Gateway offers financing, Net service
The direct PC vendor debuts a financing program for buyers of consumer PCs while it promotes its own Internet access service.
As previously reported by CNET NEWS.COM, Gateway is pitching the new program as a way to make PCs more affordable. The company is also hoping that the program, called Your:)Ware, will generate more sales from repeat customers.
Your:)Ware lets individuals select customized hardware, including processors, software, an assortment of customer service programs and finance plans, and unlimited Internet access through the company's gateway.net service, the company said. Rather than buy a PC outright, customers pay a monthly charge.
Gateway.net will be promoted on its machines, in some cases instead of services that include Microsoft's Internet Explorer. As reported last week, Gateway executive Rick Brownrigg stated in Justice Department depositions that Gateway "would like the flexibility to give its customers a choice of Internet access providers as part of the PC boot-up sequence, and in the process offer those users a choice of browsers when they register," according to the filing. See related article.
Buyers in the Gateway financing program can purchase a Gateway computer with no money down and pay monthly rates as low as $49.95. Program clients walk out with a computer from day one, according to Gateway.
Consumers who cannot afford to plop down $1,500 for a new computer may spring for one if offered the option of relatively low monthly payments, the thinking goes. College students are a prime market.
After two years of ownership through the end of the Your:)Ware term, the client can keep the computer or trade it in for its average wholesale value toward the purchase of a new Gateway PC.
The benefit for Gateway is repeat business, since it can lock buyers into a program where at the end of the term they elect to purchase the computer or, alternatively, trade in and buy a new computer.
Analysts familiar with financing said successful programs are structured in a way that makes it easy for people to get started with a new computer. Inexperienced buyers want to avoid the usual PC pitfalls, such as grappling with hardware and software issues as soon as they get a new machine.
One of the main benefits for consumers comes in the tax position. Lease expenses can be deducted as business expenses. Purchases get counted in depreciation, which is now three years, according to Seymour Merrin of Merrin Information Services.
Merrin said that users also get to switch computers, preventing obsolescence. You pay more in the end, but you don't get stuck with old stuff, he added.
The Your:)Ware program is currently available. The Internet service component of the program begins June 22.
Last October, Compaq Computer announced a leasing program for some of its Armada notebooks, pointing to similar reasons.
In related news, confirming a previous CNET NEWS.COM report, Gateway said today that all new owners of Gateway computers will have a choice between Microsoft's Internet Explorer and Netscape's Navigator browsers.
Windows 98, which will be available on all Gateway machines shipping after June 15, offers "one-click" Internet access with Windows Internet Connection Wizard. After a user clicks on that icon, all Gateway computers will be configured to offer gateway.net, the company's Internet service, as the default provider on Windows 98, according to Bart Brown, vice president of marketing for the PC maker.
Gateway.net users will be offered a choice between Navigator and Internet Explorer early in the process of setting up an Internet connection, Brown said.
"Our primary concern is offering our customers choice and flexibility," he added, insisting that the decision was not instigated by Microsoft's legal woes with regulators or some kind of "competitive reaction."
Users who opt not to sign up with Gateway.net will be directed to Microsoft servers and ISP partners, which presumably will only offer Internet Explorer as a default browser option.
All PC makers have the ability to customize the Windows Internet Connection Wizard, said a Microsoft representative, but Gateway is one of the few to also offer an Internet service, which allows them to take advantage of the flexibility.
Gateway.net launched last November, Brown said, but will be promoted as part of the company's new Your:)Ware financing program. The service has approximately 100,000 users.
Reporter Stephanie Miles contributed to this report.