November 16, 1999 8:30 PM PST

Ellison resurrects network computer

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LOS ANGELES--Reviving an idea he championed years ago, Oracle's Larry Ellison today resurrected the company that designs a scaled-down desktop system--known generically as the network computer--and announced plans to ship new models in the first quarter of next year.

Speaking at the Oracle OpenWorld trade show here, the company's chief executive introduced the Network Computer Version 2, a sequel to Network Computing Incorporated's much-touted original.

The Oracle division itself apparently will be reestablished. Ellison promised that a new chief executive and management team will be announced soon, along with several companies that will manufacture the NC2 for the new NCI.

Faced with sluggish sales, the first iteration of NCI changed its name in May to Liberate Technologies and went public in July. The provider of software for interactive television services has recently been a precious commodity, seeing its shares soar 44 percent today, after a 50 percent climb last Friday on news that its software is being deployed in the United Kingdom.

Though hotly debated in computer industry circles in 1996 and 1997, the network computing concept failed to gain a market foothold, in part because PC prices suddenly fell to historic lows--lessening the need for new, low-cost systems. When Ellison and others first began touting the network computer, traditional "standalone" desktops typically cost well over $1,500. Today prices begin around $400.

But as prices dropped, people seemed to conclude that controlling sophisticated software applications is less important than using the Internet. Home consumers in particular often rely on so-called Web-based applications such as Hotmail, and Internet-based corporate networks are commonplace.

PC makers and electronics companies have accordingly turned their sights toward manufacturing easy-to-use "information appliances" that deliver email and Web access. Thus the network computer, one of the first devices to contemplate doing away with personal hard drives and relying on network storage instead, could be positioned for a comeback--even if questions about the server end of the equation remain.

Ellison, the flamboyant head of the world's leading database maker, said Wall Street's reaction to Liberate endorses his vision of "thin client" devices such as network computers, telephones and palm-size devices that work with applications from central computers.

"The personal computer is a ridiculous device," Ellison said today, arguing that while information appliances won't obviate the need for PCs, the latter have hidden costs, create more labor for corporate information technology departments and don't make sense for many users with scaled-down PC needs.

Ellison also wryly noted that Microsoft chief Bill Gates, who once claimed "the NC is the stupidest idea I've ever heard of," introduced a pared-down device called the MSN Web Companion at leading computer trade show Comdex this week. Still a prototype, the Web Companion will run the software giant's scaled-back Windows CE operating system and is expected to cost less than $200.

The NC2 will cost $199, Ellison said. The updated device will include a CD-ROM, a 56-kbps modem and a keyboard. A monitor costs extra.

Ellison underlined the network computer's practicality, saying that upgrading the new machines will be as easy as swapping an Ella Fitzgerald CD with one by Miles Davis.

Separately, he did not rule out licensing the technology to a consumer electronics heavyweight such as Sony or Philips. Nor did he deny the option of selling the machines at superstores such as CompUSA.

Unlike Wall Street, computing industry analysts voiced skepticism similar to concerns raised when the network computing idea was originally put forth. Kevin Restivo, an analyst at IDC Canada, predicted that Ellison will still have a tough time convincing many corporate customers that their users don't need a full-blown PC.

"He's trying to dispel the PC as a computing method, but the challenge is that there's still a level of functionality that people demand," he said.

Ironically, Ellison himself conceded that the network computer concept is somewhat overblown, as it will be used like such appliances as a television set, telephone or handheld to use the Web.

"Everybody gets so fascinated by this device," he said of the network computer. "The interesting part is the Internet."

Ellison also said the company will spend $100 million in the next decade to provide free network computers to children worldwide. Los Angeles Lakers star Shaquille O'Neal was on hand to endorse Ellison's new program, urging attending companies to invest in buying children NCs.

 

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