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IDC says 1998 is year for NC

While network computers won't displace PCs, the new devices have a bright future, according to a new report from IDC Research.

While network computers (NCs) and NetPCs won't displace personal computers in the commercial markets en masse anytime soon, the new devices have a bright future, according to a new report from IDC Research.

IDC says NCs could take a seven to ten percent share of the corporate or so-called enterprise desktop marketplace by 2001. The report also stated what is becoming a typical refrain: NCs are well-positioned to serve as replacements for "dumb" terminals as well as older PCs used for terminal emulation.

NCs, such as those advocated by Oracle (ORCL) and Sun (SUNW), are loosely defined as computers that are connected to and rely on a server computer to store and distribute software applications. NCs may also rely on the server to run applications.

Microsoft (MSFT) and Intel (INTC) have also advanced an NC-like device, called the NetPC, which is essentially a bare-bones PC with better network management features.

Worldwide NC shipments
Device type* 1996 1997 2001
PCs (Net-ready) 25,388 35,898 92,804
NC clients 199 565 6,754
NetPCs n/a 143 2,970
Screenphones 72 370 7,565
Smart handhelds 213 607 7,679
Net TVs (generic) 90 415 12,350
Game consoles 92 780 9,125
Others 2 21 1,901
*Devices used for Internet/intranet access.
Source: International Data Corporation, 1997

"In the short term, we expect throughout 1997 the hype over network computing devices will continue with numerous vendors examining the possibilities of making additional desktop profits, but perhaps not willing to seriously commit until more dollars are seen," said Eileen O'Brien, director of IDC's terminals and intranet network computer program.

"A backlash could develop in late 1997 against this device segment if it fails to meet expectations. Hence, we predict 1998 will be the make-it-or-break-it year for this technology segment," she added.

In the long term, even though the PC will be the dominant desktop computer installed at companies, a significant global market for alternative devices is developing, the report said. Therefore, IDC expects NCs to become increasingly popular worldwide toward the end of the century.

IDC lists three principal reasons for the ultimate acceptance of NCs. First, NCs eventually will become a proven, reliable platform. Second, enterprises will have made the move to smaller, lightweight software applets like Java software applications. Third, networking infrastructures to accommodate these devices will be improved.

"IDC predicts as more NC clients become deployed in enterprises and IS managers begin to realize their long-term cost savings and inherent connectivity ability, demand will intensify," the report stated.

NC clients are also expected to become even cheaper as economies of scale and competition develop further.

IDC expects all NC clients to be aimed at the business/commercial/enterprise market. Some may be placed in educational environments, but that number will never be more than ten percent of the units shipped, the research firm said.

Last year was an "embryonic" year for NCs, and various kinds of products were shipped in 1996 as NCs, the majority being X-terminals. Therefore, the vendors currently at the top, such as Tektronix, Hewlett-Packard, and Network Computing Devices could easily lose their prominent positions, IDC said.

IDC asserts that a network computer is a concept "with many varied implementations." It is also segmenting the market into two major categories: enterprise NCs and information appliances. The enterprise category encompasses NCs that will be used primarily outside the home. Within the two major categories, IDC has recognized eight individual device types that will be used for Internet-intranet access by the year 2001. These are the following: PCs, NC clients, NetPCs, screenphones, smart handheld devices, Net TVs, game consoles, and other devices.