Smart Appliances to Outnumber PCs

SAN FRANCISCO (03/27/2000) - Information appliances will outsell PCs worldwide by the year 2005, but they won't replace your PC, according to a recent report.

Sales of information appliances will reach the 300 million mark worldwide over the next five years, outpacing PC sales, which will grow to 217 million units, says Egil Juliussen, president of market research firm ETForecasts. About 12 million information appliances were sold in 1999, and Juliussen expects PCs sales to reach 124 million in 2000.

The report defines an information appliance as an "inexpensive, easy-to-use device based on computer technology" that provides a few simple, connected functions. Juliussen breaks them down into a handful of categories, including Web appliances (Web TV), computing appliances (connected personal digital assistants), communication appliances (Web phones), and entertainment appliances (set-top boxes). Everything else falls into a catch-all "other" category.

Communications appliances will lead the explosive growth with expected worldwide sales of almost 140 million by 2005, as more people ditch their conventional cellular phones in favor of Web-enabled ones, Juliussen says.

That's why the numbers look so high, he says. Many of these information appliances will replace existing, unconnected products. As people buy new products such as telephones, televisions, and VCRs that provide some form of connectivity, the number of information appliances skyrockets.

Overall unit shipments are easier to project than sales figures, because the cost of many of these products will be wrapped up in service revenues, Juliussen says. Like today's cell-phone model, companies will likely throw in the set-top box or Web-enabled phone when you subscribe to a service.

Peaceful Coexistence

Juliussen doesn't expect information appliances to replace PCs anytime soon. In fact, he sees the explosive growth as an opportunity for the PC industry.

For starters, computer companies will provide much of the hardware and software that information appliances will require. And companies will use PCs to generate much of the content that information appliances will access, he says.

And finally, as more people bring home these devices, they'll look to the good old PC to connect them into an easy-to-manage network.

"The PC industry is very competitive and has a good track record of adapting to emerging technologies and market trends," Juliussen says. "This is likely to happen again and the PC industry will embrace the IA industry."

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