Start-ups, stalwarts push info appliances

That day is here for Be Inc., and Kerbango, at least in the sense that their products are being demonstrated at the Demo 2000 conference in Indian Wells, Calif., an annual show devoted to unveiling new technologies and Internet companies. Whether a robust market exists for such products is another matter.

Be, founded in 1990 by former Apple executive Jean-Louis Gassee as an alternative desktop operating system, formally unveiled its product for Internet appliances. The BeIA software, formerly known by the code name "Stinger," was shown running on an Internet terminal from Compaq Computer, code-named Clipper.

Kerbango demonstrated what it is calling an "Internet radio," a device that looks like a radio but tunes into audio from Web sites worldwide.

The notion of information appliances offering simplified access to Web-based information isn't new. Companies have been toying with such ideas for years, with few successes to show for it. The PC, however, continues to enjoy dominance as the main tool for viewing content on the Web, despite complaints about the complexity and cost of the all-purpose computer. Still, a growing number of big name high-tech companies--Intel, Microsoft and Compaq, to name a few--are betting this nascent market will take off soon. Research firms are predicting the same thing.

"It's amazing how many companies from diverse backgrounds are looking to the consumer market in general and the information appliance specifically as the next big growth category," said Kevin Hause, an analyst with International Data Corp. A new IDC report is predicting the information appliance market will hit $17.8 billion by 2004.

"A lot of companies are spending a lot of time, effort and money," he said, noting that the rise of the information appliance is not being driven by PC makers or Internet service providers (ISPs) alone. Consumer electronics companies like Sony don't want to be left out of the game, even if no one is sure the starting gun has really sounded yet.

For Compaq, the effort is multifaceted. Be and Compaq entered into a licensing agreement in December. The showing of the Clipper terminals is the first visible sign of cooperation. Clipper is a stripped-down PC (the device has no hard disk drive, for instance) designed for Web surfing and email delivery.

Be executives say that where other information appliances of this type have failed in the past, its device will succeed, oddly enough, precisely because it closely replicates the Web browsing experience people can get on a PC. Support for the latest multimedia technologies is included, and content will appear on Clipper's screen much the same way it looks on a PC. The main difference: Clipper will cost around $200, said Frank Boosman, and some companies may decide to give the device away for free in return for trading a certain number of stocks in a month, as one example. Compaq is also looking at offering the devices through telephone companies who might charge a low monthly fee for its use.

Sources at Compaq have noted previously that potential partners are looking at the hardware and are considering different operating systems other than Be's, however. In addition, Microsoft has already announced plans for taking a Windows CE-enabled version of Clipper and selling it as the MSN Web Companion.

There are limitations to how fast companies can grow revenues in the info appliance market because, although many products have been designed, few are shipping in quantity. Generally speaking, most of the money is to be made on royalties for products shipped, or in offering engineering services during the design of the products.

Be's business model could potentially expand to include service fees, according to Lamar Potts, vice president of marketing for Be. For instance, a company that distributes Be-based appliances may want to offer customers the ability to read documents generated by Microsoft's Office software without actually having to have the program run on the device.

Meanwhile, Kerbango unveiled its take on a Net audio appliance at the Demo conference. With the combination of its stand-alone "radio" and Web-based service, users will be able to tune the radio to Internet radio stations by using a knob just as they would with a regular AM/FM radio. But instead of being limited to a set number of stations, a user can use the company's Web site to group a large number of worldwide stations according to themes and access them from preset buttons on the device.

News.com's Stephanie Miles contributed to this report.