August 1, 2000 5:00 AM PDT

Monitor maker ViewSonic moves into info appliances

Monitor manufacturer ViewSonic will become the latest entrant into the Internet appliance market when it shows off a series of computing devices in briefings in New York later today.

The company, primarily known for monitors and its colorful bird logo, will show off 21 information appliance prototypes today, company executives said. The models range from a PC without a hard drive to a wireless Web pad featuring a 15-inch screen and a Transmeta processor. The devices will start to trickle into the market later this year.

The devices also will come bundled with Internet service from AT&T. Rather than market directly to customers, the company hopes to convince banks and e-commerce companies to buy the appliances and offer them to their own customers as part of an overall service package.

"Americans want 24-by-7 pervasive access to data," said Peter Weedfald, ViewSonic's executive vice president of corporate communications and emerging businesses. "You are going to see devices reconfiguring the desktop. Of the 21 (devices), 12 we will bring to market."

Internet appliances are shaping up to be the next gold rush for hardware manufacturers. Simplified devices that can connect easily, quickly and cheaply to the Internet are expected to outsell computers, in terms of unit volumes, in the next few years, according to some analysts. Companies that can craft compelling products or services are expected to reap financial rewards.

If anything, it's a diverse lot. Gateway and America Online will debut countertop terminals later this year and follow with a Web pad. Intel and Microsoft, meanwhile, are coming out with terminals under their respective brands. Even Micro-Star International, a major motherboard manufacturer, is preparing Internet-enabled set-top boxes.

"We just formalized the IA unit," said Andrew Chao, vice president of sales and marketing at Micro-Star. "In this market, there is no certain buying pattern."

But, as with the original 1849 gold rush, there likely will be more failure and misery than success stories. So far, nearly all efforts to make money off PC-like devices have flopped.

"There will be a large number of people getting into this," said Michael Slater, president of digital photography firm PhotoTablet and a noted industry analyst. "A bunch of them will make it. A bunch of them won't."

Other companies, including some of the now defunct "free PC" firms, have promoted similar strategies for using the PC as a vehicle for e-commerce companies.

Despite the apparent long odds, ViewSonic will come to the market with at least one advantage: It knows glass. The company is one of the leaders in CRT (cathode ray tube) monitors and flat-panel displays. In CRTs, the company is tied with Hewlett-Packard for fourth in overall sales in the United States and is No. 1 in flat-panel screens for desktops.

Last year, ViewSonic shipped 4.1 million monitors and displays, up from 3.1 million in 1998, Weedfald said.

Monitor expertise is important because integrating displays has proven to be a major problem for most manufacturers. Customers are seemingly obsessed with the flat-panel, high-resolution displays, which can cost hundreds of dollars more than traditional CRTs. Although cost likely will remain an issue for the company, ViewSonic at least has some experience in that department.

"We have an R&D team. We will get involved on the specifications on the technical side," Weedfald said. "They are all going to have ViewSonic display technology."

The company will also use contract manufacturers to build the devices, which will give the company greater flexibility in internal technology. Rather than offer a single operating system or chip, ViewSonic plans to offer devices containing Linux, BeOS, Windows CE and other operating systems. The devices will also contain processors from Transmeta, National Semiconductor or Intel, depending on what the customer wants, Weedfald added.

Unlike its monitor business, ViewSonic will not sell the appliances through retail, at least initially. Instead, the company will try to sell them to ISPs, banks and e-commerce companies, which will then sell them to customers at full, or subsidized prices.

This strategy, unfortunately, has yet to work effectively. PC hardware, many analysts and PC executives have noted, is too expensive to fully subsidize through e-commerce deals. Executives from Free PC, the first "free" PC company, admitted when the company was sold to Emachines that it could not expand its subscriber base fast enough to get ecommerce revenue to cover the cost of the hardware. When sold without subsidies, appliances also are typically not attractively priced in comparison to standard PCs, especially since many PCs are sold with rebates from ISPs.

Weedfald acknowledged that other attempts to provide inexpensive Internet access, including the "free" PC, have foundered. Nonetheless, the simplified user experience, fast start-up and other features make the rise of devices inevitable.

"Many people have more than one TV in the home," he said. "We believe there will be plenty of households with more than one PC or Internet appliance."

 

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