Are PCs Toast? Internet Appliances Arrive
Peter Olafson
First Look
Repeat after me: They are not computers. They are not computers. They are appliances, and they are no harder to use than a toaster.
These days it's a rare Internet device that hasn't been christened an appliance by its manufacturer. To the computer-savvy, this label may sound silly. Computers aren't appliances. VCRs, washing machines, and toasters are appliances. But the decision to apply the familiar language of the kitchen and laundry room to e-mail and Web browsing is a well-considered one: Toasters hold few mysteries; computers hold many.
To lure the unconnected (and presumably technologically impaired) masses, manufacturers have pared these machines down to the online essentials: a screen, a keyboard, a modem, and a browser (no hard disk or floppy drive). Plug the unit in, turn it on, and--ba-da-bing--you're on the Internet with a minimum of fuss and bafflement.
As a class of products, these devices remain practically new. But the ripple that started last year, when Netpliance released its I-opener, has become a wave. Compaq, Emachines, Philips, Thomson, and Vestel have all announced plans for--or shipped--Microsoft Network Companions. Intel and the New Internet Computer Company--backed by Oracle mogul Larry Ellison--have unveiled Linux-based systems. 3Com and NadaPC are working on units of their own, as is AOL in cooperation with Gateway. Especially for beginners, the cheapest of the new machines may make sense.
Simple to Set Up, Easy to Use
We tried out three of these devices: Microsoft Network Companions from Compaq and Vestel, and the New Internet Computer. With all three, getting online was only a bit more complicated than making toast, vacuuming the floor, or drying clothes. It's easy to imagine any of these units appealing to a non-PC user hankering to check out "this Internet thing."
The two MSN units have fairly simple designs. Both are small in comparison to typical desktop PCs. The Compaq IPaq I-A1 is a cute little beige number with a wireless keyboard and a tiltable color LCD screen about the size of a makeup mirror. Vestel's MSN Companion also has a 10-inch LCD, but it stands taller than Compaq's because you can't tilt it. Still, this silvery, futuristic unit would look at home on a bedside table in a sci-fi film. It's due to ship by early next year.
Setup in each case was quite painless. Using an embedded mouse--the Compaq's resembles the joypads on game controllers, while the Vestel's looks like a notebook touchpad--I was soon operating in a custom version of Internet Explorer 4.01. Shortcut buttons put common functions like e-mail, search, and news within easy reach. The modems seemed a bit poky, and these machines don't have sufficient memory for much online gaming. But the 56-kbps hookup should satisfy first-time surfers charmed by access to the vast library of the Web and by letters that arrive in a matter of minutes instead of days.
When I botched telephone number selection during setup, however, I had to call Companion tech support for a code to access the dialing screen and the correct numbers. If this were a computer, I could have tackled that research all by myself. (Later, when I needed to change the numbers, I couldn't reach Companion tech support at all.)
Then there's the cost. Pricing for the Vestel hadn't been set at press time. The initial outlay for the Compaq, meanwhile, is $599. You can recoup $400 of that price by committing to MSN as your ISP for 36 months at $22 a month (shorter commitments earn smaller rebates). Granted, the monthly amount is roughly what you'd pay for unlimited dial-up access from a major ISP anyway. But that kicks the total three-year investment up to almost $1000, and it's MSN or nothing: The device won't work without the service. A Web newcomer may find both the figure and the commitment daunting: If you decide 15 months into the deal that you want to switch to a free ISP, or pay more for DSL, you're out of luck. Not only must you get a different device, but you'll owe Microsoft an early termination fee that will still bring your total outlay to 70 percent of your service commitment.
Still, these two units do offer uncomplicated access to the Web without the vagaries of computers. If you're interested in visiting the Internet without setting up housekeeping, look into these options.
The Un-Companion
The new Internet Computer (NIC) is the antithesis of the two MSN machines. Its OS is Linux, running invisibly in the background. Netscape 4.73 is its browser. Both load from a CD-ROM. The NIC is the most computerlike of the three appliances, with a small vertical case, two stand-alone speakers, a tabletop mouse (with mouse pad), and a full-size computer keyboard that lacks the shortcut buttons included on the MSN Companions.
The NIC has the most to offer to the frugal-minded and to technology renegades who scorn the Microsoft OS (the MSN machines run a Windows CE variant). For all its computer components, it carries a modest price tag: $200, plus $130 for the 15-inch monitor, unless you can scrounge one up on your own (any SVGA monitor will do). And if you sign up with NetZero--one of the unit's default ISP options--you'll spend nothing for Internet access. This was an easy process--though a tad slow, owing to "Net congestion." The trade-off: As you browse, banner ads flit by at the bottom of the screen. (The unit also works with any ISP that supports a dial-up connection, however.)
One hitch: I began to get reports of "modem not ready." I wondered if this problem was a by-product of heat (the unit had been on for an hour or so), but NIC tech support suggested the messages meant that the provider was busy. When I checked in again, the unit logged in without a hitch.
At that moment, the device really did seem as simple and convenient as a toaster.
Net Appliances for the Masses: Is the Price Wrong?
Simpler is better. That's the pitch for Internet appliances, a class of user-friendly, inexpensive alternatives to costly, complicated PCs for Web browsing and e-mail.
But consumers haven't exactly stampeded the stores for these products. Analysts say that's because the devices on the market so far aren't nearly as cheap as promised.
Netpliance's I-opener, for example, originally sold for as little as $99, but its price rose at one point to $399 before settling down to its current $299--not including a $22 monthly service charge. "That's still not cheap," says Richard Doherty, director of research at Envisioneering Group.
Neither is Compaq's $599 IPaq I-A1 home Internet appliance. Compaq does offer rebates of up to $400, but to get them you must commit to MSN as your Internet service provider for up to three years. Bottom line: You'll be out almost $1000 for the device and the service over the course of three years. For that money, you can buy a decent budget PC (that also lets you run productivity applications and games) and get free dial-up Internet access from an ISP such as AltaVista or Lycos.
Milosz Skrzypczak, an analyst with the Yankee Group, thinks Net appliances will succeed in the long run, perhaps when banks and other organizations provide services that make the devices attractive to consumers. For example, Fidelity Investments has given select customers IBM-built Net devices for managing their financial portfolios, while Virgin Entertainment Group targets music devotees with its Virgin Connect Webplayer.
Volume manufacturing will help bring prices down, too, so who'll be buying?
The obvious targets are novices willing to pay a premium for easy-to-use devices. But PC-proficient users interested in complementing their home networks may eventually sign on for hassle-free access to specific Web services. The research company International Data Corporation estimates U.S. sales of Web terminals will reach 4.3 million in 2004, up from 220,000 this year.
"If I can buy a really cool Web tablet for $100 that I can write on and surf the Web, I'm going to buy it," Skrzypczak says. "How they make money on the sale is the tricky part."
--Tom Spring
In Features and Prices, All Net Appliances Are Not Created Equal (chart)
| Appliance | Street price | Processor/speed (MHz) | OS | Browser | Memory | Display | Mouse | Keyboard | CD-ROM | Ports |
| Compaq IPaq I-A1 | $5991 | AMD K6-2/266 | Windows CE 3.0 | Custom IE 4.01 | 32MB + 16MB flash | 10.1-inch LCD, included | Embedded joypad | Wireless; 73 keys + 10 shortcut keys | None | 4 USB, ethernet, phone |
| New Internet Computer | $200 | Cyrix M II/266 | Linux 2.2.15 | Netscape Navigator 4.73 | 64MB + 4MB EEPROM | 15-inch CRT, optional ($130) | 2-button mouse | Standard PS/2; 107 keys | 24X | 2 USB, ethernet, phone, microphone, line-in jack |
| Vestel MSN Companion | n/a | Geode/200 | Windows CE 3.0 | Custom IE 4.01 | 32MB + 16MB flash | 10-inch LCD, included | Embedded touchpad | PS/2; 73 keys + 12 shortcut keys | None | 2 USB, phone, printer |