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Long-Promised
Simplification Stalls
By Jeffrey L. Newman ABCNEWS.com from TheStreet.com N E W Y O R K, :Sept. 7 —When Microsoft teamed up with Intel and other industry powerhouses to spec out the long-promised Network PC—a super-simple and cheap workplace computer—it looked like a new computing landmark was just ahead. But nearly three months after bringing the technology to the masses, these heavy hitters of the corporate world have failed to deliver on the promise of simple, cheap computers. In short, the Net PC is little more than a vaporous, unfulfilled promise. "The only company thinking about manufacturing the Net PC right now really is Hewlett-Packard, but they're not doing it yet; Nobody is actually building them," says Peter Dougherty, president of closely held Duplexx Software. "This is pretty much as non-happening a product as you can get." Fundamentally, the Net PC is envisioned as a solution for corporations trying to dodge the high cost of full-power computers, seeking machines with just the basics: a processor, monitor, keyboard and network connection. It has no floppy drives, and the case is sealed so that the inner workings cannot be damaged by eager computer-tech wannabes. These "dumbed down" machines are promised to cost hundreds of dollars, not thousands. And they will be less expensive to maintain, thanks to less expensive components. Computer Coterie Microsoft and Intel lined up alliances with Compaq, Dell, Hewlett-Packard, Mitac International, Mitsubishi, NEC, Unisys and Zenith. "Eliminating the floppy drive and locking the case is enough to differentiate product," says Marc Usem, a technology analyst with Salomon Brothers. "Microsoft attacked from different angles out of fear. They're just buying time until they figure out what they are going to do." Which will give Microsoft and its partners time to develop a stronger product to pit against the competitors, according to industry observers. "This was clearly an initiative aimed at rebutting the NC—specifically Sun, Oracle and IBM," Usem says. "But the NC really takes you down to that next necessary notch and solves a problem. I'm not sure that the Net PC does enough to make sense." And according to the Gartner Group, a Stamford, Conn.-based technology consulting firm, the Net PC would only save the end user 26 percent, vs. 39 percent savings with the NC. Says Alex Karamanoglou, president of NGA.net, a Fort Lauderdale, Fla.-based Internet consulting firm. "It's just one big game of egos. Think about it. When Oracle created the NC, who was left out? The biggest industry players—Microsoft and Intel. This was just Intel and Microsoft's way of toppling Oracle and Sun's strong hold on this segment of the industry." Vaporware Redefined But is the Net PC a necessary product or all smoke and mirrors by Microsoft and Intel to buy time until a better solution can be found? "What Microsoft was trying to do was create enough fear, uncertainty and doubt to essentially slow the development of the NC market," says James Preissler, an Internet analyst with PaineWebber. "They're buying themselves time until they can figure out how they can play a dominant role in that market. They want to make sure if the market develops, they will be the 800-pound gorilla in that market. Net PC is simply muddying the waters just enough for people not to make a decision about which to buy and that's their strategy." And with computer prices dropping, is a stripped PC really that necessary? "The Net PC isn't going to flourish," says Karamanoglou. "Prices are going down so much that soon it will be easy to manage. It's not worth that much because you can buy a PC today, full functioning, and not limit what you are able to do. The answer is better network administration." Salomon's Usem agrees. "Prices are coming down," he says. "And this is likely to turn out to be a big nothing. It's clearly not happening." 
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