Double-Dealing Toward High-Speed Opportunism

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Our new friends in the computer business may be rejoicing
in their business mantra, which seems to be paraphrased from Barry Goldwater's political
rhetoric: "Opportunism in the pursuit of high-speed access is no vice. Monogamy in
defense of data market share is no virtue."

As @Home gloats about its recent deal with Dell Computer to
put high-speed access facilities into desktop computers, and as Road Runner glories in its
similar Compaq Computer alliance (and investment), the Silicon Prairie guys (both PC firms
call Texas home) are surely enjoying the situation.

Both Dell and Compaq looked mighty happy a few weeks ago,
when they were on the platform with Bell Atlantic, announcing similar PC collaborations
for the new "Infospeed" digital-subscriber-line service.

So much for exclusive advantage.

Of course, Dell had already set up a similar
"ConnectDirect" alliance with SBC (formerly Southwestern Bell) for its DSL
rollouts. In all cases — as with the cable deals — the plan is to build the
appropriate high-speed equipment directly into PCs, meaning that customers can buy
computers that are pre-configured for high-speed access.

One way or the other.

Just to rub it in, Bell Atlantic invited a CompUSA
executive to its podium, too, reminding us that the big computer retailer will market the
Infospeed DSL service with in-store demonstrations and circulars wherever the service is
available. @Home has the same kind of retail deal with CompUSA.

There was no mention of what happens if Infospeed is
available — as it soon will be — in areas also served by cable modems, other
than Bell Atlantic poseurs extolling that their service and brand name will dominate the
market.

As a matter of fact, Dell, Compaq and CompUSA are merely
the stalking horses for a hungry PC industry that is salivating over Internet-equipment
sales as its next big opportunity. Other computer companies will follow. And none will
have any incentive to choose sides in the high-speed shoot-out.

They're just the arms suppliers.

The opportunism of computer makers and dealers is
understandable, especially since no one yet knows how — or if — either
high-speed service will succeed. The impending confusion should be fun to watch. Which box
will a customer buy: cable-modem ready, or DSL-ready? How will he choose? Which will the
clerk push harder?

Obviously, many of these decisions will be made in the way
that retail electronics companies always make decisions: spiffs and payoffs. Bell
Atlantic's DSL retail wizard declined to describe her tactics for in-store promotions. It
was impossible to discern if that was because:

1) the plan was proprietary information;

2) it hadn't been worked out yet, or;

3) she couldn't get retailers to agree to the terms yet.

The dual loyalties of computer makers and retailers will be
mightily challenged by this situation. The Compaq and Dell executives on Bell Atlantic's
podium squirmed a bit when a curmudgeon in the audience asked them how they'll coordinate
their DSL and cable-modem support. Under the umbrella of Bell Atlantic's hospitality, they
cleverly ducked comparisons.

As DSL-versus-cable-modem confrontations loom closer, the
battles will include face-offs of prices and features.

Will the computer-store clerk (or phone-in-order-taker)
ascertain where a customer lives to determine if DSL and/or cable service is available at
that location? Assuming that the computer-maker offers identical features on its computers
for both access systems, how will a consumer decide which machine is better? Will telcos
or cable operators subsidize the equipment to attract new customers?

What will retailers demand from carriers to set up in-store
demonstrations? Who is responsible when an unhappy customer wants to switch from DSL to
cable modem, or vice versa?

The questions are endless, although there's little reason
to believe that a sales-hungry, commissioned clerk will actually run through much of the
list.

New support and marketing materials — including
competitive assaults — will have to be created, even though there are few clues yet
about how to sell against the other guy's high-speed services. The initial telco DSL
services look high-priced when compared with cable-modem services, but who knows where
those prices will actually settle?

In that regard, the computer opportunists are wisely
working both sides of the street. In your hearts, you know that they're right.

I-Way Patrol columnist Gary Arlen turned down the chance to
buy a PC with a built-in high-speed modem from a guy selling them from the trunk of his
car.

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