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NuAuction to give away 12,000 PCs

The upstart auction site will give away the PCs at random for customers of its service. The company's stated odds of winning, if all goes as planned? One in 3,000.

    As a marketing gimmick, the giveaway PC seems to have come into its own.

    An upstart auction site, NuAuction, said it will give away up to 12,000 PCs at random to customers who sign up for its service.

    The company said registration is free, and that it will not cost anything to list or sell items on its auction service until after April 15th.

    The deal could be a long shot for both customers and the company. The company will pick the 12,000 random winners. The company calculates the odds of getting a computer at 3,000 to 1. At the same time, the deal, on paper, will likely cost close to, and likely more than, $4 million when the various costs are factored in.

    The giveaway is intended to help build the company's presence as an auction site that will compete for customers in the booming person-to-person auction market, led by eBay.

    "The payoff [from the giveaway] is that we are buying the eyeballs," said Ken Kapur, president of NuAuction.com. "We feel that if we have 50,000 customers, that's when the auction site becomes extremely profitable. We can achieve that in a very short time," with the giveaway, he said.

    NuAuction's marketing gimmick is only the latest variation on a theme. Another company called DirectWeb announced today it will offer a computer and monitor to the first 25,000 people who subscribe. The company hopes to make money by selling its Internet service.

    FreePC.com will give a select few applicants a free machine, as long as they are willing to accept a barrage of advertising. Kapur, in fact, gives credit for his marketing program to FreePC.com, while noting that his company won't be putting advertising on the PC or require people to use the auction service.

    "Just being able to create awareness is a hurdle for many companies on the Web. For an initial launch, a lot of companies are willing to drop money to develop that awareness," said Dave Williams, managing principal of Atlanta, Georgia-based 360 Interactive, an online marketing and advertising services agency.

    Getting an email address alone is valuable because that provides an opportunity to market to a consumer on an ongoing basis, he said. Consumers aren't the only ones being targeted in free PC campaigns--Williams has a client that is considering a free PC giveaway in a business-to-business environment in an effort to get its less savvy customers to do transactions over the Web, for instance.

    As promotions go, however, this won't be cheap. NuAuction is initially promising a machine with a Cyrix chip, 32MB of memory, CD-ROM drive, floppy disk drive, and modem, but no monitor. NuAuction is negotiating with Emachines to get the computers.

    Analysts have estimated that the Emachines system in question costs about $380 to build, while Emachines' chief executive Stephen Dukker more optimistically puts the figure between $320 to $340. It sells at a store for $399.

    Assuming that NuAuction pays $399 for the systems, it will have to spend about $4.8 million on the 12,000 PC giveaway. Even if NuAuction got the PCs at cost, the optimistically low rate of $320 per machine, the promotion would still run $3.84 million.

    The PC will be shipped to chosen participants sometime in June, the company said. Kapur said he is negotiating with Emachines to provide the systems, but may use other suppliers, noting that "prices are falling all the time."

    News.com's Michael Kanellos contributed to this report.