Event Summary
December
27, 1999 (ZDNet) - In the latest example of PC companies trying to cash in on
the supposed "post-PC" era of Internet devices, computer maker Acer is planning
to launch a line of Internet appliances at next month's Consumer Electronics
Show, in Las Vegas, according to a company source.
Acer's
new products will include the I-Station, a simplified computer based on Microsoft's
Web Companion software that connects to Microsoft's MSN service. The I-Station,
expected to become available in spring 2000, is designed to shield users from
sophisticated PC features.
Like
other appliances to be based on the Web Companion platform, Acer's I-Station
does not include a hard drive or a floppy drive, and will not be able to run
any traditional PC applications or games. The I-Station initially will include
a 56K modem; future models are expected to incorporate broadband connectivity.
Pricing for the I-Station is not available, but is expected to be much less
than that of a standard PC.
Market
Impact
This
announcement means yet another major PC vendor will be trying to get a piece
of the Internet appliance action. The entry of Acer into this market will not
increase the market growth appreciably. We believe most of Acer's sales will
be into its installed base, but Acer may win new customers if the pricing is
attractive enough.
Acer
will have to contend with Compaq, Dell, Microsoft (also expected to show its
"Web Companion" at CES) and Intel, as well as smaller players such as Netpliance.
This adds up to stiff competition in this market, and it is not clear that Acer
will gain more than 3-5% of it. However, even 3-5% will delay market consolidation,
if only modestly. Although most of the above-mentioned companies will not ship
appliances until spring 2000, we expect market consolidation to start before
the end of 2000.
User
Recommendations
Users should care about this announcement only if Acer prices its unit low enough
- anything over $200 is hardly a bargain. If Acer does fall within this pricing
range, then the consumer market is its best target. The business market has
limited use for a diskless terminal, with the possible exception of Application
Service Provider-related infrastructures. With only a 56K modem initially, this
is hardly suitable for ASP use. Acer (and others built on the Web Companion
platform) must provide broadband before the business market will consider it
seriously. Even then, having a diskless terminal means a business must support
the back end with heavy-duty servers and major-league disk farms.
Although
the marketplace in general shows a willingness to recycle old ideas as if they
were suddenly new, we question whether resurrecting the big server/relatively
dumb terminal idea is where the market should head. Until the world goes back
to this computing model, this product is best left at home.