Apart from the handful of exceptions--who doesn't have a bleeding-edge friend with a Palm VII or WAP phone?--the dominant Web access device remains the PC.
Recently, my team descended upon the PC Expo in the Big Apple to find out what's new on the appliance front. Multiple companies had promised new and exciting announcements. But they came up empty-handed. Lots of vision, lots of future, but no here-and-now killer products.
Sure, there are plenty of successful devices, notably the Palm, the Handspring Visor, the RIM pager. But while some are true mobile appliances--that is, they are single-function, high-volume, low-cost devices--none allow the full Internet experience of access anytime and anywhere. Even Web-centric appliances such as the iOpener from Netpliance only partially support all the multimedia extensions to the Web, not to mention the attachments frequently found in emails.
One problem remains cost. While the price of PCs continues to go down, it's just too tough to get a true mobile appliance for less than $300. It's still too early to believe that memory and bandwidth are free, yet alone flat panel displays. And the subsidy model, where ISPs or telcoms give away the device (or sell it at a markedly reduced price) is good to seed a market, but doesn't drive mass-market volume.
Even more important is a lack of supporting infrastructure for the Web appliance. Part of the success of the PC was that the open, standards-based hardware architecture provided the foundation for an ever-growing ecosystem. I'm referring to a well-integrated, multiparty, industry-wide technology infrastructure (from CPU's to software to distributors).
Today, nobody can even agree on the functionality of a Web appliance, yet alone standardize application program interfaces (APIs) or peripheral interfaces. And this doesn't even start to explore the standards needed in the wireless infrastructure that will have to support increased bandwidth for the full Internet experience.
Meanwhile, the traditional PC camp is developing a close relative to the Web device: the ultra-lightweight PC. This camp argues that even a browser-based application needs local storage to save emails, a sound card to play multimedia, a keyboard as an input device, etc. Soon the appliance really looks like a PC. Connectivity, portability and battery life limit how easy it is to use these devices-barriers that in my mind prevent a PC from becoming the Web appliance of the future.
What is needed is a confluence of the PC-driven ecosystem with an innovative, potentially disruptive technology platform designed to be a portable Web-centric appliance. This doesn't exist yet. So, if you're thinking of investing in an appliance "play," my advice is to sit back and wait.
There's a promising future filled with Web appliances, but the earliest winners will be semiconductor, software and wireless infrastructure companies focused on mobile Internet computing--the ones enabling the technology, not building it.
Philip Rueppel is a research analyst with Deutsche Banc Alex. Brown. Rueppel's comments that appear herein are not a publication of Deutsche Banc Alex. Brown and may not represent Rueppel's complete or current opinion with respect to any company. Persons who want to make an investment decision with respect to any company mentioned by Rueppel should obtain a copy of his current and complete opinion as contained in the most recent publication of Deutsche Banc Alex. Brown. His opinions are not intended as an offer or solicitation, nor as the basis for any contract for the purchase or sale of any security, loan or other instrument.