The Net PC: Will lt Fly?

A host of computer giants are betting there's a big market for a low cost, not-very-bright terminal. Are they right?

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By Jill Gambon
Issue date: Nov. 27, 1995

The hot buzzword in computing these days is the Internet appliance. Is it the wave of the future--or the Son of the Dumb Terminal? Can it be used to harness the power of networks such as the Internet? Or is it merely the latest opportunity for computer giants to waste billions of dollars?

It may be all-or none-of the above. But one thing is clear: The idea of a low-cost, stripped-down, desktop dev ice that offers easy access to the World Wide Web, the Internet, and a company's internal network has become the hottest topic in information technology. While many computer makers ridicule the concept as a step back to the era of dumb terminals and big iron, other computing heavyweights such as IBM, Oracle, and Sun Microsystems are touting the so-called Internet appliance as a way to simplify computing and save companies millions on software and support.

IBM chairman Lou Gerstner is so high on the idea that he made it the focus of his first-ever Comdex address, telling attendees in Las Vegas on Nov. 13 that his company plans to be one of the first to unveil a so-called interpersonal computer early next year. "Few users care where the processing, storage, and data exchange take place, whether it's in a tin box or anywhere," Gerstner said. "We think there will be a growing shift to this. It will be an evolution from the full-scale PC."

The concept of using a not-so-bright terminal to access network-based applications has gotten a boost in the past year with the growth of the Web. Free Web browsers with easy-to-use interfaces from Netscape Communications Corp. and others have attracted millions of new users, and companies are beginning to use the browsers internally to access corporate databases. Moving computing power, applications, and data onto corporate networks and servers reduces the need for desktop devices to have their own applications or powerful microprocessors.

Gerstner says IBM's approach offers corporate customers plenty of advantages: Trimming the costs of purchasing and maintaining software, which could be used ad hoc on a network; eliminating the need to constantly upgrade hardware; and no longer having to swap in dozens of diskettes to install applications. "You can move from application to application without throwing away your investments," Gerstner says.

Oracle president Larry Ellison has been promoting the idea of a low-cost dev ice for Internet access for several months. Oracle has designed a $500 network computer that would offer popular applications like electronic mail, word processing, and database access, and the company hopes to have prototypes available to show to manufacturers by year's end.

Other industry heavyweights are jumping on the bandwagon, too. Sun, for example, is developing an operating system for network computing devices that uses the company's Java programming language. Sun officials say they may offer a Sun-branded Internet terminal next year. "Think about this as the PDA [personal digital assistant] done right," says Eric Schmidt, Sun's chief technical officer. "The problem with PDAs is they [don't] have content. The Internet gives them content."

Will such a device appeal to information systems managers struggling to regain control after the introduction of PCs and LANs shook up the corporate technology infrastructure? "A centralized philosophy is certainly easier th an a distributed model," says Wayne Gacnik, director of corporate IS at Sherwin-Williams, the $3 billion paint manufacturer in Cleveland. "If we go through a cost-conscious period, and if it's a significantly cheaper alternative, then there will be appeal."

But for some IS executives who've been buying faster and more powerful PCs on a regular basis, the idea of migrating to less-potent machines rankles.

"If there is such a device, why am I throwing out my 286s and 386s?" asks Lewis Temares, VP of information resources at the University of Miami in Coral Gables, Fla. "Do I have to buy another flavor when I already have one that can be used?"

Analysts also are skeptical about whether corporate America will accept such a device. "It's a kamikaze mission for an IS manager," says Cheryl Currid, an InformationWeek columnist and president of Currid & Co., a consulting firm in Houston. "You can't put dumb terminals in front of people wh o are already using PCs."

"It's the silliest thing I've ever heard," says Nate Zelnick, a senior analyst with Jupiter Communications Inc., a research firm in New York. "Certainly in the short-term, it's just not going to happen."

IBM, for one, is determined to prove the skeptics wrong. Early next year, IBM will begin testing such a device with 12 corporate customers. While IBM execs won't be specific about pricing, they say their machine will probably exceed the $500 cited by Oracle's Ellison, but come in below the $1,000 price of a low-end PC. It's likely to have a hard drive of 500 Mbytes or less, a 486 or smaller processor, run Windows software, and come with a screen. Other hardware companies, such as Digital Equipment, Hewlett-Packard, and Compaq, are working on or evaluating low-cost machines.

While IBM appears to be developing its interpersonal computer for the corporate market, Oracle is targeting consumers. Ellison has described a machine that incor porates 4 Mbytes of DRAM, 4 Mbytes of flash RAM, the $50 microprocessor chip that powers the Apple Newton, a PC Card slot, a keyboard, and a mouse. The device won't have a screen, but will plug into a monitor or TV.

IBM plans to support its efforts on the software side by creating by year's end a separate division with about 100 people that will focus on integrating all of IBM's software technology for Internet and network-centric computing, says John M. Thompson, senior VP and general manager of IBM's software group.

Thompson concedes that a low-powered, low-cost device isn't for everyone. "It will take time to mature," he says. "There will still be a lot of full-function PCs, but you'll see more of the functionality move to servers and networks."

Still, several industry leaders question whether the world is clamoring for a low-cost, low-powered device. "Most people don't find themselves with too much disk space or computing power," says Gordon Eubank s, CEO of software maker Symantec Corp. "I think this is truly a naive view of the world."

"I'm not saying they're crazy," says Microsoft executive VP Steve Ballmer, "but it doesn't seem to be the leading way to get there from here."

"I think a very limited number of people want a dumb terminal," adds Philippe Kahn, chairman of Starfish Software in Scotts Valley, Calif., a Net tool vendor. "Most want to do more than just browse. They want to execute applications-and they need processing power for that."

If Kahn is right, then several companies are betting big bucks on a device that won't have much appeal. Of course, that won't be a first for the computer industry.

-with additional reporting by Brian Gillooly , John Foley , Stephanie Stahl , John Swenson ,
an d Clinton Wilder

Related links in this article:
Netscape Communications
IBM
Oracle
Sun Microsystems

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