Olivetti Joins Internet Pc Group Ibm, Oracle, Sun, Discuss Development Of Computer Tailored To Internet
Olivetti SpA said Wednesday it’s in talks with International Business Machines Corp., Sun Microsystems Inc. and Oracle Corp. about jointly producing a stripped-down computer dedicated to Internet access.
A computer to be called Netsurfer will be made by Acorn Computer Group Plc, which is 58 percent owned by the Italian computer and telecommunications company, said Riccardo Ruggiero, vice president of business development at Olivetti Telemedia.
Olivetti is one of the first companies to unveil plans to make a no-frills computer built especially for finding information on the Internet, the global computer network.
The so-called network computer will run multimedia software and send electronic mail but will have no memory or storage capacity, allowing producers to make and sell it cheaply. Industry executives have said such machines would cost about $500, compared with about $2,000 for a fully equipped personal computer.
“We’re in talks now and could be ready with the new product by the second quarter of next year,” Ruggiero said.
Acorn, based in Cambridge, England, is basing the machine on an inexpensive microprocessor known as the ARM chip. The computer will be designed to look like the set-top boxes used by pay-TV providers.
Oracle officials declined to comment about potential partnerships with any company. Representatives of IBM and Sun weren’t immediately available to comment.
The chief executives of all three companies have said they think the new machines would help put computers in more people’s homes.
IBM has said it will ship samples of what it dubs the “interpersonal computer,” or IPC, to some of its customers next year.
The announcement propels Olivetti, whose North American operations are based in Spokane, into one of the computer industry’s most hyped areas, exploiting the potential of the Internet.
The idea behind the network computer is that users can download all the software needed from the Internet. The operating system software will be loaded onto a main server, to which the network computer is connected. The computer will be designed for use with large-area networks as well as connecting to the Internet.
The move comes at a time when Olivetti’s PC division is losing money, though.
Olivetti has said it will stop making personal computers by the end of 1996 if the division isn’t making a profit by then. The PC unit has been unprofitable for four straight years and is part of the reason for the company’s recent 2.3 trillion lire ($1.4 billion) rights offering.
“The question is whether you believe that there’s a market for Internet personal computers or not,” said Kevin Brau, a computer analyst at CS First Boston. “People like to write about Internet, but from an earnings standpoint it’s over-hyped.”
Still, some analysts who cover the industry estimate that Internet-related revenue could reach $10 billion to $23 billion by 2000.
“The network computer is a risk, but it’s a risk the company can afford to take if the investment is not too large,” said Kevin Tempestini, an Italian equities analyst at Salomon Brothers Inc.
Olivetti declined to elaborate on how much it is spending to produce the device, or how much will be contributed by partners.
Oracle has been discussing the project with several companies to decide on a hardware design and microprocessor as well as the operating system, said Andy Laursen, vice president of network computing.
“We don’t have a deal with any particular company,” Laursen said. “There will be some manufacturing partners to build and sell the machines.”
He said Oracle will discuss hardware and specifications in the next few weeks.
Olivetti’s Ruggiero said production costs will depend on where the computer is made and how many are made. The computer will use a high-speed modem, “but not 1,200-baud,” he said. The price of the modem will depend on how many are produced, Ruggiero said.