From the media

First there was the iPC from Zenith, then the CyberPC from Minicomp, and then even your friendly neighbourhood grey market assembler started bundling a modem and an Internet account when you bought a PC. All this is old hat in the fast-moving PC business, but with GES Technologies announcing 300 hours of Internet access with their Datamini PCs, things have started hotting up again. The simple reason--in earlier cases the customer actually paid for the real cost of the Internet account bundled with his PC. All he really got was the convenience of buying a PC that came ready for the Net, which saved him the trouble of actually going out and buying an Internet access account.

But now, as the home PC market gets meatier and more and more ISPs enter the market, buyers will actually get Internet accounts for a fraction of their real value, and in some time, you could even get Internet access absolutely free when you decide to invest in a PC. Simply put, the cost of Internet access will be shared by the ISP and the PC vendor.

So, why are PC vendors and ISPs suddenly in a charitable state of mind? For one, take a look at the ISP market itself. Mumbai already has four large ISPs and by the year-end, the number will shoot up to 10 plus. Just how will these new players (no small boys themselves) find takers for their services, what with VSNL having a four-year lead, MTNL controlling the telephone network and offering bundling there, and with Net access prices already quite low?

Enter bundling with PCs. At a decent discount of course. Even with the ISP and the PC maker absorbing the cost of the Internet access account, they still stand to gain. For the PC vendor, it translates into better sales, and the ISP is happy because they've hooked a new customer when he goes out and buys the PC. And chances are that once a customer is hooked, he'd stay hooked, unless the ISP manages to provide an absolutely shoddy level of service.

Suchit Nanda of Nanda Netcom, an ISP entering Mumbai very soon, confirms that they plan to bundle Net access with PCs, with the vendor and Nanda Netcom bearing a substantial portion of the cost of the Internet account. And what's more, the account they plan to bundle is the unlimited access type for a fixed period. Talk about hooking folks to the Net through your ISP service, and hooking 'em well and true.

Acma Computers, a PC vendor, will shortly unveil its range of PCs bundled with Internet access accounts that are actually subsidised. According to Biren Selarka, director of Acma, they, along with the ISP providing Internet access, would bear nearly 50 percent of the cost of the Internet access account.

You can be sure that all the other players in the PC marketplace will also start offering Internet access at subsidised rates with their PCs soon. As Raj Saraf, chairman and managing director of Zenith Computers, which started the bundling trend with its iPC, puts it, PC vendors would be crazy not to go in for this since they can offer customers a better deal.

Incidentally, the grey market will lose if Net bundling takes off. The grey market can supply you with an Internet access account, or help you get one easily with installation and all, but they won't be able to pick up the tab. And added to that, even ISPs won't be able to bundle their access accounts because the grey market is unorganised and the numbers sold by each assembler won't make bundling viable.

Moving on from here, free Internet access is only a step away, right? After all, with competition forcing ISPs and PC vendors to bear the cost of Internet access, someone might subsidise it wholly. In the US, this is widely prevalent, and even the opposite--free PCs with Internet accounts--holds true. While experts say that totally free Internet access is just a little while away, free PCs with Internet access accounts may be too far in the distant future in these parts.

In the US, free PCs with Net access accounts are linked to advertising and buying of merchandise over the Net. With online shopping and e-commerce still in its infancy in India, this avenue is a dead end. On the other hand, as Raj Saraf of Zenith explains, a standard PC in the US costs about $500 while three years of unlimited Net access bundled with the PC is worth about $1,000. So, over the three years of monthly payments, the ISP has a customer and the PC vendor too recovers the cost of the PC. In India, there are no unlimited access accounts, and even if you offer a free PC with the customer paying for three 500-hour accounts over three years, both the ISP and the PC vendor will still be staring at a huge loss. PCs need to become even cheaper and unlimited Net access accounts should come in for free PCs with Internet accounts to become a possibility in India.

But till then, even a 50 percent discount is still great. The incoming ISPs and PC vendors will soon be betting on this, and if buyers pick up the gauntlet, competition will force even bigger discounts and more. Whichever way you look at it, the customer is king.