Internet service provider EarthLink confirmed that it has terminated its contract with PC maker Microworkz, which until now bundled free EarthLink service with its low-cost machines.
"EarthLink terminated its agreement with Microworkz on July 29, because Microworkz was in breach of its contract with EarthLink," the ISP said in a statement. "Less than 1,000 EarthLink members have signed up for the service through Microworkz's personal computers. These members will continue to receive EarthLink's service without interruption."
Also, chief executive Rick Latman confirmed that Microworkz has stopped selling its Webzter computer line. One of the key selling points of Microworkz's $299 Webzter Jr. was that it included a year's worth of free online access. "We are no longer offering the Webzter line, because it no longer fits in our mix. This decision was not related to EarthLink in any way," Latman said. The iToaster computer is the successor to the Webzter, he added. "The iToaster is the natural evolution in the PC revolution that the Webzter started. Microworkz customers are extremely important to us, and we will continue to support and serve them as they need it," he added.
But that latter statement to some users comes across as a brazen, almost shameless statement in the face of a litany of user complaints over the last five months, as reported earlier.
"I bought one of their [ZPc Extreme] computers. After a month, and many phone calls, I am without a computer, or a refund," said customer Ricky Morin of Sacramento, California, in an email received by News.com this week. These kind of complaints have continued unabated since Microworkz debuted its Webzter computers in March. A Microworkz spokesperson said the machine was shipped yesterday to Morin.
Latman added that these backorder problems have been resolved. "This is old news...the problem is over," Latman claimed.
But the Washington State Better Business Bureau said a problem still exists. "This company has an unsatisfactory business record. Specifically, a high volume of complaints and a pattern of being slow to respond to customer complaints that were brought to their attention," according to a statement from the bureau. Complaints are centered on "nondelivery of products ordered." The bureau opened a file on Microworkz in March of 1998.
The company has been plagued by executive flight also. High-ranking executives including the chief operating officer and the chief financial officer, among others, have left the company over the past two months. Sources also claim that some or all of the board of directors left.
"Along with our new COO, Lance Rosen, we have all key positions filled and are moving at Internet speed," Latman responded.
The collapse of the EarthLink agreement will likely revive the debate over whether these "too good to be true" deals in fact are. Since spring, customers have flocked to start-ups like Microworkz because of low prices and "free" ISP service. However, a number have complained of poor customer service, delayed orders, and abrupt cancellation of offers after orders have been placed.
The Webzter PC was first offered in March of this year to great fanfare. But customer demand swamped the company. The Microworkz Web site advertises other PCs that come with 30 free days of EarthLink service, but based on EarthLink's statement, that offer appears to be no longer be valid.
Sources indicated that the company is seeking out alternatives and may even start delivering its own ISP service by September.
Microworkz isn't the first cheap PC provider to run into a few snags.
Reports on the cancelation of EarthLink's contract first came on the Internet from Dave Larson, an independent writer.