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Gateway PCs include Net service

The PC maker may soon be your ISP if you buy one of its computers, following a trend among computer manufacturers to offer Internet connection services.

Following a trend among computer manufacturers to offer Net connection services, Gateway 2000 (GTW) will begin acting as an ISP for its customers next week.

The company said it isn't going to compete with the likes of America Online or Microsoft Network. However, it does want to make it easier for PC buyers to connect to the Internet.

The company's G series of home PCs, GP series for small businesses, Destination series of PC-TVs, and later the Solo line of notebook computers will come preloaded with software that asks consumers if they want to connect to the Internet through Gateway. If they do, the system automatically sets up the service. Customers pay $12.95 per month to Gateway for 30 hours of access and an email account.

"Customers are asking for a better experience. This will help us better understand our customers and service their needs," said Mike Flanary, senior manager for product marketing at Gateway. "This will increase the likelihood of customers coming back to Gateway for future purchases."

Other companies have offered similar services. In February of this year, Hewlett-Packard introduced an Internet access service that lets users of HP's home PCs connect to the Net by pushing a special button on the keyboard. Unlike Gateway's service, the service isn't sold with the HP name on it.

These strategies have not always panned out. The ill-fated eWorld, a service started by Apple Computer, was shut down last year after it failed to compete against AOL for members.

Said Kevin Hause, an analyst with International Data Corporation, "It's not really that they [Gateway] are becoming an ISP as much as it is a service they are offering." Hause noted that Gateway is contracting with another company to provide the networking equipment.

"Most computers are shipped with a slew of providers. It gets fairly confusing, especially for a novice consumer," Hause said, adding that the Gateway service makes it easier for a customer to get online.

Perhaps more important, making it easier to get online will help Gateway's bottom line. Hause said that a surprising number of computers are returned because users think the modem is defective. Usually the problem is that customers haven't configured the equipment properly for use with the service provider.

For instance, with today's 56-kbps modems, users have to make sure that their ISP uses the same technology so that the modems can send data to each other at their maximum speed. Gateway's service will use the same technology in the PC's modems and the ISP's modems, reducing unnecessary returns or service calls.

Hause also said that by branding an Internet service, the company has more opportunities to get their name in front of customers and build brand loyalty, something with which Gateway has already done a good job. For example, the company will have a default home page for Web browsers using the service which has links to various content providers as well as Gateway technical support sites.

Gateway's Flanary acknowledged that as the service matures, users could see more customized content delivered to users directly, but he said the company sees limits to how much information can be sent. Flanary said information will be collected from users to target the content, but only if a user decides to submit a profile first.

The service will initially only be available to U.S. customers of Gateway who purchase new computers. Customers will be able to dial a local number for Internet access in 90 percent of the country, according to Flanary. Users in the remaining areas will be able to dial into a toll free number for a fee of $5.95 a month for five hours, with additional time costing $2.95 per hour.

By January, Gateway said it hopes to offer service to existing Gateway customers. The company has ambitions to expand the service to international markets by late next year.