NETWORK COMPUTERS

Yu-Cheng Su (Editor: Stacy Walter)

When Oracle Corporation’s CEO Larry Ellison first addressed the concept of network computer (NC) in October 1995, it was described as a low cost ($500), simplified terminal technology on the basis of client/server networking model. The initial version of NC then aroused extremely different reactions in computing industry. Conversely, the alliance of several big companies including Sun Microsystem Inc., IBM, Netscape Communications Corp., and Oracle Corp., largely contributed to the birth of NC technology. With the common vision, such as Sun’s slogan ‘the network is the computer,’ NC was considered as a revolutionary technology to substitute for PC. Even more, NC was assumed to be an easy-to-use technology that would eventually be brought into family life. Today, the NC technology is defined in corporate uses in order to quickly expandi their potential markets after the short-term launch. The severe challenges coming as the immaturity of technology and emergence of other substitutes make the future more crucial to the survival of NC.

BACKGROUND

The network configuration has been changed since mid-1990s, when local area networks were able to interconnect with each other to form wide area networks. The structural change established a new model of computing, which was neither like IBM’s mainframe system, nor Microsoft and Intel’s desktop model. This model, called networking, contains the advantages of both previous models to expand computing to a new dimension. The high capacity of networking, with the bandwidth supply from telecom-services, is presented on the high-speed and widely-spread network connection.

HARDWARE

Based on the increased power of networking, NC is designed as a terminal without local mass storage devices (hard drive, floppy disk drive, and software) for its operating system (OS), applications, and data. The main concept of NC is that storage and computing power are centralized at the network servers. When a NC is turned on, OS will come across the network and run in NC’s RAM. The NC prototype from Oracle Corp. in 1995 contained 200 MHz RISC chip and 4Mb RAM, but, as of 1998, current NCs have more enhanced capability and the prices are more than $500. For example, the JavaStation NC shipped by Sun on 24 March 1998 equips 32Mb memory and costs $699. Other featured hardware includes keyboard, monochrome screen, modem, and mouse, but some vendors do not include screen in their NC price tag.

APPLICATION

NCs can execute far fewer applications than PCs, but they have four major functions including Internet surfing, e-mail addressing, word processing, and videoconferencing.

SOFTWARE

In June 1997, IBM, Netscape, Oracle, and Sun developed ‘Network Computer Reference Profile’ to define a NC. One of the important conditions in defining a NC is that it must have Java-based execution environment. Java is the language that was originally created to control the TV set-top boxes. Because it can ‘talk’ to any OS, Java is considered as the best way to break Microsoft’s dominance over the computer market. If Java allows all computers to exchange information, it will reduce the users’ dependence on Windows OS. To implement this effort, workstations have to deploy ‘Java Virtual Machine’ (JVM) software between the OS and network. When a user sends data to another computer, the JVM will change data into a Java byte stream that can be ‘decoded’ by the target computer’s JVM. Thus, it can eliminate the communications obstacle between two different OS users.

ALLIANCE

The NC market appears the characteristics that are always found in an emerging market. One of them is the friendly alliance in expanding potential market instead of aggressive rivalry in occupying market share. In addition, NC is a communications tool that requires more interaction between users, so NC suppliers have to face the incompatibility problems caused by different vendor machines. Therefore, they have to work with each other to ensure the NC compatibility among multi-vendor installations. About sixteen companies are involved in a recent alliance to develop standards for managing NC and they will address the first standard draft in summer 1998.

NEW MARKET

For a market in which lots of uncertainties remain, the brand name is an important core competency. According to a new study by International Data Corporation (IDC), three large vendors – IBM, Sun, and Hewlett-Packard are perceived as the strongest brand awareness. However, this survey also reveals that the market is still confused over what is NC or what is not (PR Newswire 1998). Another set of figures from Dataquest Inc. show that the worldwide NC shipment reached only 144,040 units in 1997 (Robert and Burbank 1998), way off its 400,000 original forecast. IBM is the most successful NC supplier who shipped about 100,000 NCs to 3,000 customers, including big insurance company Allstate Corp. (Hof 1998).

MARKET CONFIGURATION

As the ambitions of NC to be a radical replacement for PC are gradually eased, the NC market has returned to the more reasonable arena – business. Because the NC structure is basically a host-centric system, it can be more effectively managed by centralized corporate IT departments. In fact, the NC structure is especially suitable for industries like banking, accounting, and insurance claim processing that have similar centralized processing structures.

COST-EFFECTIVE

Using the powerful networking as the backbone, NCs largely reduce the equipment demand that characterizes PCs. PCs are expensive to maintain, because they are installed with more applications inside. While most employees need only common applications like word processing, the excess applications on PCs seem to be redundant and costs are overpaid. Secondly, the costs of PC facilities will be increasing due to the upgrading difficulty. While companies are constantly forced to upgrade their PC software as the new versions come out, the software upgrading in turn generates more hardware requirements. However, the hardware upgrading is complicated because applications are largely stored in hardware. Thus, the upgrading actually means increased costs on both hardware and software. NCs are designed to solve the PC costs problems by reducing maintaining costs and upgrading process because there is no hard drive and applications are stored in servers.

ANTI WIN/TEL

The alliance of NC vendors including several big computing companies are actually attempting to break the long-term dominance of Win/Tel PC over computing market. When NC was first introduced, it had been advocated as the substitute for PC. In fact, the first attack based on the hardware and costs differentiation did not have great impact. The battle has been transferred to the software. The support for Java-based software is considered the best weapon to stop Microsoft’s Windows OS toward advanced expansion.

DILEMMA

The disappointing sale result of NC in the past year revealed the dilemma that NC advocators are facing now. First, the delayed launch of Sun’s JavaStation NC caused the suspicions over Java’s capability. Because Java is so new, it is not capable of meeting all the tasks customers require. Secondly, customers are not ready for Java, while they still stick to Windows applications. Even the success of IBM’s NC is attributed to its capability to run either Windows or Java programs.

SUBSTITUTES

There are three visible or coming technologies that will undermine the development of NC technology. They are NetPC, low-cost PC, and Windows Terminal Server (WTS).

NetPC is essentially Microsoft’s version of NC. It is a sealed Windows PC that could be loaded and managed from remote servers. According to Zona Research Inc., it has at least shipped 20,000 units, primarily from Compaq Computer Corp. and Hewlett-Packard Corp. (Hachman 1998).

The biggest visible rival products to NCs are still the PCs. Last year, computer prices sank 40 percent to an average of $1,169 (Hof 1998), and the research from Zona research Inc. indicates the low-cost, managed PC shipment reached 347,917 up 35 percent from 1996 (Hachman 1998). The pattern shows the strong competency of low-cost PC technology.

Windows Terminal Server (WTS) is considered the most compelling technology to NCs. WTS is the multi-user version of Windows NT Server 4.0, and it hosts applications and serves them to new Windows terminals. Because Windows applications are more available than Java applications, WTS has the immediately visible benefits for the terminals. It is estimated that the overall cost of a Windows Terminal is 25% less than a Windows PC and close to the 30 percent savings on a NC (Hof 1998).

OPPORTUNITIES

Because of its cost-effective and host-centric structure, the NC technology is a fascinating idea for corporate IT management. The market is still in the infancy phase and technological uncertainties are relatively high. Sun Microsystem Inc. and Oracle Corp. have suffered from the delayed launch of their NCs, but IBM reveals the potential for the market growth. In the future development, the reduction of cost and stable uses of Java OS will be the determinants. Regarding the technological and market factors, the following year is the crucial phase for NC business.

Hachman, M. (1998) ‘Microsoft’s ‘thin’ OS weighs in’, Electronic Buyers’ News, 30 March. Online. Available: [http://web.lexis-nexis.com/universe/docu…a3&_md5].

Hof, R.D. (1998) ‘How the ‘PC killer’ was humbled: slow machines and cheap rivals

undercut network computer’, Business Week, 13 April.

‘IBM, Sun, and Hewlett-Packard achieve highest brand awareness in enterprise network

computer according to IDC research’, (1998) PR Newswire, 16 March. Online available: [http://web.lexis-nexis.com/universe/docu…a3&_md5].

Roberts, J. and Burbank, K. (1998) ‘Network computer unit shipment – 1997 actual, 1998

forecast’, Computer Reseller News, 13 April 13.

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