IP: Doubts About the Fantasy

[Dave Farber <farber () central cis upenn edu>]

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]
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