A lurker emerges - I'll figure out someway to make a positive contribution to this thread, but in the mean time -here is an brokerage report which might spawn a whole weekend's worth of discussion among Q fans. Very long, but worth it I think.
Note especially the paragraph which begins "You can have any color car you want as long as it's black.
Merrill Lynch Global Securities Research and Economics SVR HDWR & APPLIANCE:Appliance Update Part 1 of 2 Research Bulletin Server Hardware & Appliances Reference No. 10235103 United States 17-Dec-1999 08:22 Steven Milunovich =============================================================================== Reason for Report: Appliance Update Part 1 of 2 Fundamental Highlights:
We attended the Technologic Partners conference "The Future of Pervasive Computing." Pervasive computing is the term popularized by IBM that describes the ability to access data at any time, in any location, from any network. Wireless appliances such as the RIM BlackBerry and the Palm VII are the devices people will use to access the Internet from any location. With over 110 early- stage companies presenting at the conference, it is clear that pervasive computing and information appliances are hot topics as we predicted. The conference also demonstrated that a complex ecosystem is developing among the many companies attending. Like the peripheral, add-on, and software markets for PCs, companies are sprouting up to offer devices, services, components, and infrastructure software that provide incremental value to consumers. The increasing breadth and depth of applications is attracting more users.
The conference showcased home entertainment offerings from companies like WebTV, iTv, and Replay Networks. E-ink makes innovative visual displays on thin paper-like sheets that can be rolled up. Applications included Confinity's payment system for making payments via handheld devices. Universal messaging was popular, as were various encoding and compression technologies necessary in a bandwidth constrained world. Softpress demonstrated a portable reading tablet that protects the rights of authors.
Wireless data and appliances are joined at the hip. By now it is clear that client-side appliances (not servers, but devices for end users) will be closely linked with wireless communications. Virtually every product and service shown at the conference had a wireless strategy in place. For a number of years, pundits have predicted that wireless data communications would grow rapidly, but a number of factors have held the industry back. Consumer appliances need three things to reach the mass market: (1) compelling applications; (2) an easy-to-use form factor; and (3) prices between $100-400 for devices and $10-40 per month for services. These three factors have come together in the RIM BlackBerry. Price points are higher for business users, but so are the technical hurdles (encryption, firewall compatibility, integration with existing systems).
In the next year, packet overlays will be put in place to augment existing circuit-switched wireless networks, providing lower cost for carriers that will presumably be passed on to consumers through lower prices.
The wired (or unwired) home will have to wait. While devices, price points, infrastructure, and standards are beginning to provide growth to the wireless data industry, home appliances and networking is further behind. Progress is being made, but home networking standards are still evolving and remain too complex and expensive for broad consumer adoption. Digital VCRs, as from Tivo and Replay Networks, which marry disk drives with specialized software for recording TV programming, are too expensive ($700-1,500) for all but the gadget fringe. The products are easy to use and provide compelling capabilities, but disk drive prices will have to fall further for the products to reach the early majority of buyers.
One of the most interesting companies at the conference was iTv Corporation, which makes Internet access devices like cable and satellite set-top-boxes. The company has created true appliances by designing both hardware and software from scratch for their intended purpose. The company's processor runs at 500 MHz and costs just $0.23. iTv's operating system is only 5 Kbytes while the complete software suite (email, chat, video processing, etc.) takes up just 128 Kbytes of space. The company is able to reduce costs dramatically over general- purpose systems-a complete set-top box costs less than $10 to make. The company is working with LG Electronics and Sanyo for distribution. By dramatically lowering the price to the consumer, iTv stands to significantly expand the market for Internet-enabled set-top-boxes. Even more interesting is the potential for adding the company's micro-servers to everyday products like light switches, air conditioners, kitchen appliances, and home electronics devices. A user could then operate the devices, at least in terms of turning power on and off, from anywhere using a standard browser. While this has been possible before, low cost processors could make this a reality in the late 2000- 2001 timeframe.
Update Part 2 of 2 Continued from part 1:
Infrastructure products will support all types of devices. It is clear from the success of Research In Motion that companies want mobile access to basic corporate data such as email and personal information management (PIM) functions. Corporate IT staffs are struggling to support an increasing number of handheld devices, including Palm, RIM, and Windows CE. We believe that over time appliance software and infrastructure will support virtually all devices, not just those from a single company.
AvantGo has taken this approach in addressing access to corporate databases and intranets. Two other companies, InfoWave and Corsoft, are creating products that provide access to Microsoft Exchange data by virtually any portable device. We expect cross-device applications will become a requirement for the Fortune 1000. RIM's recent announcement of support for Java plays to this trend. Microsoft and Ericsson team up for wireless access. Ericsson gets access to Microsoft Exchange services for its cell phones while Microsoft gets important WAP (Wireless Access Protocol) technologies for use in its servers. The joint venture follows the Nokia/Palm agreement last month, but the fruits of the Microsoft/Ericsson will not be available until fall 2000 when phones will have access to corporate email and PIM information. In 2001, Ericsson has indicated it will offer phones with Microsoft's microbrowser, allowing users to access WAP enabled Internet sites. We expect smart cell phones to offer Internet access and support synchronization with both corporate and ISP email systems over time.
The Symbian consortium including Motorola, Ericsson, Nokia, and Psion. Symbian's aim is to counter the threat from Microsoft's Windows CE in operating systems for wireless devices. But Windows CE has failed to get consumer adoption among palm-size devices and cell phones, leaving Ericsson free to leverage Microsoft's Exchange installed base as well as the MSN portal. Nokia has signed an agreement with Palm to use the user interface portion of the PalmOS, even though it was supposedly committed to Symbian. We are aware of few instances where competitors have banded together to create a viable, sustainable product.
You can have any color car as long as it is black. Some observers suggest that one form factor or device manufacturer will quickly dominate the industry in a manner similar to PCs. For portable wireless appliances, we believe this is akin to asking which vehicle will displace the other, sports cars or sports utility vehicles. As with cars, there will be as many form factors as there are market niches. Unless there is a breakthrough user interface that permits voice (phone) and data manipulation (PDA, email, Internet) better than any device dedicated to one of these tasks, there will likely be devices optimized for different users needs. For callers wanting access to a small number of short messages, cell phones will be an appropriate all-in-one device. But we believe power email users will not accept these devices. For the near- and medium-term, we see device proliferation continuing.
Handheld computing technology is making its way into retail and e-commerce applications. Shoppers are using Symbol Technologies' Zapstick to scan products in the mall. The information is uploaded to a personal web site at FastFrog.com where friends and relatives can use the information to buy presents for the shopper. The program will be rolled out to 253 malls around the country. Another program called YourSherpa.com allows users with a PalmOS- based handheld to scan products throughout the mall then pay for the products in a single transaction while having the products delivered to the home. These services attempt to combat the online shopping trend by removing negatives associated with bricks and mortar shopping.
Symbol is emerging as an information appliance company. It has a series of handheld devices with scanning and wireless LAN capabilities and extensive knowledge of and applications for the enterprise. Its license with Palm Computing (8 1/2 years remaining) makes it the exclusive provider of PalmOS-based scanning devices, a product with growing industrial and consumer applications. Scanning technology could even end up in cellular phones, allowing users to grab and send product information anywhere. |
