New Internet Appliances Coming from Compaq

  • Written By: R. Krause
  • Published: September 7 2000

New Internet Appliances Coming from Compaq
R. Krause - September 7, 2000

Event Summary

August 15, 2000 [Source: Compaq Press Release]

MSN and Compaq Computer Corporation announced availability of the Compaq iPAQ Home Internet Appliance, the first MSN Companion device available. The device is designed for new Internet users who want an easy and affordable way to get connected, surf the Web, send and receive e-mail, and accomplish everyday tasks online. The simplicity of the iPAQ Home Internet Appliance provides consumers with a convenient and rich Internet experience that makes it easy to stay connected to the people and information they care most about.

With only two connections-a power cord and a phone cord-the iPAQ Home Internet Appliance with MSN Companion instantly connects users to the Web with the touch of a single button. MSN Internet Access is preinstalled and configured so users don't need to spend time manually setting it up at home. MSN instantly connects users to the Internet and a simplified interface that presents them with the integrated network of MSN content and services. MSN Hotmail, MSN eShop, MSN Search and MSN Messenger Service are all available. The device is automatically updated periodically over the Internet for worry-free maintenance, providing users with virtual obsolescence protection for their system.

Consumers are eligible for a $400 rebate with a three-year MSN Internet Access subscription at a monthly rate of $21.95. With this rebate, the iPAQ Home Internet Appliance costs as little as $199. The device is powered by the Microsoft Windows CE operating system, Microsoft Internet Explorer browser software and MSN. Features include an all-in-one design with a 10.1-inch LCD flat panel color monitor with 800x600 resolution; a built-in speaker; a wireless IR keyboard with Internet task buttons; a 56K modem; four USB ports; and LEDs for power, e-mail and an Internet connection. Additional options-including a Compaq USB mouse, a specially configured Epson 740 Micro Piezo ink-jet color printer and JBL Platinum Series stereo speakers-will be sold separately.

The iPAQ Home Internet Appliance is the first MSN Companion device that offers Jeode EVM, an accelerated Java-compatible virtual machine technology from Insignia Solutions that provides faster execution and a more robust application behavior that Web users will appreciate.

Market Impact

Compaq is attempting to extend the iPAQ brand name, building on the tremendous success of the line's desktop devices (over 100,000 sold since their release). The iPAQ Home Internet Appliance is similar in features to Netpliance's i-opener, probably the best-known home appliance at present. Now that Dell has exited the home appliance market (See Dell Drops WebPC), and the Gateway/AOL appliance is yet to appear, and IBM's NetVista is fairly pricey, Compaq can expect to gain a good chunk of market share. As competition increases, we do not believe Compaq can sustain the relatively high price, unless it can build up a dominant market position. We think it unlikely that Compaq will ever have more than 25% of a mature appliance market.

The bigger question is whether there is a large market for a device which costs nearly as much as a low-priced PC, but without all the messy features such as the ability to add application software (e.g. office suites, money management software) locally. As Microsoft attempts to force the market into more of an "application rental" model (i.e., applications delivered through ASPs), we can see that market growing. However, we cannot see it taking over until after the hardware and software makers get together and decide to kowtow to Microsoft.

User Recommendations

This is a consumer-focused device, not a business-focused device. Although the price tag is steep ($599 before rebate, vs. $399 for the i-opener), we believe this product is a better overall choice than the i-opener. Although the i-opener has some minor advantages (built-in stereo speakers, a "pizza key") and costs $200 less when rebates are removed, the ability to use MSN instead of Netpliance's homebrew Internet connection will be more appealing to mainstream users.

HOWEVER, we believe consumer money is better spent than on this type of appliance. Without the rebate in effect, you're paying almost $600 for a box that doesn't do anything until you dial up MSN - and only MSN. Forget AOL, forget MindSpring/EarthLink, forget MediaOne. This is the same complaint we had about the i-opener - a captive ISP setup. If we were "resource constrained", otherwise known as "strapped for cash", we'd get an eMachines low-end model with a 15" monitor, and pick our own ISP. (No endorsement of eMachines is implied, they are just the best-known low-price PC manufacturer.)

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