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Cyrix reaches beyond the $299 PC

National Semiconductor, one of the companies that gave birth to the low-cost PC with its Cyrix chip brand, is now looking to a future beyond the PC.

LOS ANGELES--National Semiconductor, one of the companies that gave birth to the low-cost PC with its Cyrix chip brand, is, with the help of Hewlett-Packard, now looking to a future beyond the PC.

Cyrix processors, found in Packard-Bell NEC, Compaq, and Emachines computers, dominate the lowest of the low-end of the market--which is fine with Steve Tobak, vice president at National Semiconductor, which owns the Cyrix chip brand. This segment of the market is growing rapidly, and Cyrix processors are found in the preponderance of sub-$600 machines.

But even though $599 and $499 machines like those from Emachines are driving PC sales by appealing to nontraditional PC buyers, Tobak believes that when PCs penetrate 60 percent of the United States within the next two to three years, the market will be saturated. If the availability of so-called free PCs does not lure all of the technology novices to become PC users, no computer will.

Tobak predicts the demand for single-function products like Cyrix's WebPad device and TV set-top computers will take off.

Consumers who pass up $299 PCs will likely never buy a computer, he says, and that is the market the industry will need to address in the next ten years. "PCs are complex. People are scared of them," he said. "It doesn't fit the model of the matter what we say about making PCs easier to use."

So Cyrix is developing alternative products, like the WebPad, a cordless tablet device that offers basic Internet and email capabilities. Cyrix is also developing designs for set-top boxes which will offer similar features. "The Internet has become the killer app for the computing industry," he said.

Tobak compared the Internet's power as a catalyst for new devices and innovative form factors to electricity, which launched hundreds of appliances. "The PC is like the lightbulb"--the first device to harness the power of a new technology, he said, but predicted hundreds of new low-cost Internet devices over the next five years.

"Everyone is jumping in, but there will only be a few winners," he said. "Only a few devices will become huge, like the TV or the Walkman." Portability and simplicity are the key features of such devices, he said, pointing to the Cyrix WebPad as an example.

Cyrix announced the reference design for the WebPad last November at Comdex, but so far no companies have signed on to manufacture the device. Tobak says the company was approached by a variety of consumer electronics companies, PC makers, as well as Internet service providers interested in developing a machine based upon the design. Both the WebPad and set-top box designs based on Cyrix processors will be in volume production in the second half of this year, he claims. Cyrix is demonstrating all of these devices at its booth here at WinHec.

Additionally, the company is working with Hewlett-Packard (HP), he confirmed. Like a number of large PC companies, HP has been talking up devices beyond the personal computer. CEO Platt has joined IBM CEO Lou Gerstner in declaring the "end of the PC era" and suggesting that more consumer-friendly devices will grow in popularity as Net access becomes more ubiquitous.

HP is said to be currently toying with the idea of a $399 PC, similar to what Emachines is doing, according to sources, and has been examining ways to get into the device market.

Devices like the WebPad are a natural fit for home and education markets, he said, predicting that they will ultimately pervade the corporate market much in the same way as Palm Computing's PalmPilot. Corporate technology managers, notoriously slow to adopt new and potentially unstable technologies, were essentially compelled to offer support for the PalmPilot after hordes of users began bringing them to work, he noted. "[Information system] people have never lead the charge for any new technology," he said.

The WebPad, as well as set-top boxes for the consumer market, will be priced around $499, which still makes it more expensive than some PCs. This may not be a sticking point, he contends, because he is not appealing to traditional PC buyers. The WebPad will be a success because it is not a PC, according to Tobak. "People become so used to being trapped, that they forget they're in a prison," he said.

Tobak believes that in the long run in this market, Cyrix will be more successful than traditional PC players like Intel and even AMD, because the company is so focused on low-cost manufacturing. "This cannot just be a side business," he said.

The market for the high-end PC will never totally go away, he concedes, but it will be eclipsed by smaller scaled-down devices. "There will always be demand for the PC," he said, noting that mainframe computers are still growing in yearly shipments even though the PC is much more widely used.

"Why do you think Intel has to spend $300 million to promote the Pentium III?" he asked, referring to the chipmaker's recently launched marketing campaign in support of its new high-end processor. "They have to create a demand that doesn't really exist."