As clever as they are at dreaming up new products, technology companies seem equally clever at creating schemes to advertise low prices that deceive the user. Nearly every vendor wants to advertise a low price to appeal to the widest audience. Recently I've been witnessing a disturbing trend where more companies trumpet a screaming good deal to lure in customers without disclosing all the costs or details. When companies cross the line, it makes it tough for honest companies who are offering a legitimate price to compete. I saw two such examples over the Labor Day weekend.

In the LA Times I saw an advertisement for a $299 desktop computer from Dell. Companies selling Linspire computers like Microcenter, sub300, Fry's and PC Club regularly market computers for less than $300, but because Microsoft charges so

See the ad for a $299 desktop

much more for Microsoft Windows XP than Linspire, it's rare to see retailers selling non-Linspire computers for less than $300, so I thought I'd investigate. There were no other details in the ad except "Call for more info," which is exactly what we did. After getting dropped and being bounced back and forth from "business" to "home" divisions twice, a pleasant but befuddled sales rep from Nashville said we had to purchase 5 computers to qualify for this price. We inquired as to the specifications of the computer and were told that they could not be revealed until we setup a business account with a tax ID number. After some pleading they dropped the tax ID demand, but insisted we setup an account which we did. Then they revealed that the true price was $349, and a $50 mail-in rebate would get the price down to the advertised $299. We were told that there was no web page, but a quote would be sent in a follow up email. As promised, an email was sent outlining the offer but at the bottom in bold letters it read, "System not eligible for mail-in hardware rebate." (We pasted the quote at the bottom of this page as it was sent to us.)

Get computers that really start around $300 (or $400 with a monitor) from Sub300

After more than an hour of research, it's still not clear if the advertised $299 computer is a legitimate offer from Dell. I'm personally not a fan of mail-in rebates because they're usually just a ploy. In spite of buyers best intentions, the retailers or manufacturer are banking most won't follow the steps and redeem the paper form, meaning the company can avoid having to pay out the monies. Rebates aren't illegal, but advertising prices for which secret rebates are required is a slimy business practice. I'm going to reach out to Dell's spokesperson for clarification on this issue and will print their official response next week.

The second example involves Vonage, an Internet calling company which competes with SIPphone. (Note: When I'm not spending time on Linspire, I am building SIPphone.) To make net calls, many people are buying an "adapter," which is a small box that plugs into your broadband connection and makes it possible to use a regular phone to make calls. (You can also make calls using your Mac, Win or Linux computer, but many people prefer a traditional phone experience.) SIPhardware.com lists low-cost adapters that consumers can buy and use. A few of the great benefits of net calling are that consumers can avoid monthly fees, and they can choose which company they want to work with.

Get real affordable SIP hardware from siphardware.com

However, Vonage is deceiving consumers with their advertising by hiding critical facts and costs from consumers. Through some retailer partners, Vonage is promoting an adapter for just $59 or less, which rivals or beats the most affordable adapter from SIPhardware.com. What consumers are not being told is that the device is intentionally crippled, since it can ONLY be used with the Vonage service. They are subsidizing the price because they are forcing buyers to use their service, since they have impaired the ability to use the device otherwise. It's the equivalent of a TV which could only connect to a specific cable company's offering. Even worse, while they tout "no contracts required" the Vonage service requires a monthly payment for the device to function.

The typical advertisements like here, here and here, as well as language on the box conceal pertinent facts that every discerning buyer would need to know. Even when examined closely, there's no indication that the unit will only work with Vonage. There's also no indication that a monthly fee is mandatory to make calls. By hiding these facts, Vonage is falsely portraying both the cost and functionality of the product. Consumers should know upfront that a monthly fee is required. They should know that the device is crippled to ONLY work with Vonage and they will be forced to pay whatever Vonage wants to charge them. (All the adapter devices sold at SIPhardware can be configured by the consumer for their favorite service, and are not crippled.) In these early days, its important for Internet calling to be clearly explained to consumers, so it does not garner a negative reputation. Hidden fees are relics of the phone systems we want to leave behind.

Deceitful pricing hurts everyone in the technology industry, because consumers become wary and ultra-skeptical. If consumers can't figure out how to buy a $299 computer from Dell, they may think it's all a scam, when in fact I have a capable Linspire computer on my desk at home which I bought for barely over $300 from idotPC online. If a customer wants to make net calls, and buys a Vonage device, only to have to return it when they find out the real cost and limitations, it may be a long time before they try net calling again. Those in the technology business have the most to lose when other tech companies utilize questionable advertising tactics.

-- Michael

Quote on the computer from Dell

Quote Information Quote detail Quote number: XXXXXXXXXXXXX Dimension 2400 Series,Intel Celeron Processor at 2.4GHz Qty: 1 Unit Price: $349.00 [BC24B ] - [221-3162] DIM 2400,CELERON,2.4GHZ,MMT,IN [512M3P ] - [462-2848] 512MB DDR SDRAM AT 333MHZ,TIED [QK ] - [310-1582] DELL QUIETKEY KEYBOARD,104,ENG [N ] - [320-3000] VIDEO READY W/O MONITOR,DIM2,X [IV ] - [430-3900] INTEGRATED INTEL 3D AGP GRAPHI [40 ] - [340-9481] 40GB 7200RPM ULTRA ATA,DIM,V [NFD ] - [340-8688] NO FLOPPY DRIVE REQUESTED [WHXP ] - [420-1921] [WHXP ] - [313-7222] [WHXP ] - [412-0409] [WHXP ] - [412-0688] [WHXP ] - [463-2282] WIN XP HOME,SP1,ENG,DIM,TIED DELL APPLICATION BACK-UP CD,FAGENERIC DIMENSION SUPPORT IMAGE RESTORE, DIM THANKS FOR PURCHASING YOUR DEL [SM ] - [310-1871] DELL 2-BUTTON SCROLL MOUSE,DIM [IN ] - [430-0441] IINTEGRATED 10/100 ETHERNET [N ] - [313-3607] NO MODEM REQUESTED [AAREAD ] - [412-0705] ADOBE ACROBAT READER 6.0 [CD48 ] - [313-1476] 48X MAX VARIABLE CD-ROM DRIVE, [IS ] - [313-0847] INTEGRATED ADI 1885 AUDIO,TIED [N ] - [313-4514] NO SPEAKER REQUESTED,DIMENSION [MCAFE90] - [412-0632] MCAFEE 5.0,OEM,ENG,90DAY,DIM [MMBASE ] - [412-0691] MUSIC MATCH 8.2,BASIC,DIM/INSP [DPS ] - [412-0521] DELL PHOTO ALBUM STANDARD [AOLSMB ] - [412-0586] [AOLSMB ] - [412-0670] AOL BSD/SMB DELL/MY WAY HOME PAGE,BSD [COREL ] - [412-0701] WORD PERFECT PROD PACK,V12,ENG [B90D ] - [412-0360] [B90D ] - [902-7980] [B90D ] - [900-3961] SOFT CONTRACTS - BANCTEC NBD 90 DAYS,DIM,BSC, BSD (LOW)NO WARRANTY AFTER 90 DAYS [NOINSTL] - [900-9987] ONSITE INSTL DECLINED(OPTI) System not eligible for hardware mail-in rebate Qty: 1 Unit Price: $0.00 Purchase is NOT intended for resell Qty: 1 Unit Price: $0.00 Subtotal: $349.00 Shipping: $29.00 Tax: $29.32 Total: $407.32 Please note that Dell cannot be responsible for typographical or other errors, and reserves the right to cancel any orders resulting from such errors.

78%  13%  7%  AGREE  DISAGREE  MIXED

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