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By Richard Menta- 9/13/99 It certainly grabbed my attention when I came upon Eiger Labs new listing in Amazon for its MPMan F20 portable MP3 player. The listing said "Our price $120.00. Your price is $0.00 after the manufacturer's mail in rebate of $120.00". This was followed by a link with the telling words "Here's How This Works". How this works is simple. To qualify for the rebate, the buyer must agree to sign a one year contract with Juno Web at $19.95 per month. |
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The success of the free PC strategy is spreading to MP3 portables. With PC's, Internet providers offer rebates on computers in return for a long term contract with their services, usually 3 years. Since the rates are usually no higher than what other IP's charge, both new and seasoned web surfers have flocked to these deals. The biggest winners are the computer manufacturers who are selling more machines at little or no cost to themselves.
Still, not everyone feels comfortable commiting to long term IP service. 3 years is a millenium in computer years and a very competent provider at 56K may fall badly behind should DSL and cable modems hit the local neighborhood big. Rather than lose these potential customers, it makes sense to offer a second, short term option with a lesser priced item. The question is, what item?
Enter Eiger Labs. As mentioned before, it is the manufacturers who are the biggest winner in this game. By pairing with an Internet provider to fill this one year contract niche, Eiger stands to increase not only its market share but generate greater brand awareness. Eiger has plenty of incentive to be creative. A dark cloud may be looming over the horizon.
As one of the few companies with an MP3 player on the market, Eiger has enjoyed being a big fish in a little pond. But the huge success of these units, in particular the Diamond Rio, have opened the eyes of quite a few competitors. MP3 players are expected to be a big seller this Christmas and the promise of strong holiday sales will herald a dozen or so new manufacturers into the arena.
These manufacturers include distribution heavyweights like Samsung, RCA, and Phillips, corporations who can quickly flood their products into the department stores and electronic chains smaller companies like Eiger are yet to establish relationships with. Furthermore, MP3 players are seen by many as the heir to the portable cassette players which means the likes Panasonic and Sony should throw their hats into the ring soon.
With deeper pockets, wide distribution networks, and larger R&D departments, A small company like Eiger Labs may be ill equipped to compete head on in the near future. Even the mighty Diamond Rio, the industry leader, will probably lose significant market share when its products lie on the shelf in between well branded competitors from Aiwa to Zenith. Therefore, The IP channel may be an important one down the road for Eigers future health.
For the consumer, this industry climate may have brought about an excellent bargain. Those who are satisfied with their Internet provider may not wish to deal with the hassels of switching, but for those who are dissatisfied, indifferent, or simply don't have a provider yet, it could be a great deal. Of course, that is only if Juno Web provides good commited service. Make sure you read the details of the contract before signing. For its part, Juno Web wants to keep you longer than the one year. The goal of these promotions are more customer retention than customer aquisition. Hopefully, this means an elevated commitment on their part to customer service which would be the best part of all for the consumer.
Copyright 1999 MP3 Newswire. All rights reserved.
