Oracle Readies Low-Cost Net Cruiser

Does paying $500 to cruise the Internet sound like a better deal than forking over at least two grand for a personal computer?

Oracle Corp. and other companies are betting on it. They hope to win millions of new customers by putting together low-cost devices that make it easier and cheaper to get online without owning a PC.

Oracle today announced support from major high-tech companies - including Apple, IBM, Netscape and Sun Microsystems - for technical standards for its much-heralded “network computer.”

Larry Ellison, Oracle’s chief executive officer, has for months promoted prototypes of the NC machines that cost about $500. They have less processing power and memory than a PC but easily connect to the Internet. The NCs are expected to be available this fall.

Despite the ballyhoo, proponents of such devices don’t see them replacing the personal computer. But they’re eyeing the millions of people who don’t have a PC but who want to explore the Internet and exchange electronic mail. Industry observers say cost - $2,000 on up - is the primary reason many people don’t have a PC.

Homes with annual income under $40,000 make up 60 percent of U.S. households, but only 15 to 17 percent own PCs, according to Dataquest Inc. in San Jose. Sixty percent of more affluent households have them.

“There are a lot of households out there that could participate in this market if there were an inexpensive device,” said Dataquest analyst Scott Miller.

Oracle and its allies also target the corporate market as businesses increasing rely on internal computer networks. Businesses could save money but still link their employees electronically with network computers rather than full-blown PCs.

As a leading maker of software for big computers that run electronic networks, Oracle stands to gain if inexpensive Internet-cruising machines catch on. The Redwood City, Calif., company reportedly has no plans to make NCs itself but let other companies do so.

Sun, which makes servers and workstations used in networks, and Netscape, maker of the leading “browser” software to navigate the Internet, also have an incentive to foster the network computer. Another mutual incentive is curbing the dominance of Microsoft Corp., whose software is in used in 90 percent of all PCs.

Dataquest’s Miller said today’s announcement in San Francisco gives Oracle’s NC a boost but doesn’t ensure that it will claim the lion’s share of the new market.

“This is important for this kind of platform to move forward. It is a good sign that they are cooperating rather than competing on the standard,” he said. “But that being said, it does not guarantee the success of the platform.”

Industry standards, he added, are set by the companies that dominate the market rather than by committee. None of the companies involved controls the low-end of the consumer computer market that the NC targets, Miller said.

The NC is just one of several similar products that high-tech companies are working on with the same idea of cashing in on making computing simpler and less expensive.

Some companies plan inexpensive PCs, computers using adequate but less-than-leading-edge processors, storage and peripherals and costing about $1,000. AST Research Inc. plans to start selling such a machine, a $997 model through Wal-Mart Stores later this month.

Meanwhile, video-game maker Sega is coming out with an accessory that lets its Saturn game player hook up to the Internet, using a television as a monitor. Bandai of Japan and Apple Computer Inc. recently collaborated on a device that hooks to a TV, plays CD-ROMs and surfs the Internet.

And Microsoft’s chairman Bill Gates doesn’t intend to miss out on the trend. This spring he outlined plans for a Simply Interactive PC, which can control stereos and other appliances and communicate over the Internet.

But possibly slowing the acceptance of NCs and similar devices are low-capacity telephone lines that need to be upgraded before large amounts of electronic data can flow quickly into homes. And the quality of content on the Internet is still spotty.

“There are some hidden costs here and some hurdles that this group has to overcome,” Miller said.