October 28th, 1999 - Major personal computer makers, including Dell and Gateway,
are quietly working on a wave of products that won't use Microsoft Corp.'s Windows
PC operating system, the source of the software giant's market power.
desktop machines, which are expected early next year, will be designed primarily
to surf the Internet and be priced far below standard PCs running Microsoft's
Windows 98 operating software, industry executives said.
Internet computers, or "appliances," won't soon supplant Windows PCs, which
will likely dominate the market for years. But if they take off, they could
begin to erode Microsoft's dominance of the desktop.
This announcement indicates that the network computer (NC), first pushed by
Oracle CEO Larry Ellison, may finally gain enough support to succeed. This will
diversify, not consolidate, the computing landscape by adding yet another segment
over which the PC makers can fight.
expect the bulk of the initial market impact will be on the home/consumer PC
market, since business users tend to require more functionality than a web-surfing-only
unit can provide. However, when/if application solution providers (ASPs) deliver
useful web-based functionality, the business segment will open up to NCs. (We
use the term "useful" because, although the ASP model has gained support recently,
it is not yet a reality due to speed/bandwidth/etc. considerations.)
announcement is also an attempt to break free of Microsoft's OS domination.
However, even though Microsoft has no official offering yet in this area, we
believe they will within three years, especially if NCs gain market share in
the next nine to twelve months.
Because of the inherent risk in jumping on a bandwagon prematurely, corporate
users should adopt a "wait and see" attitude - or at least proceed cautiously.
Making a wholesale switch to an NC-centric corporate model is not recommended
at this stage - Dell and Gateway should demonstrate their products and the products'
viability first. In addition, business users (other than the surf-only crowd)
should ensure that ASPs are available and robust enough to support customer
business needs adequately.