Earlie, PC of future mimics network computer
By Brooke Crothers Staff Writer, CNET News.com
November 25, 1998, 10:30 a.m. PT
news analysis The writing is on the wall, according to
analysts and PC company executives.
The performance and utility of a personal computer will be
defined less by faster Intel processors and new Microsoft
software and increasingly by connection speeds and Internet
services and software. In effect, the personal computer will
co-opt the network computer concept.
Two stalwarts of the PC world, Dell Computer and Compaq, are
moving quickly in this direction and, in a way, are implementing
the vision of Sun Microsystems and Oracle, which both embraced network-centric computing models long before many
of the mainstream PC makers did.
At Comdex last week, Compaq launched a massive Internet-PC
product and service strategy for the home and small-office
market, a segment where most connections are still based on
sluggish dial-up speeds. The No. 1 PC manufacturer unveiled
low-cost consumer PCs that were notable not for their
traditional PC hardware, but rather for their Internet connection
technology and services--making them, in a sense, glorified
network computers (NCs).
The new Compaq Presarios will be offered with a smorgasbord
of high-speed Internet connection hardware and services. Users
will have options for Satellite, DSL (digital subscriber line), or
cable modems, while services will be provided by Net and
telecommunications industry giants such as Road Runner,
@Home Network, Ameritech, Bell Atlantic, BellSouth, Hughes
Network Systems, GTE, and Sprint.
Dell followed up quickly with an announcement that that it is
shipping PCs with high-speed digital modems from Cisco
Systems in conjunction with service from telecommunications
giant US West.
Though these are logical moves in the age of the Internet, they
run counter to the long-standing concept of a PC as a
stand-alone "mainframe on your desk" with all the power and
speed one would ever need inside the box.
Net connection vs. chip speed
Apple Computer's iMac was really the first high-profile
consumer computer to accentuate the Internet connection,
adding the prefix "i" to the Mac and designing the box so
setting up a Net connection is as easy as possible.
As this trend continues, Net connection speeds may begin to
eclipse chip speeds as the most crucial hardware benchmark
for a computer.
"As people spend more time on the Internet, the power of the
[PC] itself has less and less to do with the usefulness and
productivity of the system. Vendors like Dell and Compaq
know this," said Kevin Hause, an analyst with market researcher
International Data Corporation (IDC).
Indeed, at many large corporations, where PCs are hooked up
to a fast T1 line, it has already become, in essence, an
extension of the Net in many cases. "This is the NC, round
two," said Sean Kaldor, a consumer device analyst at IDC.
Carl Everett, senior vice president in charge of personal
systems at Dell, put it another way. "Moore's law is still true. But you have to get your priorities straight...Fast [modem
speed] has caught fast MIPS [chip speed]" in importance, he
noted, describing the observed doubling of processor speeds about every 18 months but suggesting faster connection speeds are becoming more important.
Another way to look at it is that people will simply feel that their
PC is fast or slow depending on the Net connection. "People
will connect to the Net, get a fast connection, and then surmise
that they have a fast PC," said David J. Eiswert, a consultant at
the Strategis Group.
But the bottom line for Compaq and Dell is that they need a
compelling reason to drive PC sales in the future, and the
mantra of "more processing power" is beginning to lose some
of its punch. "I don't need a faster PC to download [from the
Internet]," said Kaldor. "Does it more and more resemble an NC? Yes."
Rod Shrock, in charge of the consumer products group at
Compaq, said consumers get interested quickly in high-speed
access once the price is right. "Once you get below $50 [per
month for high-speed modem service], 70 percent of PC
users express a strong interest," he said.
Kaldor believes PC companies also want to tap into new
revenue streams. "This is more margin dollars, a chance
to get into services...maybe they get a cut on service
fees," he said.
Direct sales further the cause
Compaq will offer its new Internet PCs directly, not
through distributors as it has done traditionally--another
sign of sea changes at the PC Goliath and in the PC
industry in general. Dell, as always, will sell its new
Net-centric Dimension line of PCs directly.
The obvious benefit is that the PC can be configured over
the phone or over the Net just the way the user wants
it--whether it be with a DSL modem, cable modem, or
satellite connection.
But the direct model also allows Compaq and Dell to
address one of the biggest sticking points of high-speed
home Internet access: Service is still patchy nationwide.
So, as Dell's Everett explains it, "We get their area
code, phone number, street address," and then Dell
determines through the local telecommunications
company in the customer's area what kind of service is
available.
For example, whether it's low-speed or high-speed DSL
service--or maybe it's not available at all. In the latter
case, Compaq says it can offer an alternative such as
satellite or tell the customer to be patient and use the
standard 56-kbps dial-up connection until service is
offered in that area, according to Compaq's Schrock.
Strategis Group's Eiswert points to other intrinsic
hurdles. "Today's Internet has architectural speed
limitations...a weak link anywhere along the network will
slow the source of transmission regardless of the
modem or technology." To be sure, glitches in
high-speed modem access will undoubtedly be perennial
problems for service vendors as these nascent services
slowly mature.
Kaldor also points to potential problems with cable
modem service since connection speeds can drop off
quickly if many people in a local area access the service
simultaneously.
IDC's Hause agrees that it won't be smooth sailing in
every case. "The problem is that there are still issues
beyond the control of PC companies, not the least of
which is service availability. Also, once services do
begin to roll out, and other vendors begin to offer the
same services and relationships, competitive advantage
diminishes," he said.
Other industry sources point to the inevitable problems
that will arise out of the sometimes incongruous
couplings of computer manufacturers and
telecommunications companies. One source at a
computer maker wondered whether the two sides can
get along and whether the deals they sign are truly
implementable in some cases.
Also, both PC executives and analysts are quick to
point out that the same old reasons for buying a new PC
won't go away: power users, game junkies, and
professionals in certain fields will still want the latest and
greatest graphics chips, hard drives, and Intel
processors in their PCs.
Dell's Everett also emphasizes that Windows 2000, the
next version of Windows software due in 1999, will
require more processing power.
Nevertheless, as the Internet ineluctably continues to
grow in importance, PC makers will follow, touting the
latest and greatest Internet connection schemes, while
some of the more traditional reasons for buying a PC
may slowly get drowned out amidst the din of
Internet-based marketing.
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