Demand has been heavy since the company earlier this month announced that it would give away 10,000 of the machines to people who agree to accept advertising messages and have their preferences tracked.
"The first 10,000 units are really a test of the concept and then we'll be able to roll out beyond that as quickly as we can," Chadima said. "We hope to ship a million units within the first year."
The company said it already has received 1.2 million applications, about half of which came in the first week.
Free-PC, a subsidiary of Idealab, is offering free PCs in exchange for a bit of privacy, by requiring that its customers consent to having advertisements sent to their computer and their purchasing preferences tracked on a daily basis. Advertisers will then be matched with users' product preferences, and the ads, cached on the free PC's hard drive, will be served on the desktop--even when users are not online.
The offer has been hard to resist: customers receive a fully-loaded Compaq Presario running at 333MHz with 32 MB of RAM and a 2 GB hard drive. Add to that a 33.6 Kbps (kilobits per second) modem, free Internet access and email, and a 15-inch monitor, and it is perhaps no surprise that many consumers have gladly agreed to give up their personal information.
"We were surprised with how quickly people responded," said Chadima "We expected to have that kind of response, but not so fast."
The company expects to ship the first computers sometime during the second quarter, likely in May or June. Free-PC also is expected to ship a second wave of computers within 30 days of the first delivery, according to Chadima.
The company also is considering working with other PC makers in addition to Compaq to help meet the demand.
Now Free-PC is turning its attention to signing on advertisers. Free-PC already has an agreement with Cybergold, an "attention marketing" firm with advertising relationships with Disney, ESPN SportsZone, credit card company MBNA, and Autobytel.com.
The company also has an arrangement with Impulse! Buy Network and hopes to land other advertisers after a series of meetings scheduled in March.
The company has stressed that the choice of who receives the first PCs will not be based on a lottery system, as many applicants have speculated. Rather, the lucky 10,000 will be determined by the audience that Free-PC's first batch of advertisers are attempting to reach.
"If the first advertisers are Burton snowboards and Mountain Dew, aimed at a younger demographic, then a lot of college kids are going to get the first PCs," a company spokesman said. "And conversely if the first advertisers are more family-oriented, then families will get the machines."
The company's Web site was rendered nearly useless for hours due to a flood of traffic when Free-PC first announced it would give away the computers three weeks ago.
"What we hope to do is achieve something close to the Holy Grail of advertising, constant and immediate feedback with customers as opposed to this shotgun approach," Chadima said.