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Back to the desktop for WebTV

The second generation of the set-top box may end up looking more like a computer after all.

Although the WebTV was originally marketed as a device that brought Net access to the masses, the second generation of the set-top box may turn out to be more like a computer after all.

Mitsubishi and Hitachi are going to soon be joining Philips Consumer Electronics and Sony as WebTV manufacturers. As more competitors join the race to link the living room to the Net, Sony and Philips want to stand out from the crowd. Philips, for example, is considering adding the ability to do word processing.

For now, the WebTVs from Sony and Philips are nearly identical and are being pitched to the same relatively limited audience. But as the market develops, that's going to have to change.

"The new generation of WebTV will differentiate in hardware. There will be very specific differences between the Sony and Philips offerings," said Jan van de Poll, director of business development for Philips Magnavox Internet TV in an interview with CNET'S NEWS.COM. The hardware differences will be highlighted by a plan to pitch the boxes to specific niche audiences through access to special Web sites.

Philips plans to focus on selling to the educational and library institutional market, according to van de Poll. "We are working on a special 'jump station' or Web site with the working title of Planet K-12 that will provide a resource for teachers and students," van de Poll said. The site is supposed to provide help with everything from homework to educational grants.

The company is also working on developing software for their set-top box. Because the WebTV doesn't have a hard disk, Philips is working ways to run applications on a central server, much like how the NC works, according to van de Poll. The first such application would likely be a word processor, but the company is also thinking about Web page development tools and other applications.

To make this idea more practical, the company is also working to deliver in July a device that would let WebTV boxes connect to Hewlett-Packard printers, van de Pol says.

Other future WebTV iterations from Philips might have features such as audio and video or a port for digital still cameras. Other possibilities include hooking the boxes to Ethernet local area networks as the company enters specific market segments such as educational institutions, according to van de Pol.

While the WebTV was originally intended to be as simple as possible, Philips is compelled to add these new features to keep its set-top offering ahead of the curve. Later this year, Zenith Electronics, and RCA are expected to introduce their first Internet set-top boxes based on technology from Oracle subsidiary NCI.

A number of recent market surveys also indicate that the home market for these devices will be relatively limited until at least 2001. In the meantime, competitors will have to stake out alternate markets.

The original licensees for the WebTV, Philips and Sony, should hold an edge over their competitors because of their early entrance into the market and because of WebTV's affiliation with Microsoft if a recently announced merger goes through.

"WebTV is shaping up very well--they've just doubled the number of partners...I think they are regarded as long term player now," says Debbie Coplin, an analyst with market research firm Jupiter Communications. "Now that they aren't worried about just surviving, I think they can focus on developing the platform and experimenting with different revenue models now."