Earthlink, the online service, has bought the PC manufacturer (well, assembler) PeoplePC. This is interesting for a bunch of reasons.
- They only paid $10 million (plus assuming $34 million in debt). Though I haven't looked at any financials -- what, you want me to do research at these prices? -- that seems low for a company that had established itself as a national brand through some pretty good advertising.
- Why would an online service buy a hardware company? It surely isn't because hardware has such terrific margins. Earthlink plainly wants to be a one-stop shopper for online access. Communications turns out to be the killer app after all. Getcher e-mail, web, access and smarter-than-the-average terminal all in one place.
- The next step, I bet, is for Earthlink to not sell the computers at all, but include the hardware in your monthly fee: $35 for dialup access, $60 for DSL access, $100 for DSL with hardware.
- When online services begin giving you the hardware, and the hardware becomes solely a communications device, Microsoft's position on the desktop becomes tenuous indeed. Earthlink could use pretty much any OS it wants -- even a custom one -- if all they're providing is a computer terminal.
- The last interesting point is that I learned about this story in The Hollywood Reporter. Interesting place for tech news, no?
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