A raft of retailers and tabloid newspapers are stampeding to launch free internet services in the wake of Dixons' Freeserve success, despite the fact that analysts claim the internet is still not driving PC sales.
Dixons has announced that it has signed up its one millionth Freeserve member - 18 weeks after the launch. The retailer's colonisation of the internet market has spurred competitors to launch rival operations. Toys R Us has launched a free internet operation and Tesco is offering its 10 million Clubcard holders a service. Others eager to get in on the act include The Sun and The Mirror newspapers, reported to be in the final stages of preparation for the launch of their free internet ventures.
Continuing Freeserve success led to the formation of a separate business unit for the cash cow operation, estimated to be worth #1 billion to the retail giant (PC Dealer, 27 January). However, the competition has already pushed Dixons to respond, cutting the telephone support cost from #1 to 50p and opening Freeserve help desks in PC World stores this week.
Mark Danby, general manager of Freeserve, commented: 'The UK ISP market has been held back for years by monthly subscription charges. Freeserve has turned the market upside down, proving a subscription-free service is what the UK consumer wants.'
However, research from Inteco revealed that the internet is still not driving home PC sales. The research confirmed that more than a quarter of UK households had a PC, but only 11 per cent of these were online.
Pete Day, senior analyst at Inteco, said: 'For the majority, the internet, and in particular its use to satisfy personal interests, is not yet a big aspect of home PC use. Less than half of all recent buyers are going to the trouble or expense of subscribing or even experimenting with free trial access.'
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