New WebTVs are selling well

Mitsubishi Consumer Electronics WebTV Plus boxes sold out within a few days at some major retail outlets, boding well for sales of these enhanced TV set-top devices as they hit store shelves in the coming months.

While the number of initial boxes sold is small because of limited availability at the retail outlets polled, analysts said that the quick turnover of the units at some stores offers evidence that the market for TV-bound computing devices like WebTV plus, set-top boxes, and Network Computers (NCs) is taking off.

"It signals that customers are willing to throw down a few dollars for these machines," said Jae Kim, associate analyst with Paul Kagan & Associates. "WebTV has been getting the most attention because of brand name recognition and the infomercials. Riding on the heels of their marketing is the RCA set-top box."

Magnolia Hi-Fi, a retailer based in Oregon, sold its inventory, as did The Good Guys. Mitsubishi released its WB-2000 boxes on December 4 to these retailers.

Other manufacturers are also beginning to release WebTV Plus products including Sony.

Although a large market for set top boxes and other small computing devices has been promised for years, this time it may actually occur. Not only has the technology for set-top devices improved, but also more manufacturers are moving to supply the relatively low cost units.

WebTV Plus boxes come with a number of improvements over the first-generation or "classic" WebTV model. With WebTV Plus, users can surf the Web and watch TV at the same time; users have to choose one or the other with classic WebTV. Classic WebTV boxes also have no hard drive and less memory.

Mitsubishi's WB-2000 Plus receiver, for instance, comes with a 1.1GB hard disk drive, a 56-kbps modem, a built-in TV tuner, and a printer connection. In addition, Mitsubishi is bundling a wireless keyboard with the terminal and a standard infrared remote control device. It sells for a retail price of $279 after rebate, which is lower than the original cost of classic WebTV boxes. Classic WebTVs now sell for under $100 after rebate.

The marketing message has also begun to sink into consumers, pointed out David Goldstein, president of Channel Marketing, a Dallas-based market analysis firm.

Like Kim, Goldstein said that WebTV is the apparent leader in the small device market at the moment, partially because of the company's recent marketing and pricing efforts. Eventually, however, NCs may become the device of choice for consumers because they are more flexible.

"You can do more than just surf the Net. It can act as a full-function PC," he said.

The popularity of the NC will likely take off with home users once Internet service providers (ISP) begin to lease server space for home users to store files. NCs compute, but generally do not store data or applications locally. By leasing server hard disk space, home users can then effectively begin to use the NC like a regular desktop.

"The ISPs have the ability to do it today. The infrastructure exists for this to be successful," he said.