Muryo-Pa!
by Kyoko Fujimoto

What would you say to a company that offered you a brand-new computer for the seemingly simple price of answering a few questions about yourself? Would you say, "what's the catch?" or "where do I sign!"...?

That was exactly the question posed early this year when US-based Free-PC, Inc. became the first company to offer consumers a personal computer, Internet access, and e-mail in exchange for handing over personal information such as income level, interests, and spending habits, and then having tailored advertising banners on their screens whether online or not. It's an offer that millions of US Internet users have said "Yes!" to since the scheme first hit the headlines in February. Now, Japan has caught the giveaway-bug and has come aboard with a local version.

Small price to pay for big business
Seeing huge potential in Japan and grabbing it, is Kazuo Kanayama, founder of T-Zone - one of the biggest electronic shops in Akihabara - and former president of Ado Denshi Kogyo (now called CSK Electronics), which operates T-Zone. In his 24 years with the company, he has seen the Japanese electronic market change considerably. Kanayama was appointed Chairman of Vertex Link in July and given the task of starting a new e-commerce service - dubbed "e-cap24" - which is expected to be one of the biggest shopping malls on the Japanese Net (see http://www.ecap24.co.jp). Thinking it was important to raise Japan's PC penetration rate in order to successfully promote his new e-business, and being inspired by so many free PC projects in the US, Kanayama decided that now was the time for Muryo-pa! (loosely, "free PC" in Japanese), and Vertex Link's Free PC project was born.

"We are not planning to make a profit through distributing free PCs on their own," says Kanayama. "We would like to build a firm infrastructure where people can go onto the Internet, and eventually to our Web shopping mall. The best way to build this infrastructure is to distribute free PCs." As in the US, the giveaway business has proven highly viable as it has created a direct link between consumers and advertisers. From the initial questionnaire, advertisers are able to directly target and monitor the PC users, tracking which ads are clicked on as well as what users buy on the Web. This information is so lucrative that advertisers - through their payments to free PC vendors - essentially subsidize the cost of the computers.

E-commerce targets ISPs and telcos
Kanayama sights ISPs, telephone companies, and freight agencies as the top three industries that can benefit from e-commerce. "In order to do e-commerce, people need to connect to the Internet. This means that an ISP and a telephone company are necessary, and when people buy something online, shipping too becomes necessary. We have approached these companies for cooperation on the project, and have received favorable answers." Vertex Link has also approached other companies that could benefit from this project - including banks and supermarkets. "At the moment we have about 40 companies participating in this project, and the number of partners is expected to grow," says Kanayama.

Covering the PC's costs
In effect, the cost of the PC is covered in many ways, including commissions for introducing users to the services of partner companies and advertising revenues. (Japan customers will also have to answer an additional monthly questionnaire based on what partner companies would like to know, and the results are then passed on to these companies). As in the US, ads are displayed when the user turns on the computer, and the banner ads on the desktop serve as direct links to their websites.

But the Japanese scheme, unlike the US, is currently structured more like a three-year free lease agreement, where users can choose to buy their PC for ¥5,000 upon completion of the three-year term, or return it using a pre-paid courier service. If they choose to return the PC, they can renew the contract and exchange for a newer model.

Service structure
In August, Vertex Link distributed 10,000 IBM Aptiva units. Though Vertex Link have their own white box PCs, they chose to use IBM because of the extensive support service IBM provides throughout Japan. "Users have to pay ¥1,800 a month for the service, but IBM will support them from start to finish," Kanayama explains. "When you get the PC delivered to your house, IBM will come over and check if you are properly connected to the ISP. If there is a problem, they will fix it right in front of you, or take it in for repair and return it for no extra cost."

Selling your soul for a free PC
"Some people have complained to me that it's not free at all," Kanayama says (see sidebar). "But you have to understand that we all need to pay for the ISP and the phone company in order to use the Internet, and increasing the number of users is the reason for distributing the free PCs in the first place."

To be considered for the scheme, applicants must first answer a questionnaire containing about 40 items. In the US, divulging this personal information prompted a lot of criticism from privacy advocates fearing the advent of Big Brother. Concerns were raised over the possible sale of private information to advertising companies, though Free-PC maintains its loyalties lie with the customers and under no circumstances will their information be sold.

Judging by the enormous response to the campaign, the average consumer is not as worried about this as they are about missing out on those free computers. So far in Japan, some 45,000 people have applied, and of those, 10,000 were chosen based on - amongst other things - age, interests, and lifestyle. Kanayama admits that the selection process may not be completely fair, but maintains that PCs are not only being given to rich people. "We are trying to allocate particular users to particular partner companies, and this is how we chose the 10,000 people." He also believes that this type of business will continue to grow in Japan as it has in the US, with the public relying more and more on the Internet for their shopping.

Vertex Link plans to be at the forefront and is set to distribute another 10,000 units in either November or December.

Kyoko Fujimoto is editorial assistant at Computing Japan.

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