News
Issue #2002 - 47 (December 2002)
(Updated Dec. 22, 2002)

MARKET OUTLOOK & TRENDS

Internet Appliance Market May See Growth

Internet appliances, led by Microsoft's Tablet PC, may see a revival over the next several years, according to a new report from Allied Business Intelligence (ABI). 

The Oyster Bay, N.Y.,-based research group projects that the Internet appliance market will be worth about $14 billion in 2002, compared with $13 million last year. ABI said in its report that by 2007, the market will grow to $32 billion. 

Laraine Tunick, an ABI analyst, said that Tablet PCs have the potential to overtake the notebook segment, but not in the next four years. She said some improvements need to be made -- namely the handwriting recognition technology and the battery life -- before the device will really take off. 

"The potential is there, it's just a question of how users will adjust to it," she said. 

The Tablet PC is most likely to succeed initially in vertical markets where pen-based computing is already used, said Tunick. "For insurance adjusters and factory floor workers, pen-based input makes for easier entry of data. It probably will take off there first." 

Microsoft is also hoping that the Tablet PC will find a home in corporate America. So-called "corridor warriors" will account for nearly $10 billion in revenues by 2007, Tunick said. 

Besides pen-based devices, Tunick expects to see strong growth among PDAs, digital audio receivers and Web-enabled game consoles. Net TV –- set-top boxes that lets users access the Internet on their television sets -– are going nowhere, she said. 

As for the original Internet appliance concept of a stripped-down PC used solely for surfing and e-mail, Tunick said that there is no real demand for it right now. She said devices such as the Netpliance iOpener were marketed to the wrong group –- people who didn't have a computer at all, rather than those who had a computer but wanted a second device just for e-mail and Web surfing -- and were priced too high. She said that if the pricing comes down, and if vendors re-position products to complement PCs in the home rather than replace them, that Internet appliances may catch on over time. 

One to watch: Microsoft's "smart displays." Tunick said the wireless touch-screen monitors "might be the next generation of what the original Internet devices were supposed to be."

Source: http://www.allnetdevices.com

MobileInfo Comments and Advisory: It is inappropriate to call PC tablet piece as an Internet appliance. The trade press and PR folks do more harm than good by using wrong terminology. PC tablet has a role in mobile device space for several vertical applications. Let us call it what it is - tablet PC with wireless and Internet connection.

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