“Even worse, it has decided to start giving away its operating
system–which is the core of its business and accounts for most of
its revenue–for personal use in an attempt to gain some brand
recognition and mindshare and turn its sights on the Internet
appliance market.”
“As a result, the company said that it will not realize the
revenues that were expected from sales of the desktop OS, which
analysts had anticipated would account for 85% of the $16 million
in revenues projected for 2000. What’s more, the move will
“negatively impact” future earnings. Investors weren’t happy about
the news, sending the stock down more than 20% to $15.31 by late
this afternoon.”
“The company thinks that by giving away its OS, which in the
past has been largely targeted at heavy graphics market, it will
broaden its appeal and gain enough visibility and momentum to
become a viable player in the Internet appliance market.
Internet appliances are essentially single-purpose boxes that hook
up to the Internet and require only a basic operating system and a
Web browser. International Data Corp. projects the market for
Internet appliances to grow from about 10 million in unit shipments
in 1999 to nearly 60 million shipments in 2003.”