By Patricia Fusco, InternetNews.com
Stepping out of its core chip-making business, Intel Corp.
Thursday unveiled its first integrated Web appliance.
The handheld device, dubbed Intel Dot.Station, features a
built-in phone and Internet access with e-mail and Web browsing
capabilities.
Intel (NASDAQ:INTC) intends to bring the unit to market though
its Internet service provider channel partner program. Intel
Dot.Station will be sold as part of an overall service package to
ISPs, in the same way that cable services sell set-top boxes.
According to Intel, the unit will not be sold in retail
outlets.
The Intel device operates on the Linux operating system and
features built-in calendar functions, address books and
note-posting capabilities. Currently, the personal computer market
remains dominated by machines using Intel processors and Microsoft
Corp. software.
Greg Welch, Intel home products group director of marketing,
said the decision to offer the Linux-based appliance was not
designed to snub Microsoft (NASDAQ:MSFT) operating systems.
“The decision to use Linux software to run the Dot.Station came
at the request of customers,” Welch said.
The Dot.Station device consists of a single freestanding unit
with a high-resolution monitor and a separate keyboard, as well as
a built-in phone. It also offers ISPs a consumer-friendly price
point of $500 to $700 per unit.
Welch said the inexpensive Web appliance was not designed to
compete directly with full-featured personal computers and he did
not expect the device to whittle away at the entry-level personal
computer market segment.
“It’s targeted to those households that don’t yet have a PC, but
are nonetheless interested in getting online,” Welch said.
“Installation consists of plugging in the power, plugging in the
phone line, plugging in the keyboard and turning it on.”
“I don’t see it cutting into the PC business,” Welch added.
”Quite frankly, it would be my expectation that if consumers use
our device, they might find a need for a PC in their lives sooner
than they would have if they had never bought the device.”
Welch said the appliance is also ISP-friendly, because the
Linux operating platform allows service providers to remotely
manage and upgrade the devices.
“Service providers would be able to customize the content and
services of the devices to match their brands,” Welch said.
Intel expects that its ISP partners would give the unit a way in
tandem with Internet access deals. But Welch would not name which
national ISP would be first to put the Dot.Station to work
promoting branded Internet access.
“Our largest customer fully intends to offer the device to their
customers at this point for free,” Welch said.
Intel rolled out its ISP partnership program in July 1999 and
has ties to more than 50 ISPs in North America and as many as 150
ISPs worldwide.
US Online Network is a privately held company that provides
local ISPs with a platform to unite as a buying consortium.
Currently the network consists of more than 100 independent ISPs
that provide Internet access to over 1,000 cities in 42 states.
The Wenatchee, Washington-based organization is also one of
Intel’s ISP channel partners and will most likely put the
Dot.Station appliance to work at its members request to recruit new
subscribers.
Steve Klock, US Online Network chief executive officer, said the
Intel ISP partnership program demonstrates its commitment to
independent ISP owners and operators.
“Intel made a commitment to be a player in this market,” Klock
said. “If you want to make bets, better to invest in someone with
deep pockets and leading technology.”
Intel’s Welch said research confirms that the Web appliance
market segment isripe for growth.
“It’s not unreasonable to guess that this is a billion-dollar
business opportunity,” Welch said. “The question is will that come
in two years, three years, four years.”
The Intel Dot.Station Web device is the first in a family of
products the firm intends to release. Intel expects to be shipping
hundreds of thousands of the devices by year-end, just in time to
ride the seasonal wave of holiday sales promotions.
Independent research firm Cahners In-Stat Group reported in
April that the sales of line-powered Internet appliances would
surge to well over 37 million units by 2004, up from just over 2
million units sold in 1999.
While the In-Stat forecast includes sales of set-top devices, it
estimates that Internet appliances would account for $1.9 billion
in sales of microprocessor and memory devices in four years.