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Say Again? - "Flying saucers are just an optical conclusion." - Anonymous

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Analysis

Shrinking choices for web access

[No Image] By: Unicorn , Analyst, Bloor Research
Published: 22nd June 2001
Copyright Bloor Research © 2001
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We may be on the verge of seeing a plethora of new devices that provide access to the web. But right now, it seems that the options are closing in, as alternatives fail to win consumer support. Are we seeing Microsoft achieve the domination of the Internet that it so much desired?

There seem to be good reasons for thinking that there is a huge potential consumer demand for simple Internet access devices. Time and again, research has indicated that the PC is too complicated and too expensive for most people. It is also frustratingly unreliable at times. Yet attempts to tap into this market have somehow failed to find their mark. But makers have not given up and Sony plans to launch a new appliance this month.

Earlier this month, Compaq slashed the price of their web surfing appliances in an attempt to stimulate demand. Compaq says it still believes there is a market for web appliances, and hopes that the price cuts will jump-start it. All the same, Compaq was not prepared to back up its hopes with any statistics on past sales or future projections. Although not full PCs, the Compaq appliances rely on Microsoft software.

The price cuts illustrate one problem: appliances have been priced at similar levels to basic PCs. This has made them too expensive to be easily used in package deals with Internet Service Providers or online services such as MSN or AOL. It has also deterred consumers who have not yet been persuaded that Internet access is really of value. The price cuts are combined with rebates and a package deal for access to MSN.

Handheld devices show great promise as an alternative route to the Internet. Here, Palm took the lion's share of the market until recently. It is still grabbing the numbers, although Compaq's PocketPC based devices have been popular in the market, especially with business users. Symbian has yet to make a substantial showing, although an early test of its popularity comes later this month as the latest Nokia Communicator is released in the UK. It will be interesting to see how well the combination of the Symbian system and Nokia's undoubted skills in consumer markets will succeed.

Alba, the maker of consumer electronic goods branded as Goodman or Bush, recently suffered a sharp fall in its share price. The reason was that losses on Internet TV products had wiped out all the profits made in other areas. Under the Bush name, Alba has been making both Internet capable televisions and also set top boxes. The chairman said that sales had fallen short of the ambitious targets we had set.

The one area that is clearly holding up is the games console market. Sony's PlayStation2 was clearly designed to be Internet capable, although it is not clear that much use is being made of this feature yet. Game consoles are very popular consumer items and certainly have the potential to be routes to the Internet. That may be a significant factor in Microsoft's enthusiasm for the launch of its own game console.

We could yet see significant change, especially in the handheld and games markets. For the moment, though, routes to the Internet seem to be dominated by Microsoft software. Is that a bad thing? That depends on the uses to which Microsoft puts that dominance.

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