Don't bury the beige box yet, analysts say

A quick survey around the show floor at PC Expo this week in New York finds gadgets galore. Noticeably absent are major PC makers, such as Compaq Computer, Dell Computer and Micron Electronics.

If anything, this year's show is more like the "Gadget Expo," with handhelds and wireless devices drawing large crowds. But Gateway, Hewlett-Packard and IBM have large booths, and IBM has been drawing gawking onlookers with its wearable PC.

Will gadgets replace the PC?

"No," says Ralph Martino, vice president of strategy and marketing for IBM's personal systems group.

"Yes, there's a lot of talk the PC guys didn't show up at PC Expo. Well, we're here. All the excitement may be about these other devices, but those devices need to be managed and need something to provide extended connectivity."

Martino is convinced the PC is not going away and says predictions to the contrary are misguided. Analysts agree.

In a report released earlier this month, eTForecasts predicted that Internet appliances and non-PC devices are the wave of the future. But the Buffalo Grove, Ill.-based research company also concluded that PC sales will explode, in part to support the new devices.

The eTForecasts report also predicts that by 2005, 55 percent of Internet users will rely on Web appliances for at least part of their surfing, up from 2 percent this year. That works out to 115 million Internet appliances in the United States vs. 222 million PCs. And worldwide, the prediction is for 596 million appliances and 1 billion PCs by 2005.

"This does not mean the end of PCs as Internet access devices, but an increasing share of Internet users will augment their online life with Web appliances," eTForecasts analyst Egil Juliussen wrote in the report. "PCs will remain the leading Internet access device--especially for heavy-duty usage. By 2005, most Internet users will be accessing the Web from both PCs and information appliances such as Web cellular phones and Web appliances."

PCs won't fade away in the face of handhelds, pagers, cellular phones and other Web-enabled devices, Juliussen asserts. Instead, the analyst foresees a sales boom in PC servers and desktops used to create, manage or deliver content. Annual server sales, for example, are expected to reach 11.5 million units in 2005, up from 3.7 million units last year, in part for serving up content to non-PC devices, according to eTForecasts.

Martino couldn't agree more. He predicts any information architecture that emerges will be centered on the PC.

"Otherwise, users are not going to be able to share information regardless of device," Martino said.

The problem is convergence.

"Our work life and home life are blurring," he said. "You and I are going to have multiple devices both at home and work." These devices will rely in part, as do Palm handhelds today, on PCs.

A good example is Research in Motion's Blackberry pager. While the device can send and receive email on the go, it depends on a PC for full use of its features.

Martino also expects PCs to play an important role in the convergence of corporate and home wireless networking and broadband access, such as cable and digital subscriber lines (DSL).

Rather than share Dell founder Michael Dell's enthusiastic forecast this week that wireless broadband will displace landline competitors, Martino predicts the emergence of wireless networks that are connected to a PC or server acting as a hub to cable or DSL.

"We believe strongly the convergence of these two technologies will drive up usage and lead to more PC sales," he said.