Battle Royal Over Future Computers
PC OR NC?
The personal computer is taking the world by storm, despite two serious drawbacks. It is the world's most complicated consumer device. And it's expensive.
This hasn't stopped sales from soaring. Americans will buy more personal computers (PCs) next year than televisions. Still, computer companies are eager to push their technology into an even larger mass of consumers, especially in the developing world.
But if the industry is united in planning for growth, it is hardly of the same mind about what the hardware will look like - and what it will cost. Where software giant Microsoft defends the traditional PC, upstarts like Sun Microsystems, Oracle, and WebTV have different ideas.
Their Trojan horse is a bare-bones computing device that promises to be simpler than a PC and much less costly. The new device, sometimes called an "information appliance" or "network computer" (NC), is optimized to view the immensely popular Internet.
Not only will the machines be cheap to buy - perhaps $500 to $1,000 - but maintenance costs will be drastically reduced. These expenses, ranging from training to upgrading software, are a bugaboo for many corporations.
Software for network PCs is downloaded from central computers via the Internet or corporate networks, rather than requiring costly installation on each machine's hard drive.
Corporate customers are waiting to see how well the devices actually perform. While the machines won't likely replace PCs, surveys suggest the market could be very large. If NC manufacturers can keep the costs down, some analysts believe they can turn even developing-world consumers into surfers of the Internet.
"It seems inevitable," says Al Furst, a consultant on Asia for International Data Group, a worldwide consulting firm based in Cambridge, Mass. It is not only developing-nation consumers who want the Internet; their governments do too. "In Asia, the question of the Internet becomes the subject of Cabinet meeting discussions that go on for weeks.... They all realize that the path to prosperity runs through the computer industry."
Although the world is getting its first glimpse at NCs this week here at the huge Comdex computer show, no one's quite sure what the new device should look like. Should it be a small black box that hooks to a television set? That's the tack of Philips Consumer Electronics and Sony Electronics. They're manufacturing a $300 black box for WebTV that brings the power of the Internet to home television sets.
Or maybe an NC should hook up to a computer screen. That's the direction Sun Microsystems is taking in its sleek JavaStation. With a chip optimized to run a new Internet computer language, called Java, the $750 device is aimed at corporations.
"The early adopters will naturally be the corporations," says Randy Brasche, marketing manager at Network Computer Inc., a subsidiary of database company Oracle in Redwood Shores, Calif. So far, seven manufacturers have signed up to make the Oracle-designed NC.
But the big win for NC will come if consumers buy into the NC concept, particularly in developing nations. The key will be price, says Ronald Chwang, president of Acer America Corp. in San Jose, Calif. Last year, the industry sold about 60 million personal computer worldwide. If manufacturers can turn out NCs for under $500 and market low-cost PCs for under $1,000, Mr. Chwang forecasts they could sell 200 million units by 2002.
Acer's target for its NC: China. "So far, it's been doing very well," Chwang says.
Several obstacles could hold up the spread of the NC to the developing world. "This is a wonderful device, except for the fact that power isn't reliable in most of India," says Vinton Cerf, an Internet pioneer and senior vice president of MCI Telecommunications Corp. Farmers can't surf the Internet if their phones are unreliable - or nonexistent. The proper infrastructure will have to be built first.
Still, the demand is so great, even in underdeveloped countries, that the spread of computer technology looks inevitable, says Mr. Furst of International Data Group. He estimates 8 million to 10 million PCs have already been installed in mainland China. Even in Vietnam, about 100,000 were sold last year, he says.
In Beijing, "people were buying $1,000 Pentium processors on the street," says Albert Yu, senior vice president of chipmaker Intel Corp. in Santa Clara, Calif. "A thousand US dollars, which is a huge number in terms of their salaries!"