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More free and semi-free PCs

More free and semi-free PCs are heading for the market, while the jury is still out on the long-term profitability and success of the new sub-bargain basement promotions.

On Monday, Microworkz announced it was taking direct orders on an “Internet Computing Device” called the iToaster, which sells for $199. The iToaster uses a proprietary operating system (taken from Linux and BeOS) that allows one-click Internet access “within seconds,” a secure environment for e-commerce and only a 15-second boot up time, according to a spokeswoman. It has a word processor and spread sheet and can import Microsoft Word and Excel documents. In addition the iToaster is designed as “the most convenient and easy to use computing device every made,” the spokeswoman said.

Microworkz will sell an initial run of 10,000 iToasters based on a first come first served basis with order taking beginning in July and delivery starting July 15. The company said it may offer more units in the future.

Also last week, Free-PC, Pasadena, CA. (, announced it became the first company to make good on its promise to ship free PCs with a total of 10,000 Compaq Presarios to go out to customers through June.

Steve Chadima, vp of marketing said, the company has not yet decided the number of PCs to roll out in the future. “The first wave is 10,000 and then we take a deep breadth and figure out how things are going. We determine which consumers are of greatest interest to our advertisers. With this first 10,000 we took a research sample across various geographies, age groups, single parent families, two parent families so that many groups of people were represented.”

Free PC said that the first 10,000 Free-PC customers were selected from 1.25 million applications sent to the company since February. By September, Free PC will determine the nature of its second shipment said Chadima, noting, “By then we should be able to get a good sense on patterns of usage, how many hours a day they are on line….”

Free-PC users fill out a demographic questionnaire and receive free Internet Access and a Free-PC in exchange for allowing ads to be “sent” to their PC by Free-PC’s advertisers. The hope is to specifically target ads to the user’s demographic profile.

Another free PC promoter, DirectWeb, Mount Laurel, N.J., which launched in the Philadelphia area March 21 said it expects to begin shipping its free PCs during the first week of July, said a spokesman. Customers who ordered first will receive the first shipments, he said. DirectWeb is providing what it terms a “state of the art” Windows 98 based PC to users who sign up for internet service at a rate of $19.99 per month for unlimited Internet access.

Analysts say that profitability is still a problem for free PC vendors. “I don’t think anyone has a feel for what is going on. It’s still definitely up in the air as to what the business model is here. They are all worthy of experimentation but nobody knows if you can really make money giving stuff away,” noted senior analysts Stephen Baker, PC Data, Reston, VA.

Said Free-PC’s Chadima, “We agree the jury is still out. We believe it will be there… the price of the machines is going down and we believe, with very highly targeted advertising, the amount of money we can earn per machine will go up and the two lines will cross at some point.”