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HP goes cheap for small business

Hewlett-Packard will improvise on the Internet-PC concept on Monday when it comes out with a bargain basement PC for the small business market with a choose-your-own rebate option.

Hewlett-Packard will improvise on the Internet-PC concept on Monday when it comes out with a bargain basement PC for the small business market with a choose-your-own rebate option.

On Monday, HP will unveil the Brio BA200, which contains a 433-MHz Celeron processor, a 4.3GB hard drive, and 32MB of memory, according to sources close to HP. The computer will cost $499 alone or $649 with a 15-inch monitor.

To lower the price further, HP will also couple the deal with rebates from an Internet service provider. However, unlike many current rebate offers, customers will have a choice of options. Consumers can qualify for $400 back in exchange for signing up for three years of ISP service, or they will be able to sign up for one year of service and receive $100 back.

And, for those who don't like rebates at all, customers will be able to qualify for a free month of Internet service and other small business services.

HP's Brio BA200 will come loaded with software that is targeted for the small business user.

The rebate variations are likely a sign of things to come in the arena of PC marketing. PC sales skyrocketed this past summer when computer makers and retailers, in conjunction with ISPs such as CompuServe, began offering customers $400 rebates on PCs whenever the customers agreed to sign up for three years of service. The rebates are paid by the ISP.

While sales have blossomed, the programs have created a few headaches, noted Stephen Baker, retail analyst at PC Data. Anecdotal evidence indicates that there has been an increase in returns in this area, a sign of buyer's remorse, he said.

In addition, computer makers have noticed that their cost of sales has gone up. Computer makers often offer customers $50 or $100 rebates on systems. However, not all buyers actually turn in the paperwork to qualify for the rebate. With the advent of the $400 ISP rebate, however, consumers are now turning in rebate cards at a higher rate than in the past, he said, raising manufacturer's costs.

Further, "ISPs feel like the cost of getting a customer this way is pretty expensive," Baker said. Shortening the contract period, he added, seems to placate certain conflicts for all parties.

Eventually, the most popular, and economically viable option, may be the plan where consumers get free ISP service for a limited time, said Roger Kay, an analyst with IDC.