AOL's $299 PC

cmj writes "Internet.com reports 'Looking to attract households that still aren't online, AOL is offering new customers a $299 PC system if they sign a one-year $23.90 dial-up Internet service contract.' A click through AOL's ecommerce site reveals the the specs as 1.7 GHz Celeron with 256 MB RAM, 40 GB hard drive, 56K modem, 10/100ethernet card, 17" monitor and Lexmark printer. The PC is running Windows XP, and includes 'AOL Office Powered by Sun'. Also of note is the fact that the $299 appears to be financed at around 22%. The math ( (12*23.90)+299 ) seems to suggest that you can get a $699 computer for $585.80 plus any finance charges. Setting aside the question of whether this is a good deal or not, one has to wonder whether AOL is desperate for new customers and resorting to bribery, or just progressing to the next step of branding. With this action AOL controls everything from the OS to the Word Processor to the web sites their customers browse."

Comments

Deja vu, MSN

[Liselle]

I distinctly remember Microsoft doing something similar with their $400 rebate for signing up for three years of MSN. They dropped it after a year or two. AOL's deal seems more financially risky to me, I wonder how they can pull it off.

Re:Deja vu, MSN

[dswensen]

I can personally attest to the fact that MSN most assuredly did not just start letting people out of their contracts. (Don't ask... I regret it to this day...)

Re:Deja vu, MSN

[rgmoore]

I think that you're remembering incorrectly. ISTR that the thing that really killed the MSN rebate business was that it had legal problems in some jurisdictions. In particular, California law made is such that people could sign up, drop the MSN service immediately, and not have to return the $400. When customers started to abuse this in droves (i.e. not long after somebody figured it out), Microsoft decided to can the idea.

Re:Deja vu, MSN

[BroncoInCalifornia]

AOL's deal seems more financially risky to me, I wonder how they can pull it off.

$299 + 12*$23.90 = $585.80

I do not think they are losing money supplying a low end computer for over $500.

Re:Deja vu, MSN

[redJag]

do we have to have an acronym for every god damn expression? istr.

been there and done that

[Frisky070802]

This doesn't seem new or noteworthy. Such deals have been around for years. for intstance, googling appropriate terms took me to an article from 1999 about this sort of thing.

Also, the numbers for how much this computer is worth don't factor the right things in. Anyone who'd go for this deal needs some sort of ISP to begin with, and the $23.90/month may be higher than other ISPs, but does give the customer something of value beyond the PC. On the other hand, is that really a $699 computer?

wha?

[wankledot]

"controling"?

How are they controling you? Do they prohibit you from visiting other sites or installing another OS/Apps? Just because they install some default image, that doesn't mean they're controling what you do with the system.

Re:wha?

[donutello]

Have you ever used AOL? Would you like to be stuck paying for AOL for a year even if you don't like it just to get a "new" PC? Sure, you can install Linux, but try to get support from AOL if something needs to be replaced under warrantee, and forget about even getting on to AOL with Linux.

The terms of the deal are clear. It's your choice whether you want to take the deal or not. Sounds like you've already decided you don't want to - that's your prerogative. Someone else may decide it makes sense - that is their prerogative.

Re:wha?

[leerpm]

Somehow I do not think they are targetting active Linux users with these deal. Their target market is those people who are basically computer illiterate, but want to get on the web/email without the hassle of going down to their local Best Buy to buy a computer, and then sign up for internet access. This is similar to what a lot of mobile phone carriers do. They bundle a phone with a contract.

If this shipped with Lindows instead...

[Chordonblue]

...maybe they could get the price down to $199, hmmm?

Don't flip out on me, it was just a thought... ;)

Re:If this shipped with Lindows instead...

[Anonymous Coward]

AOL is a big company, why don't they just make thier own distro of Linux and slap in this computer???

Re:If this shipped with Lindows instead...

[Chordonblue]

I think with them shipping this with StarOffice that ARE that much closer. Word is that they already have an Linux-based distro but have been sitting on it. You would think that with their fortunes failing, this might be a good time to try a new approach. With this $299 deal, I think only MS will make any real profit.

Excellent

[Anonymous Coward]

I think this is a fabulous idea and hope many people take advantage of their generous offer.



Did I mention that I own AOL stock? Yeah, I really should've cashed out years ago.

Considering...

[ajiva]

Considering you can get a much better machine for much cheaper. Check out:

http://gotapex.com

You'll find BETTER Dell machines for ~$400 with 6 months of AOL included!

Re:Considering...

[flynt]

http://gotapex.com

Uhm, I don't think so. Wait, "got apex", whew.

Re:Considering...

[Powercntrl]

I read that as goatsecx too... Sure sign of being on Slashdot too long.

Wonder how many moderators will mod the grandparent post down because they don't read carefully and think goatse.cx has started selling computers. Could you imagine, " - Microsoft Internet Explorer provided by goatse.cx"? The animated page access icon?

Eww.

Re:AOL Office Powered by Sun

[Chordonblue]

It IS StarOffice (with obligatory AOL logos). One step closer to an AOL-Linux release I think.

Interesting

[bigsexyjoe]

They give you the fine print in gif form just to make sure it's difficult for you to read the text. The resolution isn't really fine enough for the text to be legible at any magnification, but it appears that the finance rate is 23.9% or 25.9%

Re:Jelousy

[jpu8086]

Obviously Apple hadn't mastered the naming schemes back in 1993. Had it been named iWorld, it would most likely have been a bashingly successful venture.

More info: eWorld

$299 is financed at 21.7% APR

[Numeric]

You really need to review this. I saw the story this AM (EST) and throughly reviewed the deal because I'd like to upgrade my mother's computer which is a currently a pc200mhz with 64mb of memory as a Xmas present.

Here's the fine print (beware the fine print is a image file):
http://www.aolcheckout.com/aol-pc/aol01b-l egal1.as p?vcid=a2&srccode=subp2b447688

"$299 Financed plus a one-year committment to AOL for 23.90"...did you read financed?

my take on the deal...

according to the fine print, you are issued a Tiger Gold Card with approve credit from Wells Fargo, furthermore, the regular APR is 21.9% (i think, the fine print is very small).

so now you have a credit card from a company with a really high interest rate! "Boom!" as Madden 2004 would say. That is the hook for AOL, they can make some money by establishing new customers for a credit card company.

Its seems like a nice deal on the front end.

Re:$299 is financed at 21.7% APR

[NetJunkie]

So pay it off the first month. BOOM! You get the PC for $299. You only get charged interest if you float the balance.

Re:$299 is financed at 21.7% APR

[RackinFrackin]

That's a good idea, but I'd bet that there is in the contract saying that the buyer will pay a certain fee if the loan is payed off before a certain time. This is a common practice for auto loans -- if the finance company isn't guaranteed that they will make a certain amount, the loan isn't worth their time.

So wait

[Sycraft-fu]

You are telling me that you want people who are, almost by definition, too stupid to get a real Internet connection to have a LINUX PC? Damn, just invite the crackers to go nuts directly why don't ya? :)

Seriously though, these are the kind fo people who would whine about Lindows since it's different. Doesn't matter how much the same it is, they'd whine and not use it.

I mean an AOL user here at work got her computer upgraded from 98 to 2k (new computer). From a user standpoint there is almost no difference. She was even used to loggin in since network shares required it. None the less she found about a million things to whine abou. One was that when you open explorer in 98 it goes to the C drive, in 2k it goes to your home directory. She bitched and moaned that this was confusing/difficult/took time/etc till we found a fix.

No man, you do NOT want these people on Linux, espically not one that is logged in as root by default.

Re:So wait

[Chordonblue]

I guess what I'm talking about are OPTIONS. No, Lindows won't be for everyone either. OTOH, maybe someone would like to have a computer cost $199 instead of $299 and be willing to learn.

And what's the big dealio about Lindows defaulting root for the primary user? So what? So does XP! This can now be changed in Lindows 4.0 just as easily as creating a user in XP. Problem solved.

Re:So wait

[rolocroz]

I don't think that Windows XP is any better. What I really think is that computers just shouldn't default to root. As someone else mentioned, Mac OS X is the one consumer OS that gets this right: root isn't even enabled by default, and sudo is the only way to act as root without mucking around with NetInfo. If Lindows didn't have that stupid security flaw, it would be a better choice for machines like AOL's.

Re:So wait

[kalidasa]

I mean an AOL user here at work got her computer upgraded from 98 to 2k (new computer). From a user standpoint there is almost no difference. She was even used to loggin in since network shares required it. None the less she found about a million things to whine abou. One was that when you open explorer in 98 it goes to the C drive, in 2k it goes to your home directory. She bitched and moaned that this was confusing/difficult/took time/etc till we found a fix.

Hemlock, I hope.

I've had to migrate too many users who treated "c:\" as their home directory. Someone started bitching to me about not going directly to c:\ when Explorer opened, I'd be deeply tempted to go BOFH and replace her computer in the middle of the night with an 80286 running DR. DOS and Windows 2.

Not bad for WebTV users

[Vandil X]

Hopefully the low price tag will convince people still using WebTV to actually purchase a personal computer.

I can see this as being killer for grandparents and others living on fixed incomes.

The system specs are decent, considering the target audience is probably not going to be encoding digital video, compiling code, or running photoshop.

The office suite is a nice touch. It sucks to get emailed a MS Office document and not being able to open them in anything but WordPad. I get so many tech support calls related to people not being able to open MS Office attachments. If the AOL office suite includes Excel and PowerPoint clones, all the better.

AOL a woman?

[WankersRevenge]

With this action AOL controls everything from the OS to the Word Processor to the web sites their customers browse.

When did my girlfriend start working at AOL?

Re:AOL a woman?

[Anonymous Coward]

Wait, so a guy named WankersRevenge is posting on Slashdot about having a girlfriend? How's that work?

obvious...

Re:Jelousy

[ncc74656]

eWorld became a little service called America Online when it merged with the c64 service, Q-Link...

AOHell goes back much further than eWorld. I think you meant to refer to something called "AppleLink Personal Edition," which was available for both Apple IIs and Macs (if that gives you more of an idea how far back it goes).

Controls everything?

[Octagon Most]

"AOL controls everything from the OS to the Word Processor to the web sites their customers browse."??

Give me a break. AOL doesn't care what you do with the PC. Go ahead, wipe it clean and install your favorite alternative OS. All that matters is that you sign a one-year commitment to AOL's dial-up service at $23.90 per month. That $286.80 commitment subsidizes the cost of the computer. AOL has stated (maybe it's even in a linked article) that a common reason given for cancellations is loss of access to a computer. In a few tests they have offered such users a discounted PC rather than let them become former users. As a result of what they have learned they believe that offering a really cheap computer will attract/retain members. They need to do something as they have lost a couple million recently.

Sounds like a business decision to me. But, hey, maybe it's all just part of a vast conspiracy by a big corporation to control everything we do.

Re:Controls everything?

[rgmoore]

As a result of what they have learned they believe that offering a really cheap computer will attract/retain members.

I think that this is really the big point. ISPs have surprisingly good customer loyalty when you consider how little difference there is between one dialup service and another. I guess that a big part of it is just the hassle of switching email addresses. In any case, AOL knows that many of those people who sign up for one year of service will continue to get service from AOL for the forseeable future, bringing in a lot more revenue than the subsidy on the computer. It may be an especially good idea if Microsoft is succeeding in attracting newbies away from AOL by making it easy to sign up for MSN from Windows.

Math Error in Article Post

[EmagGeek]

You cannot consider the entire cost of AOL access to be "interest" in this interesting calculation. You must consider that you are receiving something of value in addition to just the computer. THe way to calculate the effective financing rate is to take the difference between the cost of AOL and the cost of another equivalent access service, say, Earthlink, which I believe is $15/mo or so...

So, (12*(23.90-15))+299 = $405.80...

Ok, so let's see what I can buy that system for.

I just purchased two small machines, Athlon 1900+, 256MB Ram, 40GB Hard disks, with integrated I/O and everything for $280 each delivered. A 17" monitor can be had for about $100 and a cheap-ass Lexmark printer is about $50. What's that come out to? $430? and it's a MUCH MUCH MUCH faster machine...

So the bottom line is that this deal is marginal at best, and with AOL's buying power, it's probably very profitable in the end. They can probably put that machine together for about $200-250.

Re:So...

[laird]

"$299 with a $20+ a month lock-in contract, so what they really mean is something closer to about $450."

You're exaggerating by leaving out the fact that they're getting AOL access, which millions of people are paying $20+ a month for without getting a cheap PC. If you think that AOL service is worth nothing, then your math works, I suppose, but...

AOL's next plan...

[rice_burners_suck]

The next thing you know, instead of receiving those annoying coasters in the mail all the time, you'll start receiving free computers in the mail all the time. They'll work for 1045 hours for free, after which you either pay, or they blow up.

AOL's "1. Mail computers 2. ??? 3. Profit!!!" plan is as follows:

Savvy computer users will figure out that erasing the hard drive and installing their own OS removes the 1045 hour time limit, and removing the TNT from inside the computer case completely eliminates the possibility of the computer blowing up.

Then, in an RIAA-like effort, AOL will sue hundreds of thousands of individuals for illegally using their computers, which constitute valuable intellectual property. They will ignore the fact that by law, when they send something in the mail, it becomes the property of the recipient. It will take a long time for this to get to the courts, in order for the courts to throw it out, and in the meantime, many frightened teenagers will settle with AOL for amounts greatly exceeding the market value of the computers.

Clean profits for AOL.

Re:Windows XP eh?

[MerlynEmrys67]

To everyone that believes that large manufacturers pay $199 for a copy of Windows XP that they ship...

Uh no - it is actually somewhere in the $25 dollar range (plus the cost of any media that they ship along with it, and also first line tech support)

Insurance companies should do this!

[Aqua OS X]

Insurance companies should do this!

You could sign up for a 2 year policy with Geico, and get a '89 Mercury station wagon, with external wood paneling, for only $300 bucks!

Misleading math...

[laird]

"The math ( (12*23.90)+299 ) seems to suggest that you can get a $699 computer for $585.80 plus any finance charges"

This math is only correct if you assume that there's no value in having AOL dial access. If you think that AOL access is worth the $23.90 a month that millions of people are already paying for it, you're getting a $699 computer for $585.80 plus any finance charges, plus agreeing to stay on AOL for a year.

This doesn't sound any more sleazy than cell phone companies giving you a heavily discounted cell phone in return for a commitment for longer service. If you don't want to make the commitment, don't sign the contract, and don't take the up front discount.

To me, this looks like a decent way for people who aren't online to get online very cheaply and learn whether they want to spend more for broadband, etc., later.

But...

[Kirk Troll]

You could build your own $500 computer that would be most likely faster, and not contain all that shitty pre-installed AOL crapware that will slow you down further. And, you wouldn't be signed up for AOL service. (And who the hell wants that.)

Or, for the Maccies, you can get an eMac for $750 (Student Discount) which has a CD Burner, 40gb hard drive, and 1ghz processor. (Also doesn't contain gobs of pre-loaded poo.)

Systemax, cheap but good.

[BrookHarty]

Systemax pc's are pretty good, been around awhile, basic solid machines. If you already use AOL, thats a nice system with monitor for 299. Wonder how much the ink cartridges are... The mobo seems to be very cheap, would be nice for more specs.

Doing a quick pricewatch search shows the pc is an average deal, and system max uses quality oem hardware, your choice.

But I'd rather go over to Outpost.com (frys) and get something like amd200+mb for 100 bux, get a nice case for 40 bux, some memory, hd and gfx card for about 350 for that price. Pick up a used 17 inch monitor for 20 bux at RePC.

There are good deals, but you have to look. I found used dual P2's for 250 bux with scsi drives. Awesome linux/bsd servers.

...Or leave it the hell alone as it is

[Chordonblue]

You know, as much as it pains me to say this... Uh...

I've actually started to recommend AOL to people! :O OMFG - I SAID IT!

There it is. I'm sorry. But there is some reasoning here, if you all won't mod me down as a troll first.

The main reason has to do with AOL 9's control of spyware, parental rules for Internet usage, and yes, ease of use. For some users out there this is exactly what they need. AOL's numbers aren't near as high as they used to be due to user savvy, but they do still serve a purpose. Think of all your friends/relative's computers you've had to run AdAware or Spybot on recently and you have to agree...

Even on broadband! :O Oh Shit! I just said that too!!!

Bad Dobby! Bad BAD BAD!!! :)

Linux w/ AOL

[DA-MAN]

I have before, it's not too hard at all.

In fact there is a small tutorial on how to connect to AOL with Linux.

I wonder if this offer is valid with AOL Broadband, that way you could be on Broadband, and still have a cheap PC.

already been done, long ago, in other news:

[valmont]

You can get dial-up Internet access with no AOL bullshit and a cool PC starting at only $20/month from PeoplePC while paying NOTHING down.

You can buy a PC for $200 at wal-mart.

... and that's just a few of many MANY options out there. Now why the fuck would you shell out $300 for an OK computer on-top of having to pay $24/month for internet service that'll suck phat donkey ass?

go AOL. tsk.

It's not just a good idea. It's the law!

[OpenSourceOfAllEvil]

It's not just a good idea. It's frighteningly good if they can pull it off. Have you ever heard this response? I have.
"What OS do you have, Mac or Windows?"
"I think it's AOL."

Imagine hearing it a lot more.

Do not fear AOL

[rcastro0]

With this action AOL controls everything from the OS to the Word Processor to the web sites their customers browse."

That is funny. Down here in Brazil AOL is advertising on TV "New AOL: Now With No Installation CD Required". They had taken a serious beating trying to push forward their proprietary browser and now they have thrown the towel, and decided to become a more vanilla ISP, working with any regular browser. In case you are wondering: yes, that is desperate. They are not even a top three ISP in Brazil, after (how many? 3, 4?) years of throwing tons of cash in advertising and promotions.

It comes to prove IMHO that AOL's current positioning in the US market is a "path dependent" phenomenon, coming to be by a succession of (unlikely) historic events, and by no means natural. I do not fear AOL controling or dominating anything. It seems to me the only thing they are trying to do is to control their downhill slide.

One last thing. I thought you would be interested to know that AOL Brasil has a Linux download area, and that they are recommending Netscape 7.0 as a browser. I'm not sure, but I believe this has no parallel in AOL other markets.

Re:So...

[laird]

Well, for people experienced with the internet, I agree that a cheap ISP is the best deal, because all you really need is TCP/IP routing and a mail server. But for someone who wants to have their hand held, AOL's not a bad start -- it's certainly The plain internet access ISP's have gotten better over the years, but it's still easier getting AOL working than installing and configuring PPP, web, email, etc., individually.

Personally, I'd go straight to broadband rather than dial, but that's 2x as much, and we're talking about people who don't want to spend that kind of money on the internet.

One very interesting thing about this

[MadAnthony02]

I visited the website and noticed it looked oddly familiar. Did a whois on it, and it showed up as being registered to online computer merchant tigerdirect.com . It's interesting that TigerDirect isn't mentioned anywhere on the page, nor do they mention it on their main page.

Seems like it's almost more that Tigerdirect wants to sell more machines than AOL trying to get more users.

299pcdeal.com

Domain name: 299pcdeal.com

Registrant Contact:
tigerdirect.com
Domain Admin (lonny.paul@tigerdirect.com)
-
Fax: none
7795 W Flagler Street
Miami, FL 33144
USA

Administrative Contact:
tigerdirect.com
Domain Admin (lonny.paul@tigerdirect.com)
-
Fax: none
7795 W Flagler Street
Miami, FL 33144
USA

Technical Contact:
tigerdirect.com
Domain Admin (lonny.paul@tigerdirect.com)
-
Fax: none
7795 W Flagler Street
Miami, FL 33144
USA

Billing Contact:
tigerdirect.com
Domain Admin (lonny.paul@tigerdirect.com)
-
Fax: none
7795 W Flagler Street
Miami, FL 33144
USA

Status: active

Name Servers:
ns1.domain19.net
ns2.domain19.net

Creation date: 11 Sep 2003 20:56:47
Expiration date: 11 Sep 2004 20:56:47

Redmond: Defender of the Free World!

[Cheesewhiz]

"With this action AOL controls everything from the OS to the Word Processor to the web sites their customers browse."

Thank GOD for Microsoft...defender of our freedom to choose! Uhhm...wait...

Did we collectively forget Pricewatch?

[mccabem]

"...is that really a $699 computer?"

By the vendors' reckoning on Pricewatch, that PC is worth about $200 retail.

The 17" monitor goes for $83 retail.

The printer is probably worth less than $20.


So, if getting a [$200+$83+$20=] $303 PC for about $600 sounds like a good deal, then AOL is your savior! (!!)

Sadly, AOL is going after those least-informed of consumers with this deal, so they'll probably find a fair number of takers.

For those who don't consider AOL worthless, let's consider the cost of ISP service on top. A quick query here tells me that it's easy to get dial up for $8/month or less.

So....[$303+($8*12mths)=] $399 worth of "internet experience" for $699.

cost?

[Lord_Dweomer]

"Setting aside the question of whether this is a good deal or not, one has to wonder whether AOL is desperate for new customers and resorting to bribery, or just progressing to the next step of branding."

Actually, now I'm starting to wonder how cheap an internet connection IS for AOL. If there are plenty of ISPs out there selling service for $9.99 a month, it makes you wonder what AOL's profit margin is on that.

Lets all stop bashing AOL....

[LnxAddct]

Ok, first of all I know many small firms that use AOL (although it is usually AOL Broadband), second of all AOL does a lot of good for the net. AOL scans every email for viruses and doesn't let any through that has one, but rather they notify the sender, they also have great spam filters. Its very user friendly, and their DSL uses PPPoE so its easy to connect to through a router and then the client machines can jsut pop up AOL and connect throguh the LAN connection which is free (yes it is, i've done it on computers, and yes more then one person from the same acocunt can be using aol at the same time). It helps stop the spread of email worms, does excellent spam filtering, and gives the user every means of modern communication that he/she may need, at the tips of their fingers. Yes its not the most slashdotty type service where people use slackware simply becuase its hard to set up (not trying to start a war here, but thats what it sometimes seems like, where as debian, or gentoo in my opinion are better and easier to set up) AOL is no worse then MSN, except that AOL tries to do some good on the net and are very innovative. BTW, all kinds of music and media are available on AOL too at no cost. It realy is pretty nice and impressive, most of my family uses it. I dont use it, but most users love it. Oh yea AOL also are the nice guys that opened up the TOC protocol after it was the most popular protocol, unlike MSN who forced their protocol on users to make it one of the most popular then locked out everyone else. AOL also supports open source as is seen by the AOL Server and the fact that all(or most) of their servers run Linux. And if you IM ZolaOnAOL (that is AOL's chat bot, it was made by AOL and it isnt jsut some hackers bot) and ask her, "What is the best operating system in the world?" , She'll promptly answer that Linux is. Why are you guys so against a corporation that supports the Open Source movement (true they dont have a linux client, but thats because of the lack of market, it wouldnt really help anything if they did, through the other things that they are doing though, it is helping us) They hate MSN jsut as much as anyone else. We need to support corporations that support us and open protocols/software. Everyone needs to open their eyes. Just my 2 cents.

They're trusting customer laziness, duh.

[mbauser2]

I used to work in a camera store that sold cell phones, too. (Don't ask me why a camera store would bother will cell phones, because I'm still not sure.) One thing I learned: mobile phones still cost the phone companies more than the 99 dollars they sell them for -- the companies are swallowing the cost of the phone because they hope to make it up with a few years of phone bills.

It works, too, because... (wait for it)... people don't want to change their phone numbers. (Another reason the cell companies dislike number portability). AOL is assuming the same thing will happen with their service -- customers will decide it's too much work to change it, stick with AOL for years, and repay AOL's investment.

(Besides, AOL is an evil megacorporation. If they don't make their money back, they'll just find a way to write it off on their taxes.)