Chips and operating systems from other companies will likely enjoy a greater degree of prominence in shaping the market for set-top boxes, Net-ready handhelds and other non-PC devices, said Simon Lin, CEO of Acer Information Products Group, the computer arm of the Taiwanese conglomerate.
"From a marketing standpoint, it will probably be easier for other chip companies than it was a couple of years ago. Consumers and information appliance players may be more willing to look at alternatives," Lin said. "First, there is the Intel supply situation. Second, people will (probably) believe you have to have different processors."
Although executives from Linux companies and Intel competitors have long touted their technological advantages in the device market, Lin is among the growing number of PC executives who have said that there will be a greater technological diversity in these emerging markets.
While few of Acer's products are sold under the company's brand name in the United States, the company makes notebooks and other products for domestic labels such as IBM.
The Internet appliance market, of course, has been on the verge of becoming mainstream for at least three years. Sun Microsystems and Oracle promised in 1997 that the "network computer" would displace standard PCs on corporate desktops and even in homes. So far, it hasn't.
Microsoft's WebTV created a platform for getting onto the Internet through a television interface. Although it is probably the most popular Internet appliance today, the service so far only has a million subscribers--far lower than original expectations.
The picture, however, is beginning to change. The explosion of cell phones and personal digital assistants has paved the way for Internet-enabled versions of these devices. Game consoles, such as Sony's PlayStation 2, will increasingly be used to access the Internet, as will set-top boxes. AOL, for instance, will launch its AOLTV service next week.
"These are the five major products that will be generated in quantities," Lin said of the emerging technologies. "They will complement the PC...None will be the final, final Internet device. They will coexist for some time."
Still, these devices will begin to pick away at the frontier of the PC empire, as many begin to take over the duties of the faithful personal computer.
"Why Microsoft is worried about Sony's growth is because the PlayStation can be used as an Internet device," Lin said.
Like the PlayStation, some new devices also do not depend on Microsoft or Intel technology. A survey of appliances at Computex, a recent trade show in Taipei, confirmed this view. A number of manufacturers plan to adopt the open-source Linux operating system over Windows 98 or versions of Windows CE for upcoming set-top boxes and appliances. And, while some are using Intel processors, a number of companies have built designs around Transmeta or National Semiconductor processors.
While cost is a factor in some of these design decisions, it is not the only factor. Boot-up time can be greatly reduced by using Linux instead of Windows 98, said many sources. The interface can also be customized.
Linux is still far from establishing itself as a mainstay, Lin said, but the open-source operating system is helped to a certain degree by timing. Linux is gaining momentum among developers at a time when the device market is taking off.
On the processor side, Intel has largely seen its momentum slowed by the processor shortage, which has lingered for three quarters.
"Intel's supply capabilities scared a lot of customers," Lin said. "Perhaps these alternatives will have a better chance."