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This article is not about Linux per se, but provides some predictions about
likely conusmer hardware platforms in the next few years and the challenges
they present to Microsoft.
jas3
p.s. For educational use only. Material copyrighted by Dow Jones & Co.
1999
__________________________________
October 28, 1999
Personal-Computer Makers Work
On New 'Windows-Less' Products
By JOHN R. WILKE, GARY MCWILLIAMS and DAVID BANK
Staff Reporters of THE WALL STREET JOURNAL
Major personal-computer makers are quietly working on a wave of products
that won't use Microsoft Corp.'s Windows PC-operating system, the source of
the software giant's market power.
The desktop machines, which are expected early next year, will be designed
primarily to surf the Internet and be priced far below standard PCs running
Microsoft's ubiquitous Windows 98 operating software, industry executives
said.
These Internet computers, or "appliances," won't soon supplant Windows PCs,
which will likely dominate the market for years. But if they take off, they
could begin to erode Microsoft's dominance of the desktop.
Major PC makers are taking a variety of approaches to the emerging market.
Gateway Inc. is building a line with no Microsoft software at all, and may
jointly market it with America Online Inc., which recently invested $800
million in Gateway, people familiar with their plans say. Compaq Computer
Corp. hasn't decided what basic software to use in its Internet line, which
it will preview at next month's Comdex computer show, other industry
executives said.
Dell Computer Corp. also plans to bring out a line of Internet computers,
some using Microsoft software and some without, people close to its efforts
said.
Internet Changes Landscape
Microsoft, meanwhile, is scrambling to keep PC makers in the fold. It is
working with some of them to make MSN Web Companion, an Internet machine
which will be tied to Microsoft's MSN Internet service. It is based on
Windows CE, a stripped-down Windows version that has had limited success in
the market so far.
Some Fans Cool to Microsoft, Citing Drop in Old Indicator
Company Profile: Microsoft
* * *
Join the Discussion: What will Microsoft's recent moves mean for the future
of the software firm and personal computers?
Computer makers have tried selling appliance-style devices before. But the
Internet changes the landscape, reducing the need to buy a full-fledged
version of Windows to get e-mail and even such applications as appointment
calendars and personal-finance software, some of which are now available on
Web sites. The new Internet computers also signal independence among PC
makers that have long served as captive distributors for Windows.
Spokesmen for Gateway, Compaq and Dell said they won't comment on
unannounced products. But on Tuesday, Compaq Chief Executive Michael
Capellas hinted at the new approach after announcing earnings. "There will
be dramatic shifts in how people perceive the product," he said. "Longer
term, our opportunity is to redefine Internet access" in a new generation of
products, he said.
"Every PC manufacturer is thinking hard about and working on a lot of these
devices in their labs," said Kevin Hause, an analyst who tracks the market
for International Data Corp.
Antitrust Suit Emboldens PC Makers
While surging consumer interest in the Internet was the catalyst for
non-Windows machines, the heightened scrutiny of Microsoft's business
practices resulting from the pending federal antitrust lawsuit emboldened PC
makers to bring out non-Windows products, a second industry executive said.
The outcome of the case could directly affect their ability to continue
experimenting with new products, he said.
But the main factor is the Internet. "The Internet gives people a platform
to do most of the things they need to do on a PC without a cumbersome and
expensive operating system," the executive said.
Since the initial Internet products planned by Compaq and Gateway won't run
Windows 98, they can't carry out many of the tasks general-purpose PCs can.
Later versions of these products may include some basic office software,
industry executives said.
Apple Computer Inc., the only major PC maker that doesn't use Windows,
already has a huge hit with its iMac computer, and handheld Internet-access
devices are selling briskly. In Microsoft's antitrust trial earlier this
year, the software giant cited Apple and the handheld Internet devices as
proof the market remains competitive.
A preliminary ruling in the suit by the Justice Department and 19 states is
expected shortly in U.S. District Court in Washington. One issue at trial
was Microsoft's alleged power to force PC makers to accept its demands
because they needed access to Windows; Microsoft forcefully countered those
charges. If the government prevails, it is expected to seek safeguards that
cut Microsoft's power over the PC makers.
As Easy as Toast
Microsoft views the shift to consumer Internet devices as part of its
broader struggle with AOL. "I think we have the lead on them," said Yusuf
Mehdi, MSN's director of marketing. "We also have the jump on them in
partnerships. We understand how to work with hardware makers."
Microsoft's goal is to make getting on the Web as simple as making toast-and
to tie users to Microsoft's Internet service and MSN.com "portal" service.
PC makers, too, are expected to use the new machines as way of winning
customers for their online partners.
Depending on the quality of components, such as screens, and on particular
marketing deals, the price for many of the desktop machines should range
from $199 to zero, if sold in combination with monthly Internet service.
Most will consist of a screen and wireless keyboard and probably won't
contain a disk drive or use Intel Corp. processors. They also will offer an
"instant on" feature, eliminating the annoying PC "boot-up" sequence, and
automatically connect to the Web.
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