Chip Maker Offers Network Computer Design To System Builders

PMC-Sierra, a MIPS licensee that manufacturers the CPUs for use in networking devices and printers, said its design offers system builders a low-power unit that will initially cost about $150 or less to build. The development unit includes a PMC-Sierra 64-bit MIPs CPU, 128 Mbytes of memory, ATI Rage XL graphics controller with 8 Mbytes of memory, and traditional computer connectors such as Ethernet, USB and parallel ports. PMC-Sierra executives said the system uses 90 percent less power than a typical Wintel configuration and requires no fan and no heat sink for the CPU.

The company is marketing the thin-client system under the name Xiao Hu, a Chinese word meaning "little tiger." The device was co-developed with China's Tsinghau University. PMC-Sierra is hoping the device will attract attention of manufacturers of smart displays, interactive TVs and kiosks, as well as those serving the traditional corporate, government and educational organizations.

Though the idea of network computing has been bandied about for years, it's a technology that has gained little acceptance. Doug Brownridge, vice president of corporate marketing for Burnaby, British Columbia-based PMC-Sierra, acknowledged past failures of the format but said the market is better prepared to accept these units now.

"Network computing in 1997 was too simplistic and didn't meet the needs of its users, but now the technology is more advanced and can meet those needs," he said.

Among technology improvements that could make the thin-client more palatable to customers: more robust CPUs that can handle significant processing tasks, such as onboard video decoding, as well as better networking and broadband capabilities.

PMC-Sierra will continue to consolidate components to bring down the price point, Brownridge said. The company is hoping to push the manufacturing price down to $80. Company executives said it already has software-based VoIP capabilities and expect to integrate wireless functionality soon.

Solution providers and analysts say the thin-client model makes sense in the enterprise, call centers and other company departments where employees access a fixed number of specific applications. Since the devices access all information from a centralized server they are cheaper to manage. Instead of updating virus definitions on 3,000 desktops, for example, an administrator would update just a handful of servers. Thin clients cost less than desktops and are more secure, since users are unable to download unauthorized content to the desktop.

Despite these benefits, all agree the format is a hard sell.

For U.S. companies used to storage onboard and a Windows operating system, network computing "is one of those ROI equations the market hasn't embraced," said Robert Wolfe, president and CEO of AvcomEast, a solution provider in Silver Spring, Md.

Though Wolfe has sold some of Sun Microsystems' SunRay thin clients into specialized environments, he has found the concept difficult to discuss with customers. "There is a mentality to overcome," he said.

Wolfe said a network computing sale is best-approached with C-level executives. Cost savings might hit IT managers a little too close to home. Because administrators would service primarily the server in a thin-client setup, the number of IT support staff could be reduced. "Now if you are an IT manager, do you want your administrators to go down from 30 to six?" he asked.

Bob O'Donnell, an analyst at IDC, said that upfront transition costs also could turn off customers. "Thin clients are cheaper in the long run, but there are dollars involved to convert." In particular, the network computing model requires more servers than the traditional Wintel setup, he said.

Still, O'Donnell said he believes network computing will see more success in the years to come and projects the current 1.5 million units worldwide should grow by 20 percent by 2008. Market leaders Wyse Technology, Neoware and Hewlett-Packard are currently experiencing modest success in the market, he said.

"The biggest part of the problem is awareness," O'Donnell said. "People just don't know about thin clients or they have misconceptions about the format."