AOL Signs Pact With E-Machines

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America Online Inc., Dulles, VA, unveiled a marketing alliance yesterday with Korean-backed E-Machines Inc. that will offer free personal computers to those who sign up for three years of online service.


Next week, the companies are expected to launch a special promotion to sell $399 basic E-Machine computers with a $400 rebate to buyers who sign on to AOL's CompuServe 2000 for three years. Consumers will basically get the computer for the cost of the online service, about $20 a month.


AOL said under its new deal with E-Machines, which includes a minority investment by AOL in E-Machines Inc., both America Online and AOL's CompuServe 2000 software will be integrated into eMachines' PC.


AOL is predicting that the deal will boost the number of computer users connected to the Internet, especially among lower income consumers. In addition, by locking consumers into longer-term deals for its basic service, AOL can consolidate its lead as the No. 1 Internet access provider.


E-Machines has said it expects to reach $1 billion in sales this year, and has become one of the top five PC makers in less than a year.

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