SAN MATEO (11-23-95) - A growing number of industry leaders claim to have seen the future. It is, they say, a $500 network appliance that offers access to the Internet.
Spearheading the effort to promote network appliances are Oracle Corp. and Sun Microsystems Inc., which see the device as a way of usurping the Wintel dominance of personal computers. At fall Comdex two weeks ago, IBM CEO Lou Gerstner pledged that his company would produce a network appliance, called an Internet PC, sometime in 1996.
As if to confirm the existence of a conspiracy, Microsoft Corp. has attempted to downplay the significance of network appliances, painting them as throwbacks to the mainframe era, which have no place in today's client/server environments.
And in the middle of the debate are users, most of whom express indifference or downright antipathy.
So who will benefit from the network appliance?
Not users, according to analysts.
"This is a very vendor-driven strategy," says Karl Wong, director and principal analyst for PC and workgroup software at Dataquest Inc., a market research company in San Jose, Calif. "Nobody wants to sell Wintel machines:
Microsoft and Intel are taking all the value out of the market."
For vendors such as IBM and Digital Equipment Corp., the concept of a network appliance is attractive because of their experience with low-cost terminal networks connected to traditional mainframe systems.
"It's the guys who have mainframes who want this strategy," says Martin Reynolds, director of technology assessment at Dataquest. "It's Oracle [that] wants you to keep all your data in its database and Sun that wants to sell you the server."
But Oracle and Sun argue that the phenomenal growth of the Internet has made the PC less important as a platform for running applications.
Instead, say advocates of Internet appliances, a stripped-down PC that runs applications over the network will be cheaper and easier to use and administer.
These vendors, however, don't intend to totally jettison intelligence on the client. Sun, for example, is researching a network appliance operating system based on its Java programming language that would permit World Wide Web browsing and run network-based miniapplications.
Because of the bandwidth requirements of such applications, only corporate users with high-speed dedicated connections to the Internet are expected to be the initial market for network appliances.
"Gerstner was talking about a defeatured PC," says Kimball Brown, an analyst at Dataquest. "In a private network, you can go to 100Mbps pretty cheaply. It plays into IBM's strengths. For ISDN or modem speeds, you can't do the Internet appliance in the way people are talking about -- with a slim client. There are people who are saying there will be incredible bandwidth to the home. But that is all hogwash and is likely to be for at least 10 years."
Most observers remain deeply skeptical about whether vendors can produce $500 devices that include the kind of functionality required by most applications. Oracle's CEO Larry Ellison maintains that a device that includes a $50 CPU, $30 DRAM chips, $20 flash memory chips, and other components, such as a keyboard, modem, and Ethernet or Asynchronous Transfer Mode interface cards, can be built for that price.
But most users will pay more for a PC if they can get better performance, Brown says.
"A 3-year-old PC can do most of the things that people want from the $500 terminal," Brown says. "The problem is, you can't put enough value in the box to make it worth manufacturing. We really don't see the $500 market taking off."
Microsoft is banking on the continued dominance of the PC in homes and on corporate desktops while hedging its bets with increasingly Internet-savvy applications.
"I don't think [the network appliance] will happen," says Steve Ballmer, Microsoft's senior vice president of sales and marketing. "I don't think the world wants to go back to the mainframe. I think Oracle, Sun, and IBM like mainframes. I'm not saying they're crazy, but it doesn't seem to be the leading interesting way to get [to the 'net]."
Michael Parsons is a West Coast correspondent with the IDG News Service. Additional reporting by IDG News Service staff.
Network PC vendors
The following are developing network appliance technologies:
* Oracle Corp.
* Sun Microsystems Inc.
* IBM
* Toshiba Corp.
* Digital Equipment Corp.
[Copyright 1995 InfoWorld (US), International Data Group Inc. All rights reserved.]