PC-less Web - Internet appliances - Brief Article

DSN Retailing Today, Jan 1, 2001

Internet appliances are coming on strong. The recently ended holiday season saw these newfangled hybrid devices emerge as a solid niche category, in which at least four names have surfaced as front-runners.

Todd Thibodeaux, director of research for the Consumer Electronics Association (CEA) and its eBrain consumer research division, said he sees the category expanding, but not beyond eight to 10 million units sold over the next three years. And with the market so new, the association hasn't generated any substantial sales data on these products as of yet.

Putting a cap on category sales stems largely from the fact that early models don't take into account some pressing consumer concerns, such as a desire to maintain existing e-mail addresses and limit the number of monthly fees being paid to service providers.

One product, however, seems to be rising above the fray: 3Com's Audrey While other units are primarily stripped down versions of a PC, Audrey is a somewhat different proposition. The unit is based on the company's popular Palm OS and presents the most compelling Internet appliance on the market today.

The other units require a separate Internet Service Provider (ISP) account, so consumers have to pay an additional monthly fee and create a new and separate e-mail account. Audrey works with the user's existing ISP and e-mail accounts, stores favorite sites and can be used with either a dial-up modem or high-speed connection.

Since Audrey is based on the Palm OS, it allows users to sync multiple Palm units to compile schedules and date books for an entire family. A stylus and dial are used for navigation rather than a mouse and keyboard, and consumers can even write a handwritten message or e-mail reply or record a voice memo via an embedded microphone.

According to Ron Vitale, 3Com's senior director of marketing in the Internet appliance division, Audrey was developed as a lifestyle-driven product. The product is currently being sold at select CE chains such as Best Buy. In a move to appeal to a wider customer base, the company also launched the product at four Bloomingdale's stores last fall, complemented by an advertising campaign in women's magazines such as InStyle, as opposed to straight technology outlets.

Audrey is intended to be a complementary product appealing to heavy Internet users--exactly the market that is more likely to trade up to high-speed connections in the home. This market's desire to upgrade is what industry watchers believe is necessary to grow this emerging category.

"Cheap Internet access devices will grow in ubiquity only as fast as the deployment of broadband two-way access rolls out," said Tbibodeaux. "They only make sense in an 'always on' world. Who wants to pay $499 for the device and $20 a month for the ISP, all for the pleasure of checking e-mail in the kitchen while you wait for a dial-up connection?"