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Gateway, Dell Plan Windows-free Appliances

Written By: R. Krause
Published On: November 10 1999

Event Summary

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.

The 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.

These 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.

Market Impact

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.

We 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.)

This 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.

User Recommendations

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.

 
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