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February 8, 1999

THE FIRST “FREE PC” EMERGES AT DEMO 99

By CBR Staff Writer

Free PC Inc, one of the twenty-plus companies within entrepreneur Bill Gross’s idealab! group of start-ups, probably caused the most stir at the Demo 99 conference, which began in Palm Springs yesterday. Free PC takes the step that everyone’s been talking about since emachines Inc, the recently formed venture jointly-owned by Korean Data Systems and Trigem Computer Inc, promised to flood the market with sub-$500 PCs at the end of last year (CI No 3,539). Now Free PC has cut the price of a Compaq Presario internet PC down to nothing, as long as the user allows targeted advertising messages to be delivered directly onto the desktop. As part of the launch yesterday, USA Networks Inc announced it had invested $10m in the company, in exchange for a place on the desktop. The PCs will deliver free access to the internet using Alta Vista email services and free email services provided by another idealab! company, NetZero Inc. Free-PC plans to ship its first 10,000 units to qualifying customers in the second quarter of this year, and is already asking customers to begin applying via its web site at www.free-pc.com. Set-top cable boxes have been free for a long time, and now cell phones are virtually free said Gross. Merchants are now prepared to subsidize the cost of a PC indirectly, he said. Applicants must fill out demographic data such as age, income and family status, personal tastes and interests. Appropriate ads, drawn from a collection stored on the hard drive shipped with the PC, are displayed in a frame surrounding the working area of the screen. The ads can be updated via the internet periodically in the background. Free-PC has signed a contract with Cybergold Inc for incentive-based advertising from companies such as Disney, ESPN, credit card company MBNA, Earthlink and America Online. Gross started out at Lotus Development Corp in the early 1980s before founding software publisher’s Knowledge Adventure Inc in 1991. idealab! was founded in March 1996, and also includes companies such as CitySearch, GoTo.com, eToys Inc, Centra Software Inc, IntraNetics Inc and eWallet Inc. See related story for more Demo 99 news.

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