Fine print complicates PC purchase

September 06, 1999|By Mike Himowitz

What does a PC cost these days?

You have to read the fine print to find out.

Thanks to rebate mania and Internet service tie-ins, computer retailers have become almost as skilled as automobile dealers in camouflaging the real cost of the machines they're hawking in print, radio and TV ads.

Oh, you can find the real price -- buried down there in the 7-point type that describes exactly what you have to do to get the PC for the bargain price that catches your eye in the big print. And when you do the arithmetic, it may not turn out to be such a great deal after all.

I discovered how pervasive the practice is when I perused the PC ads in the paper recently, something I do when somebody asks me what PC to buy. Instead of getting involved in a long discussion, I tell them to wait until they're absolutely ready to whip out the plastic -- then I look over the ads and find a decent system that meets their needs for a reasonable price.

This time the prices looked very reasonable -- too reasonable, in fact. Then I started reading the fine print. It turns out that major PC retailers have all signed "rebate" deals with either Compuserve 2000 or Prodigy -- two former online powerhouses from the 1980s that are trying desperately to regain market share they lost to America Online and other Internet service providers in the '90s.

Here's how it works: When you buy a PC, you get a $400 "rebate" as long as you sign up on the spot for a three-year Internet service commitment. Among the big outlets here in Baltimore, CompUSA and Circuit City are allied with CompuServe 2000, which charges $21.95 a month for Internet service, while Best Buy is hooked up with Prodigy, which charges $19.95.

To get the $400 back (which may not arrive for two to three months after you buy the computer), you'll eventually have to pay $790.20 cents to CompuServe or $718.20 to Prodigy. But throwing in the "rebate" allows retailers to post a lowball price -- or even offer the now-famous "Free PC" deal on bargain-bin, $400 computers.

If you're the calculating type, don't think you can weasel out of one of these deals by waiting for your rebate and then canceling your Internet service. According to the fine print, you have to sign up for the Internet service in the store with a credit card and agree to pay each month for 36 months. If you cancel your Internet service before the three years expires, your account will be charged for a proportion of the rebate (depending on how long you've been subscribed to the service), plus a $50 fee.

Of course, you don't have to take the Internet deal. You can just add $400 to the advertised price of the computer -- which is what it would have cost you a couple of weeks ago before the rebate frenzy -- and walk out of the store free and clear.

The question is whether the Internet deal makes sense. If you're not already hooked up with the Internet but want to be, you have to get your service somewhere. It might be just as easy to do it this way. CompuServe 2000's monthly charge is the same as AOL's, while Prodigy is $2 a month cheaper. Both have solid, reliable networks, and they're available with a local call almost everywhere.

At one time, Prodigy offered its own family-oriented content, but after losing the subscriber war to AOL, it morphed into a straight Internet service provider. CompuServe 2000 is a "lite" version of the classic service that AOL developed after it acquired the CompuServe business from H&R Block. Like AOL and the original CompuServe, the new service has its own content but offers a transparent portal to the Internet.

Now the arithmetic. Buying a PC with one of these rebate deals is the same as buying the computer for full price and getting your Internet service for $10 to $11 a month. That's about half the going rate for national service providers, but not a whole lot better than in a long-term agreement with a good regional Internet company.

On the down side, if you're not happy with the service and want to cancel (or switch to high-speed cable or DSL), you'll have to pay several hundred dollars for the privilege.

For users who already have an Internet account, switching to another provider can be a pain in the neck -- particularly if you have a long-established e-mail address you don't want to lose. You'll have to make sure everybody knows that you've moved and expect to miss some messages during the transition. And if you're happy with your current provider, remember the adage -- "If it ain't broke, don't fix it."

So there you have it -- there's no free lunch. By making one of these deals, you don't really save money on the computer, but you do wind up with a decent price on Internet service. On the other hand, you're virtually indentured to the outfit you sign up with. The potential savings amount to less than $3 a week -- the price of a Big Mac and a Coke. Is that enough to bring you on board?

Pub Date: 09/06/99

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