IBM announced two large network computer deals today, proving
that the market isn't dead. It's just growing slower than expected.
IBM said it sold 8,000 Network Stations,
its version of the NC, to American General Finance (AGF) in one of the
larger Network Station deals to date and "several thousand" to Sysco
Corporation, the largest food distributor in the country.
Although the deals represent a minuscule fraction of overall desktop computer sales,
they stand as proof that the NC concept lives on.
NCs burst onto the scene
in 1995 as an inexpensive alternative to PCs. Centrally controlled by
powerful servers, NCs, said proponents, would be both cheaper to acquire
and to manage. Since then, however, PCs have dropped in price and become
easier to manage, wiping out many of the promised benefits of NCs.
As a result, NCs sales have largely become viewed as replacement devices
for older "green screen" dumb terminals. Both AGF and Sysco, in fact, have
adopted IBM's Network Station to replace dumb terminals, according to IBM.
Sales to date have been relatively small, especially when
compared to PCs. Approximately 500,000 NCs were sold in 1998, according to
International Data Corporation, lower than
early estimates. By contrast, 21 million desktop PCs will emerge from
factories in the fourth quarter alone, according to other IDC estimates.
Still, hope springs eternal. IDC estimates that 6.8 million "thin" clients
will ship in 2002 while Zona
Research sees a 13 million unit market in five years.
IBM for its part remains committed to the effort and will be coming out
with a Network Station based around Intel processors in 1999, according to the
company. IBM also accounted for the lion's share of NC sales 1998, said
industry sources. IBM announced earlier in the year that Allstate Insurance
agreed to buy 45,000 Network Stations.
"We think 1999 will be the year when people make the move towards a 'thin'
infrastructure," aid Ed Petrozelli, general manager for IBM's Network
The Sysco and AGF deals, however, do not seem to provide optimism for Java
backers. Neither company is installing the Network Stations to run
Java-based applications, according to an IBM spokesman. One of the early
advantages of NCs, according to proponents, was that NCs would allow
corporations to migrate from Microsoft technology.