The company is giving its customers a "free" PC with monitor when they sign up for the company's $29.95 per month Internet service and agree to subscribe for 30 months.
InterSquid is the latest company to attempt to profitably give away PCs, following companies such as Gobi, DirectWeb, and NuAuction, which are also taking advantage of rock-bottom PC prices to market online services.
With varying business strategies and expectations for success, these companies are emulating the distribution strategy of cell phone service providers, who give away free phones in return for service revenues. Essentially, InterSquid subscribers will get an Intel-based PC with monitor and Internet service for about $899 when all is said and done.
New Jersey-based InterSquid was named after founder and president Joseph Calamari, a former American Express financial planner who believes he has found a viable strategy to make money on the Internet.
"We were reviewing Internet-related concepts for a while, and decided that providing the access, that was the way," to succeed, Calamari said. Giving away computers is not the central focus of InterSquid, but a way to attract subscribers and gain publicity, he said.
As more companies jump on the free PC bandwagon, critics say it is unclear whether the PC business can truly be adapted to the cell phone strategy, because PCs are much more expensive to build and maintain. But Calamari, who notes that PCs are dropping in price in the same way cell phones did five years ago, is confident that the company will be profitable by the end of the year.
"I think it's interesting that people think we are in the free PC business," he said. "No one ever accuses AT&T of being in the free cellular phone business."
Customers must sign a 30-month contract to receive the computer, he said. If customers cancel early, they have to pay for the PC on a pro-rated basis. Customers also have the option of keeping or upgrading their PC at the end of the contract.
With its Internet service, InterSquid is offering subscribers a PC with an Intel 333-MHz Celeron processor, 15-inch monitor, 56-kbps modem, CD-ROM drive, and limited warranty and technical support services. Calamari estimates the company can distribute between 10,000-to-20,000 PCs per month. So far, InterSquid has given away about 300.
InterSquid is largely a marketing conduit. The financing, warranty, and tech support services are provided by InterSquid's PC manufacturing partners. "Everything that we do is handled by each respective company," he said. "We're a type of marketing company."
Calamari declined to specify which companies InterSquid is working with, citing the company's ongoing talks with investors. Currently, the company is funded by a group of individual investors, he said.