AOL Offers $300 PC With Subscription

America Online is now selling a cheap PC designed to boost its shrinking user base with a one-year commitment to AOL's Internet access service required at purchase.

The AOL Optimized PC, built by Systemax, is a no-frills model that will compete with other low-cost PCs such as the Linux PCs built by Microtel Computer Systems and is available through Wal-Mart Stores' Web site, and discount models from larger players such as Dell and Hewlett-Packard.

System Specs

The PC comes with a 1.7GHz Celeron processor, 256MB of DDR SDRAM, a 40GB hard drive, a CD-ROM drive, a 17-inch CRT monitor, and a color printer from Lexmark International for $299. The company, a division of Time Warner, has launched a Web site to promote and sell the new PC.

The year of AOL's dial-up Internet connection service costs $23.90 monthly, for a total of $286.80.

The AOL PC comes with Microsoft Windows XP Home, but the first screen users see is an AOL-designed interface called the AOL Desktop. The PC also comes with an office productivity software package called AOL Office Powered by Sun, which is the StarOffice software suite developed by Sun Microsystems.

AOL has been selling the PC in a limited number of retail markets in the U.S. Midwest as part of a market test, an AOL spokesperson says. It has offered the PC since mid-November, but the $299 offer ends December 31.

Challenging Times

The cheapest PCs from Dell and HP cost about $450, but offer faster Celeron processors from Intel and other options such as CD-RW drives. However, they lack monitors and printers as standard features.

Microtel's PCs cost anywhere from $200 to $500 on Wal-Mart's site with Duron processors from Advanced Micro Devices Inc. and Linux operating systems from SuSE Linux AG and Lindows.com Inc. The least expensive option comes without an operating system.

AOL's Internet access service has lost 2 million U.S. customers since last year's third quarter, according to its October financial reports. The company now has 24.7 million members in the U.S. Membership is growing in Europe, but the company added only 113,000 users from last year's third quarter to this year's quarter for a total of 6.3 million European users, not enough to offset the U.S. losses.

The company is trying several strategies to recapture U.S. users, including a broadband service, redesigned software and a forthcoming low-cost dial-up service.

Note: PCWorld.com has a partnership agreement to provide content to America Online.