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IP: Doubts About the Fantasy
From: Dave Farber <farber () cis upenn edu>
Date: Tue, 05 Dec 1995 09:25:52 -0500
From: anon-remailer () utopia hacktic nl (Anonymous) The New York Times, November 27, 1995, p. D3. Doubts About the Fantasy of a $500 'Network PC' By Peter Lewis It was the buzz of the Comdex trade show in Las Vegas earlier this month, hailed as the hottest idea since the personal digital assistant or the set-top box. But can anyone really build a $500 "network PC"? And will anybody buy a computer that has been stripped down to just the basic components required for connecting to the Internet and other computer networks? I.B.M., the Oracle Corporation, Wyse Technology, Toshiba and other companies have said in recent weeks that they will have these so-called diskless network computers on the market next year, although only Oracle and Wyse have talked specifically about a $500 price tag. The price instantly caught the imaginations of consumers who now spend from $1,500 to $3,000 for a typical personal computer system. But other computer industry executives and analysts suggested that the "$500 PC" is richly overhyped and poorly understood. "These people are just nuts," said David Coursey, editor and publisher of PC Letter, an industry newsletter in San Mateo, Calif. "It sounds like a used 486 to me, because that's what you get for $500. It's difficult to imagine anything you could build for $500 that has any future to it." But some executives imagine a rich future in low-cost, limited-function computers. They have been drafting plans to begin selling "networked" computers -- computers that have no internal hard disk or other data storage -- with enough processing power to tap into information and operate programs that reside on larger computers elsewhere on a network. "We believe there will be a category of networked computers in many different forms, in portable versions and desktop versions," said Eric Schmidt, chief scientist at Sun Microsystems Inc. in Mountain View, Calif. "They will exist and they will be very successful, and not just from Sun and Oracle. The price points are going to be pretty low, and they'll look more like consumer electronics." Others say that even if the category never gets off the ground, it could cause a swifter decline in prices for regular personal computers. The arguments favoring a new generation of low-cost network computers are compelling, at least in theory. Proponents note that a majority of personal computers are now attached to office computer networks, the Internet or some other online information service. They also point to recent advances in so-called client-server technology, where individual users, known as clients, are "served" over a network by a central machine that acts as a common data and program resource. The appeal of diskless computers is also expected to grow with the popularity of the Internet's World Wide Web. New Internet technologies, like Sun's Java and the Microsoft Corporation's Blackbird systems, are expected to allow more processing power to reside on the network instead of in the client computer. "The device will have the processing power of a PC; it just doesn't have all that other stuff," like CDROM drives and giant hard disks, Mr. Schmidt said. Because the applications and data will reside in the network rather than on the desktop, it will not matter what operating system or microprocessor is used Mr. Schmidt said. Some critics say these proposed diskless machines are merely modern versions of the "dumb terminals" that were once tethered to mainframe computers before the personal computer revolution changed the technology landscape. And others say all this is a pipe dream arising from companies seeking to break the virtual monopoly of Microsoft and the Intel Corporation, which dominate the software and microprocessor sides of the PC universe. "It's been a subject of talk among the less informed, and the people trying to thwart Intel and Microsoft are the ones driving it," said Theodore W. Waitt, co-founder and chief executive of Gateway 2000 Inc. of North Sioux City, S.D., one of the world's largest PC makers. "Our customers are saying they want more and more, not less and less," Mr. Waitt said. "Our thrust is to give more features, more processing power, more storage, and bigger and brighter displays, but at a better price point." Mr. Waitt said the average system price at Gateway actually increased this year, to nearly $2,800 from $2,550, suggesting that customers were willing to pay more for better performance. "The idea that the Internet can spawn a new device is fundamentally correct, but it is not $500 and it is only somewhat platform-independent," said Bob Stearns, vice president for corporate development at the Compaq Computer Corporation in Houston. "When you add up the cost of the basic components, I'd be surprised if anyone could make a reasonable profit selling it for less than $1000. On the other hand, Mr. Stearns said the excitement over a low-cost PC might create enough pressure to force computer makers to create less expensive, but still fully powered, PC's for the consumer market. "I also do not think this thing replaces the PC," Mr. Stearns said. "Still, it could be a device for the computer-phobic, or it could be a second or third or fourth PC for someone." Mr. Schmidt at Sun said Internet companies might follow the cellular telephone model and offer cheap PC's at below cost, to get customers to sign up for more lucrative network services. Larry Ellison, chief executive of Oracle, was challenged at Comdex to defend his vision of a $500 network computer. He outlined a simple computer consisting of a central processing unit (microprocessor); a communications chip that would function like a high-speed modem; 4 megabytes of dynamic random access memory; 4 megabytes of "flash" memory; a mouse; a keyboard and a monitor. "He claimed he can build it for $330, and I'm skeptical," said Timothy Bajarin, president of Creative Strategies Research Internatiodal, a computer consulting firm based in San Jose. "But you know, I'm very pleased that Ellison is bringing this up. I welcome what he is saying because it will make the computer industry focus on getting the digital experience to people who cannot now afford a $1,500 to $2,000 computer." "For the past few years we've been stuck on Windows this and Windows that, stuff that is really rather mundane," Mr. Bajarin said. "This is getting the industry's creative juices flowing again." [End] S0$AD
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