Tech Industry

NCs headed for homes

The consumer market for network computers will far outstrip business buying, Net researchers predict.

The consumer market for network computers will far outstrip the number of NCs sold into commercial environments, according to projections today from Internet researcher Zona Research. This report echoes the findings of a report released earlier this month by International Data Corporation.

While the commercial market will boom from 1.7 million this year to 6.7 million NCs in 2000, Zona expects consumers to buy more than 70 million NCs or other network appliances in the year 2000. Most consumer devices will be some form of Internet-enabled telephone, said Stephen Auditore, Zona's president. Net-enabled TVs are also cited as an example of a consumer NC.

"We don't see NCs as killing PCs," he added. "We see that replacing terminals [in businesses] is a pretty interesting business, and the consumer market for network appliances will grow even faster." Auditore also says consumers will embrace application-specific devices such as screen phones for sending and receiving email.

For the commercial market, Zona based its projections on data from 400 companies on current and future NC purchase plans, but its consumer figures aren't backed by primary research.

Projected NC shipments
(thousands of units)
Market 1996 1997 1998 1999 2000
Consumer 100 2,000 7,500 37,500 70,500
Education 2 101 292 621 940
Business 383 1,740 3,445 5,515 6,768
TOTAL 485 3,841 11,237 43,636 78,208
Source: Zona Research, March 1997

In trying to estimate the size of the consumer market, Zona looked at other research on adoption of low-cost devices, examined adoption rates for France's NC-like Minitel service, and factored in what phone companies are expected to do using Net-enabled telephones. He described the report as a "qualitative assessment."

Earlier this month, an IDC report on NCs also concluded that consumer-oriented devices would sell better than business NCs. IDC estimated that 668,000 network appliances were sold last year, higher than Zona's estimate. However, IDC's projections for future years are more conservative than Zona's. (See related story)

"In the commercial market, we don't see NCs displacing PCs on the desktop," said Zona's Auditore, who debunked the NC boosters' refrain that "total cost of ownership" for NCs is cheaper than for PCs. The cost of ownership argument holds that NCs are significantly more inexpensive to use and deploy than PCs.

"We think cost of ownership is a bogus argument," Auditore said, saying that NCs will prove cheaper than PCs, but not much cheaper. He doubts that will sway many customers to deploy NCs. Moreover, as another plus for PCs, he adds that software will be more available for PCs. Corporate buyers will snap up NCs to replace terminals--dumb devices connected to mainframes--more than anything, he says; this is a relatively small market.

Both reports seem to indicate the NC is gaining more "mind share" than market share. The network computer is more debate than device, and Java isn't yet set to take the world by storm, according to John Gantz, an analyst with IDC Research, at the Directions '97 conference in San Francisco. Gantz says that 75 percent of the devices accessing the Internet by the year 2001 will still be PCs.

Still, the concept is gaining ground and a variety of shapes and sizes of NCs will appear in both consumer and commercial markets. IDC believes that Net-enabled televisions, in particular, are likely to be the biggest source of growth for NC devices in the consumer market. Over 12 million units are predicted to be shipped in 2001 compared with 6.7 million NCs in the "enterprise" [corporate] market in the same year, according to Bruce Stephen, also with IDC.

Both firms say the consumer market will be bigger, but the analyses assume one big "if," that consumers will adopt the technology. Stephen says that if consumers don't warm to devices like "smart" phones, game consoles with Internet access, and Net TVs within three years, the consumer-based network computer market could lose funding for development of new devices and shrink considerably as a result.

Zona was acquired this month by IntelliQuest Information (IQST) and is now a wholly owned subsidiary.