IT Infrastructure for free

1999-05-10

So, BskyB are to give away satellite receivers for a song (or a forty pound connection charge). This announcement may have come as a bit of a shock to those poor punters who have just shelled out hundreds of pounds. Fortunately for them, the broadcaster is to freeze their subscriptions to make up. In any case, in this converging market, the news should not come as a surprise.

Let’s think about this. Again and again, we have examples of technology and services being given away for free. Look at Microsoft’s Internet Explorer and the now-ubiquitous mobile phone (which has been consistently offered at several hundred pounds lower than its cost of manufacture). Reasons may vary – in all cases the suppliers are looking to win market share which they can exploit later or leverage for other products, in some cases costs are recuperated, at least partially, through subsequent subscription costs. A company in the US is even giving away PCs for free, but considering that these can now be built for the cost of a mobile phone, this approach should not be unexpected.

Given that this trend is to continue, we are likely to see ever more imaginative approaches to making money out of the internet, both to cover costs and to make a tidy profit. Revenue will come from advertising and customer profiling (click trends), sure. Money is also to be made by hosting the channels through which “real” goods and services can be purchased, such as travel bookings and car servicing. Tomorrows entrepreneurs will have to think of ever more esoteric ways of extending and exploiting this medium.

In the meantime, both businesses and consumers are likely to profit from the situation. It might be wise for anyone about to make a major investment in IT takes stock of what is likely to be made available for free, such as email access or extranet services. At least it should enable us to harden our negotiating stance.

(First published 10 May 1999)