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Net appliance will boost PC biz, not kill it – survey

A future, not the future

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Opinion A US market research report released today claims that the anticipated boom in Internet appliances won't come at the cost of the traditional PC industry after all. Quite the reverse, in fact, reckons eTForecasts. Instead of decimating the PC business, the appliance market will actually drive PC sales. eTForecasts contends that while computer buyers will turn away from the PC toward cheaper, dedicated Net access machines, they are still going to want content and plenty of it. That content will be produced on high-end desktop PCs and served on PC-based servers, and companies will need more of both than ever before. The result: a buoyant business market for PCs, even as corporates and consumers buy into non-PC platforms. Servers in particular are going to do well out of the post-PC world, with sales growing from 3.7 million units last year to 11.5 million in 2005, according to eTForecasts' numbers. Overall, the number of PCs out there will grow from around 500 million to one billion over the next five years, during which PC sales will double in value each year to around $1.7 billion in 2005. ETForecasts' conclusion makes plenty of sense, but let's be honest it shouldn't really come as a surprise to anyone. What is surprising is the way some analysts have been predicting the death of the PC when such an outcome flies in the face of the way the PC business has evolved over the years. So while replacing a mainframe or a mini and, say, 500 terminal with 500 PCs made a great deal of sense financially, the cost savings of shifting again, this time to appliances - or 'thin clients', as we used to call them - while significant is nowhere near as large as before. In any case, there are plenty of tasks for which appliances aren't yet suited, and that means there's still room for the PC. As for the consumer space, we've yet to see any real evidence that, despite vendors' rabid desire to get into the market, existing PC owners and/or the great hordes who manage perfectly well without any form of standalone computer system are suddenly going to turn to appliances en masse. That's not to say there isn't a market there, rather that we haven't been convinced it's quite the next best thing since sliced bread. Will Net access increase? Yes, of course, largely through mobile devices like Palms or Internet-compatible cellphones. But are these appliances? You could say so, but then no one has really described them as such until now. And how many people buy - or will buy - these devices for Net access? Siemens, for one, expects to sell WAP phones primarily to existing cellphone owners who are upgrading, rather than new users buying into the so-called mobile Internet revolution. The die-hard Internet appliance pundit will at this point suggest the set-top box as the key Net access device. Again, where's the evidence? If anything, what evidence there is suggests the opposite of the pundits' predictions. WebTV hasn't done too badly, but it's hardly set the world alight. The simple fact is that, to date, PCs have dominated the Net access market, and indeed have pretty much created the consumer Internet business. Over 80 per cent of iMacs, for instance, were bought to get their buyers online, according to Apple's research. Again, we're not suggesting there isn't a market for Internet appliances, rather that, like notebook computers ten years ago, they are primarily going to find new markets and will only eat into the PC business a little. Internet appliances are a future of computing, not the future. ®

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