AOL has become the second ISP in two days to offer a free laptop with a broadband subscription.

Starting in September, customers who buy a two-year contract for AOL's broadband service through the Carphone Warehouse will get a coupon for a free base-model Inspiron notebook from Dell. AOL broadband costs £19.99 per month.

A similar free laptop deal was unveiled yesterday by Orange UK, which is already offering a 'free' £300 laptop to those who sign up for a two-year broadband subscription at PC World's retail outlets. The moves could prove attractive to those who have never owned a computer or bought a broadband service and therefore could grow subscriber numbers, said Jonathan Coham, an analyst at Ovum PLC. Those customers tend to be older and are more loyal, he said.

But it won't come cheap for the operators. "These are very low-margin customers for the time being," Coham said. "Both Orange and Carphone Warehouse are going to make a slim amount of money on top of what they are getting from the broadband subscriber."

The Dell laptop comes with Microsoft's Windows Vista Home Basic OS, 1GB of RAM, an 80GB hard drive, an Intel Celeron processor and Wi-Fi. The laptop can be upgraded for a fee. Customers also get a wireless router, but have to pay a £14.99 laptop delivery fee.

By contrast, Orange's free laptop offers fewer features than Dell's. It's made by Ei Systems, and comes with Windows XP Home, 256MB of RAM and a 40GB hard drive but doesn't have Wi-Fi. Users can upgrade to a better laptop for a fee. Orange's broadband service, however, is cheaper, at £14.99 per month for a 24-month contract, excluding an initial discount for the first three months.

A Dell spokeswoman said the deal with Carphone Warehouse is an extension of the company's retail strategy, and there will be more retail deals around the world coming soon.

Dell, which traditionally sold computers online, by phone or through catalogues, sees the retail market as a way to stop its declining market share, Coham said. Dell could potentially try to entice the novice computer users who take the free laptop into buying technical support packages.

"I think if Dell is smart they will see this as an opportunity to upsell these basic PC customers with additional accessories, software and support," Coham said.