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PC makers target the dumb terminal

Computer makers roll out stripped-down computers that offer basic hardware features, but low-cost PCs are conspiring against them.

NEW YORK--In conjunction with today's release of a new version of Microsoft's NT Server software, computer makers are rolling out stripped-down computers that offer basic hardware features--so-called "dumb terminals"--but low-cost PCs may be conspiring against widespread use of the devices.

Companies including Boundless Technologies, Network Computing Devices, Hewlett-Packard, NCR, Neoware Systems, Tektronix, Intergraph, Umax, and Wyse Technology are either showing off or announcing support for a new class of "thin client" desktop hardware based on the Windows CE operating system.

The devices come with no hard drive and low-powered processors but can run Windows NT-based desktop and applications on a central server.

Microsoft today formally introduced Terminal Server Edition, a version of its Windows NT Server software that will allow networked terminal computers to operate Windows-based applications remotely off a server, as previously reported this month.

Customers needing to access mainframe-based or Unix applications can add technology from Citrix Systems called MetaFrame.

The new version of Windows NT has been widely seen as a response to demand for lower cost of ownership--the same demand that gave rise to the network computer concept promoted by Oracle, Sun Microsystems, and others.

But the sharp drop in prices for standard personal computers has slowed the momentum of the network computer and may have the same effect on terminals.

For instance, Wyse is offering a Windows-based terminal for $749, while Network Computing Devices said its Windows-based terminal will sell for $649 when they become available in the third quarter of 1998. Yet many low-cost PCs are already available in the same general price range.

While proponents of NCs say that companies will save money in the long haul because the systems are easier to administer, it is difficult to calculate exactly how large those savings will be. Users have to pay license fees for the use of the server software as well as the applications that run on the systems. These fees in many cases will be too high to make it a compelling alternative to personal computers.

On the other hand, Zona Research, a consultancy, says in a report released today that licensing costs are "in line" with Microsoft's traditional licensing policies. In some cases a company may wish to buy a cheap PC instead of a Windows-based terminal, but can still gain some of the benefits of a terminal, Zona said. "We believe the plummeting prices of full-featured PCs may force several organizations to experiment with accessing [Windows] applications from inexpensive PCs, using the PCs for some local application execution."

Microsoft's claims of significant cost of ownership reductions may not be entirely accurate, other analysts say. For instance, compared to Citrix's thin client concurrent licensing price scheme, Microsoft's charge-per-user pricing may turn out to be much more expensive. Concurrent pricing allows a company to buy less licenses than client licensing, as it assumes that not every employee will be online at the same time.

"As the number of users goes up, factoring in Citrix's concurrent licenses, you could end up paying considerably more for a licensing solution" using Windows Terminals, said Dwight Davis, an analyst at Summit Strategies.

Additionally, heavy application use will drive up the number of servers needed per client. Light task-oriented applications will only require one server for up to 200 clients. But only 10 to 15 basic office suite users will tax one server, Davis estimated.

However, the estimated 100 million users at corporations who have not yet upgraded from Windows 3.1 will be able to move to 32-bit Windows applications without upgrading their client hardware, a significant expense reduction.

"The price advantages may or may not be compelling with the Windows Terminal servers," Davis said. "The real advantage for a lot of companies will be the manageability benefits. A lot of companies have come out of centralized mainframe environments. They want to get back to the computing model where there's a central server running most of the stuff and they don't have to worry so much about the desktop."

Interestingly, NCD's ThinStar 300 series NCs are the first announced products based on a design supplied by Intel. The devices will sport a 133-MHz Pentium processor as well as Intel technologies for system management. The ThinStar 300 won't be available until the fourth quarter of 1998. No pricing was announced.