The network computer will succeed as a consumer device that builds Internet access and e-mail into tomorrow's phones and TVs, and as a substitute for X terminals in the office, but it won't replace the office PC. That's the view of Stephen Auditore, president of Zona Research Inc.

The Redwood City, Calif.-based market watcher projects that by the year 2000, shipments of consumer NCs will outstrip commercial shipments by a whopping 10 to one: 70 million units for consumer set-tops and Net phones vs. just 7 million for streamlined desktop boxes that link users to the Internet and corporate intranets. Most of the growth in consumer shipments is expected to occur between 1998 and 2000, when the functions of consumer appliances and NCs will start to converge in Web-enabled phones and e-mail TV, according to Auditore.

"These products will be the next evolution in consumer devices," he says. Zona refers to these communicating appliances as "infrastructure-derived NCs," units designed to deliver data from the Net. The $300 Internet-access set-top box designed by WebTV Networks is just such a product.

The bad news for many of those pioneering the network-computer business in the office, in Auditore's view, is that the uptake will be relatively slow as business users cling to Microsoft Windows. "Indications are that no significant customers are replacing PCs with NCs; they are only replacing X terminals with NCs," says Auditore.

Swimming against the current of popular opinion, Auditore doesn't buy the argument from the NC camp that corporations will save millions in cost of ownership by switching from PCs to NCs. "I am not convinced that NCs will be cheaper to own, or that Java applications will be any easier or cheaper to develop [than Windows applications]," he says. "PCs are used in the commercial world to deliver a large existing base of applications, both mainframe- and Windows-based, and without Windows, the NC will not succeed in the commercial world."

That's not to say the network computer will be a complete flop in the office. NCs will act as dedicated-function machines handling limited tasks, sometimes delivered over an intranet, Auditore says. Zona estimates that about 383,000 network computers were shipped to office users in 1996, most of them as X- terminal replacements. Starting this year, X-terminal shipments should fall to zero as NCs rise, hitting perhaps 6.7 million units in 2000, he says.

Indeed, Auditore says the NC reminds him of X terminals several years ago, a market that was widely hyped but never took hold outside of technical organizations. And he should know. Before he started Zona, Auditore headed a research firm that mainly tracked the X-terminal market until it began to sink into obscurity.

"Look at virtually every company raving about NCs and you'll see they are the same companies who said the same things about X terminals [several years ago]," says Auditore.

That analysis jives with the projections of the major vendors promoting NCs in the office. Most of the 500 beta users of IBM's Network Station are using the NC as a replacement for 3270 and 5250 terminals, says L.E. Behrens, the hardware technical head of IBM's Network Computer division. Indeed, terminal-emulation software is one of the key parts of IBM's initial NC offering. "Most of the users we have rolled this out to are in character-based apps," says Behrens.

Source: OEM Magazine