RNWK--Wednesday August 16 6:08 PM ET
Compaq Launches iPaq Appliance
By PETER SVENSSON, AP Business Writer
NEW YORK (AP) - The appeal of the Internet is growing every day, yet there are many who are suspicious of letting into their homes that willful and rebellious servant, the personal computer.
The industry wants to capture this market with ``Internet appliances,'' simplified computers that are intended to take the fear and loathing out of going online.
But for all the buzz, few of these supposedly revolutionary devices have reached consumers, and none have been real hits.
Compaq's iPaq, launched Tuesday, is the first of a second generation of the appliances. While still quirky, it's a useful and capable machine that shows some maturity.
The size of a small VCR, the iPaq comes with a built-in flat-panel screen that folds up from the base. The keyboard is wireless and includes a button that guides the cursor around the screen in the absence of a mouse. The button isn't as good as laptop pointing devices are nowadays, but it's adequate for the limited applications of the iPaq.
There's no hard drive or floppy disk drive, meaning you can't load your own software or do any of the other things that make personal computers too complicated to be reliable. You can connect an optional mouse, and the iPaq will work with a single printer model, the Epson 740 color inkjet.
The iPaq is the first product to run MSN Companion, a Microsoft operating system that integrates tightly with the Web. In our test, it was better than other non-PC devices at Web surfing and doing e-mail, but getting it going was more difficult than it should have been.
The prototype iPaq setup began rather easily, then abruptly crashed. There was no way to reset it, so the only way to get it going again was to pull out the power cord, plug it in again, then start the setup process from the beginning.
Compaq said the crash was probably due to the unit connecting to a server running preproduction software, which has now been fixed. According to Microsoft, most customers who buy an iPaq in a store can sign up for MSN Internet access in the store and thus bypass the procedure that caused the crash.
Since then, the iPaq has run fine for more than a month.
In fact, it hasn't been turned off - it isn't made to. Hit the ``Off'' button and it disconnects from the Web and shows a picture of your choice on the screen, turning the device into a $599 picture frame.
Press ``On,'' and it dials in to the Web.
MSN Companion uses an animated dog or cat - the user chooses - to explain what the computer is doing.
Send an e-mail, and the pet appears on screen to lick an animated envelope and whisk it away. It's an echo of Microsoft Office's Assistant, that paper clip with the eyebrows.
MSN Internet service, at $21.95 a month plus local phone charges, is the only one available for the iPaq. This lack of choice is to be expected for an appliance, where software, hardware and Internet access are all built to work together. While browsing the Internet, users must also be willing to put up with small ads MSN Companion places in a corner of the screen.
A really promising aspect of MSN Companion is that it automatically dials in to the Internet every night to check for e-mail and updates to the software. If updates are needed, it downloads and installs them by itself.
If this system works, and there is no reason it shouldn't, it would let the iPaq keep pace with changing Web standards for presenting music, images and graphics. Currently, the iPaq can play Windows Media and MP3 music on its built-in speakers, but MSN product manager Craig Beilinson said Microsoft was working with RealNetworks Inc. (NasdaqNM:RNWK - news) to create an update that would let it play the popular Real audio and video standards as well.
So the iPaq does what it's made to do, but is it a good buy? At $599, it costs as much as the cheapest computers. A $400 rebate is available for those who sign up for three years of MSN, but a PC buyer can get the same deal from MSN or other providers.
Right now, it's the best alternative for those who want to get online with a minimum of fuss, but anyone who wants to learn more about computers or play games would be better served with a cheap PC.
For those who want simple devices, alternatives will be available in a few months. Emachines Inc. is building an appliance that runs MSN Companion but has a separate screen, and Gateway Inc. (NYSE:GTW - news) is creating a ``Web pad'' that can hang on a wall and connect to America Online.
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