Philips to build Internet appliance guts

Philips Components wants to make it easier for manufacturers to build Internet appliances.

On Friday, before the official start of the Consumer Electronics Show in Las Vegas, the company will unveil two "reference platforms," or nearly complete systems, for Internet appliances.

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The Royal Philips Electronics division will provide nearly 80 percent of the finished product, which has an LCD display with a touch screen and is compatible with several operating systems. The appliances will support Windows CE 3.0, Mobile Linux or Linux operating systems. One of the models depends on a Crusoe processor from Transmeta, while the other uses a Geode chip from rival National Semiconductor.

The appliances will be able to take several forms, such as Web tablets, which resemble Etch A Sketches, or computer kiosks.

Philips Components' approach takes much of the heavy lifting off manufacturers and even opens the possibility of manufacturers outside of the computing industry joining the Internet appliance race. The move also relieves Sunnyvale, Calif.-based Philips Components from having to market the devices.

"Philips is teaching (manufacturers) how to bring a product to market here," said Rob Enderle, vice president of research firm Giga Information Group. "How good they are at getting licensees will determine how successful they will be with this. Unfortunately, they don't have a history of doing this, so we don't have anything to compare this to."

Signing up licensees will also play a critical role in lowering the cost of LCD-based products. Analysts have criticized LCD-based appliances because the LCD panels add so much expense. Philips Components representatives expect final product to cost less than $1,000.

According to Enderle, the more licensees that Philips Components can sign up, the more likely the prices on these appliances will drop.

The announcement underscores a trend in the hardware manufacturing world. In the past, components makers provided parts to other manufacturers, which then sold finished goods to the public. Increasingly, however, the design work is being taken over by component makers and contract manufacturers, while the name-brand "manufacturers" are largely functioning as sales and marketing organizations.

"We're doing this because (manufacturers) have asked for it," said Matt Medeiros, CEO of Philips Components. They "are looking to switch from a manufacturing focus to more of a branding and marketing focus."

Medeiros said manufacturers will still have a major say in the overall design of their products, providing the industrial design, user interface, applications and base station for the appliances.

The two appliances are dubbed the S10LP-NG and the S10LP-TC. The S10LP-NG is based on the National Semiconductor Geode SC3200 processor and will be suited for smaller battery-operated appliances. The S10LP-TC uses Transmeta's Crusoe TM3400 processor and will support always-on Internet access and streaming video.

Philips Components expects both appliances to begin shipping during the second half of this year.

The company also will announce that it will help manufacturers bring products with the wireless networking standards Bluetooth and 802.11 to market. It will deliver products to manufacturers that include technologies from its partners, which include Cambridge Silicon Radio, Intersil, Silicon Wave and Widcomm.