of memory, a 4.3GB hard drive, and a modem. The CompuServe $400 rebate expires November 15 and Compaq's $200 three-piece system bundle expires October 15.
Keeping up with the little guys
Compaq, Hewlett-Packard, and Micron are struggling to offset lost sales to upstarts such as Microworkz and eMachines. The heavyweights are hoping that by adding Internet services to their offerings they can compensate for razor-thin profit margins in the hardware-manufacturing business. Micron Electronics Chairman and Chief Executive Officer Joel Kocher has stated that Web services carry gross margins as high as 80 percent.
Micron, unlike Compaq and Hewlett-Packard, has its own Internet service provider--as of Tuesday. Micron says once its newly acquired Micron Internet Services is integrated into the company, it will offer its own Internet access package.
Gateway is now offering its own Internet service and is said to be in negotiations to buy Earthlink. Dell says it plans to offer its own Internet access service in the United States; the company already sells Internet access in Europe.
Earlier this month, Microsoft, America Online, Prodigy, and others made deals with smaller vendors to offer $400 rebates on computer purchases as a way to entice users to make a three-year commitment to their Internet services.
Other companies that recently announced next-to-nothing PC prices subsidized by services include Free-PC.com, Gobi, and DirectWeb.
PC power crunch on the horizon
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