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IBM lands two NC deals

The two deals prove the network computer market isn't dead--it's just growing slower than expected.

Michael Kanellos Staff Writer, CNET News.com
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas.
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Michael Kanellos
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IBM announced two large network computer deals today, proving that the market isn't dead. It's just growing slower than expected.

IBM said it sold 8,000 Network Stations, its version of the NC, to American General Finance (AGF) in one of the larger Network Station deals to date and "several thousand" to Sysco Corporation, the largest food distributor in the country.

Although the deals represent a minuscule fraction of overall desktop computer sales, they stand as proof that the NC concept lives on.

NCs burst onto the scene in 1995 as an inexpensive alternative to PCs. Centrally controlled by powerful servers, NCs, said proponents, would be both cheaper to acquire and to manage. Since then, however, PCs have dropped in price and become easier to manage, wiping out many of the promised benefits of NCs.

As a result, NCs sales have largely become viewed as replacement devices for older "green screen" dumb terminals. Both AGF and Sysco, in fact, have adopted IBM's Network Station to replace dumb terminals, according to IBM.

Sales to date have been relatively small, especially when compared to PCs. Approximately 500,000 NCs were sold in 1998, according to International Data Corporation, lower than early estimates. By contrast, 21 million desktop PCs will emerge from factories in the fourth quarter alone, according to other IDC estimates.

Still, hope springs eternal. IDC estimates that 6.8 million "thin" clients will ship in 2002 while Zona Research sees a 13 million unit market in five years.

IBM for its part remains committed to the effort and will be coming out with a Network Station based around Intel processors in 1999, according to the company. IBM also accounted for the lion's share of NC sales 1998, said industry sources. IBM announced earlier in the year that Allstate Insurance agreed to buy 45,000 Network Stations.

"We think 1999 will be the year when people make the move towards a 'thin' infrastructure," aid Ed Petrozelli, general manager for IBM's Network Computer Division.

The Sysco and AGF deals, however, do not seem to provide optimism for Java backers. Neither company is installing the Network Stations to run Java-based applications, according to an IBM spokesman. One of the early advantages of NCs, according to proponents, was that NCs would allow corporations to migrate from Microsoft technology.