News: Analysis & Commentary: Consumer Electronics
The Soul of a New Refrigerator
In Las Vegas, the shape of e-pliances to come
On Jan. 6, Scott G. McNealy was ready to unveil a technology breakthrough: During a speech at the Consumer Electronics Show in Las Vegas he planned to introduce the world's first Internet refrigerator.
No, Sun Microsystems Inc. isn't getting into the white goods business. Sun CEO McNealy wants to make a point by showing a $350 portable tablet from startup Qubit Technology slapped onto a Whirlpool refrigerator: Information Appliances will soon be everywhere in your home. With easy-to-use software, will make getting a movie schedule or stock report from the Net as simple as toasting a piece of bread.
McNealy argues that these convenient Internet appliances, always ready to answer a question, will take the Web to the millions who have no interest in using a PC, while making it easier for everyone else. And McNealy is in excellent company. Technology companies such as Microsoft, Intel, and Compaq are taking booth space at CES next to the consumer giants like Sony--all to get in on this market. They will be showing dozens of gizmos to make getting on the Net far simpler. "This year will be the first time to see real products that will lay the foundation for what's to come," says R. Kevin Hause, an analyst at researcher International Data Corp. By 2004, he predicts, sales of non-PC Internet devices will reach 11 million units.ALL ABOARD. Also piling onto the appliance market are service providers, including telephone and cable companies, which want to stimulate demand for high-speed Net access. At the same time, publishers, financial services companies, and online retailers are doing what they can to bring forth a technology that will deliver millions more to their potential audiences.
The concept of the info appliance has been gestating for a decade. But it's now coming to life for a number of reasons. First, there are new technologies such as speedy broadband Net connections and home networks. A new device, a home gateway, will manage Net connections and provide "always on" service--meaning that a consumer never has to log on or boot up and can use all these devices on one Net connection.
But perhaps the biggest factor in making this the year of the info appliance is the need by technology leaders such as Microsoft, Intel, and the PC makers to find new markets. The conventional PC business faces slowing growth and plunging prices. Even Intel, which dominates the PC chip business and profits handsomely, is eager to find other markets with greater potential. On Jan. 5, it rolled out an elaborate strategy to sell and support non-PC Web appliances. Intel says it will deliver a family of screen phone-type devices--that use the Linux operating system, rather than Windows--in mid-2000. They will offer quick and easy access to e-mail and the Web, as well as typical telephone features. "We can't afford not to participate in this business," says Claude Leglise, general manager of Intel's Home Products Group.
The business model for this new line will be a departure for Intel, too. It plans to sell its products to telephone companies or cable operators that will distribute the gear to subscribers. That means they'll be heavily subsidized by service revenues, or perhaps even given away for free--the way cellular phones are when consumers commit to service contracts.RUDE AWAKENING. The cell-phone model also appeals to content providers and e-tailers. Britain's Virgin Entertainment Group, for instance, will slap its brand on Web terminals made by Boundless Technologies Inc. and subsidize them in hopes of generating more online music sales. Likewise, America Online Inc. and Hughes DirecTV are subsidizing a new set-top box that delivers AOL content to DirecTV subscribers. The system is expected to be demonstrated for the first time at CES and will hit the market by midyear.
What could hold up the info appliance market now? For starters, telephone and cable companies could fail to make broadband widely available. If consumers expect these machines to do everything a PC does, they could have a rude awakening, says Calvin R. Kenney, director of business development for Acer America. Reliability also is imperative, since the entire premise of the info appliance is that it will run as dependably as the telephone.
With the world's technology, content, and e-commerce giants sensing a potential bonanza, chances are these obstacles will be overcome. "Pieces of the puzzle are coming together, but it will take a few years for this to be a huge economic success," says Joe Bassi, senior manager of business development for Sun's software products and platforms group. But by then, one hopes, the Post-it notes now slapped on refrigerators could be replaced by an equally easy, if more expensive, technology.By Andy Reinhardt in San Mateo and Steven V. Brull in Los Angeles, with Peter Burrows in San Mateo and Catherine Yang in Washington