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Intel, NCD team on thin clients

Intel and terminal maker Network Computing Devices ink a deal to build desktop systems based on Intel's thin client specification.

Intel (INTC) and "thin client" computer vendor Network Computing Devices today inked a deal involving a substantial investment that will lead to Intel's entry into the terminal and Network Computer (NC) market and the establishment of Windows CE as an operating system for these devices.

The deal represents a step forward for both companies in the thin-client market. Intel has been trying to devise a strategy for getting its processors into thin client devices such as terminals and NCs for some time. These types of computers are typically less powerful than even low-end PCs and rely heavily on the server computer for the processing of data.

NCD, which makes WBTs (Windows-based terminals) and NCs, has been actively seeking out large technology partners to advocate thin clients, said Bob Gilbertson, chief executive officer for NCD.

"People still don't understand thin-client computing. There is a lot of FUD [fear, uncertainty, and doubt] out there. They don't understand the full benefits," Gilbertson asserted. The Intel name will give credibility to corporations as well as computer vendors about the viability of the thin-client market.

Negotiations between the two companies began last December.

NCD's Bob Gilbertson on the deal's history
Under the deal, NCD will begin to market terminals based around Intel technology and an Intel "Lean Client" specification for thin-client computers.

The first machines will arrive in the third quarter of this year, said Gilbertson, incorporating a 133-MHz Pentium chip to start. Intel has also taken an equity stake in NCD, purchasing 750,000 shares, or 4.4 percent of the company.

WBTs are server-centric desktop devices. Although they come with a processor, most processing takes place on the server. WBTs do not have memory or hard drives, and connect to the server through the WinFrame architecture from Citrix.

Microsoft is releasing a terminal server software system in the second quarter, code-named Hydra, that is expected to give a boost to the market. Hydra-based WBTs use Windows CE as a local operating device. Thus this deal also represents Microsoft's first foray into that market.

More devices, including NCs based around Intel chips that use a Java virtual machine, could also emerge, Gilbertson added.

Ironically, the first products to come out of this deal will represent something of a step backward, technologically speaking. For instance, NCD will use the 133-MHz Pentium chip, which is no longer part of Intel's main processor line. When it first spoke about lean clients at its analyst meeting last fall, Intel indicated that the Lean Client specification would use a new type of processor.

But the alliance should give a boost to the market, though sales will not likely take off until 1999.

"I think 1999 will be the breakthrough year," said Eileen O'Brien, terminal analyst for International Data Corporation. "There will be a couple hundred thousand this year."

As far as the comparison between WBTs and NCs, O'Brien said that WBTs seem to have more momentum at the present. Both Microsoft and Intel are now lined up behind terminals, she pointed out, and sales of NCs have remained relatively lackluster. Today's deal will also likely make it easier for NCD to land deals to manufacture terminals for computer vendors. Currently, the company makes NCs for IBM and terminals under its own name.

"If either of these are going to make it, WBTs have more potential," she said. Success, however, depends upon how well Hydra works.

The Lean Client specification has yet to be published publicly, but Intel and NCD provided details on how the two companies would work to bring products based around the standard to market.

The reference design will consist of Pentium-based lean-client hardware integrated with software from both companies. Intel will supply NCD with Pentium microprocessors, associated logic components, and related software. NCD will create, manufacture, and market lean client systems and operating software, including its optimized version of Microsoft's Windows-based Terminal software, the companies said.

NCD said its initial products resulting from the deal will be marketed under its own brand and private OEM labels, and enable customers and OEMs to replace aging "green screen" terminals with lean-client desktop systems and Intel Architecture servers running Windows NT.

Prototypes of NCD's lean-client design will be demonstrated later this spring. The first systems are expected to ship in the second half of the year.

Intel is an investor in CNET: The Computer Network.