Internet appliances represent one of the most exciting opportunities in technology in the new millenium.
The techology fulfills the mantra of accessing the Net "any place, any time, any body." It also addresses the growing need for ubiquitous computing. The increased involvement from industry leaders--such as Microsoft, Sun Microsystems and Hewlett Packard--has not only validated the opportunities and tremendous potential of this rapidly growing market, but also has brought numerous software and hardware developers to this sector.
The growth of ubiquitous computing and communications devices is based on the evolution of faster and cheaper processors, and the need for real-time, intelligent communication devices. The applications range from telecommunications switches and routers to consumer electronics, from Internet-accessing digital set-top boxes to cable modems. The Internet appliances market has just begun to attract attention, and it is certain to play a larger role in the post-PC frontier.
The sub-markets of smart phones, set-top boxes, and intelligent PDAs can be expected to grow at an explosive rate in the near-term, while the growth of handheld PC companions should keep pace with the current momentum in the mobile market, and become a credible alternative to existing Net-accessing portables in the long-term.
The traditional development tools community in the deeply embedded market is transitioning itself to face new market opportunities and a more competitive environment. The commercial real-time operating system/tools vendors are poised to gain more market share as product development cycles continue to shorten, and services and software development costs become more important.
I expect that the overall Net appliances market in the United States will grow at close to 100 percent its compound annual growth rate (in unit shipments) for the next four to five years, reaching 42 million by the year 2002. Key appliance segments--such as set-top boxes, smart phones, and Net-ready TVs--will see faster near-term growth, while the larger palm PCs and PDAs markets will take longer to see similar growth numbers. PDA technology as well will catch up quickly as the computing and communications industries increasingly converge.
The number of embedded RTOS/tools vendors (currently about 60) should decrease in the next few years as larger companies--like Sun Microsystems and Microsoft--establish a stronger front through internal growth and acquisitions. The mass application markets--what is called the horizontal (or soft RTOS) market (where Windows CE and Java will most likely succeed), such as digital set-tops, palm PCs and smart phones--will adopt only a few of the top names as standards after the smoke clears following industry consolidation. I predict there will be less than half a dozen significant players in a few years--and those who succeed will definitely thrive in the next century.
Though industry giants like Microsoft, Sun Microsystems, Hewlett Packard, and Motorola may dominate market dynamics, there are a number of small, exciting companies in this space that look promising.
For these companies, we believe strategic partnering and brand marketing will be as important as technology and business models. The ability to manage expansion will also be crucial to the success of industry players.