Harvey Norman dismisses Telstra’s $0 laptop

By Patrick Avenell

SYDNEY: Harvey Norman has dismissed Telstra’s announcement that it will sell laptops on contract with $0 upfront payment. The offer, available only to businesses, is not expected to increase sales or generate profit for retailers.

The contracts exists for 36 months with a monthly payment of $99 covering the computer and 1GB of internet usage. This payment is split into two parts: $70 for the network connection and $29 for the wireless card and notebook. Further payment is required for excess usage costs and all unused credit is forfeited.

Telstra has reached agreements with selected dealers to sell the contracts, including Harvey Norman, ICT Distribution and Techhead Interactive.

Telstra Business executive director Cathy Aston says that notebook computers are set to become a ‘must-have’ in life.

“Increasingly, mobile broadband-enabled laptops are as essential as mobiles, especially for business people. They’re easy to take to many places, you can even go away for a few days, take your laptop and stay connected to the business,” said Aston.

But Harvey Norman’s general manager, computers and communications, Luke Naish was more reserved in his assessment, pointing out that Harvey Norman already offers a range of interest free computer services for business customers.

Naish also questioned the bundling of a notebook computer with a wireless broadband service, saying that certain data plans and notebooks too often did not go hand in hand.

“It’s about filling needs, there are less restrictions in purchasing separately,” Naish said.

Telstra are keen to promote the new scheme as being cost-effective, with small business and start-ups being able to avoid a large upfront payment. The computers, however, are not free. The total minimum cost will be $3,564 and, obviously, after 36 months the three-year-old laptop is out of date and heavily depreciated.

When asked about the potential margins for retailers under such a scheme, Naish replied, “What margins? It’s been an absolute dogfight. The [computer] market is packed at the moment, everyone is underselling.”

Naish went on to say that he expected the contracts to be sold only in “small volumes”.

Interestingly, this is a limited offer, with Telstra naming a 30 June deadline for new contracts. Whether this offer is being used an experiment to test consumer demand for the deal, or if there will be an increase in price after this date, is unknown.

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