A New Class of Customers Is on the Way

During the past few weeks, several surveys came across my desk that predicted significant changes to the computer industry. Considering that the computer industry already tolerates a product or technology life cycle that literally lasts only months before the next major paradigm takes root, such dramatic predictions are usually the norm.

Two of these surveys originated from International Data Corp. (IDC, Framingham, Mass., www.idc.com), a highly credible research house. In other words, these predictions should be taken seriously.

Consider one report, which predicts the PC-centric era is facing an end. According to this IDC report, issued in mid-June, by the year 2002 shipments of non-PC Web-enabled devices will nearly match shipments of PCs. By comparison, in 1997, PC shipments accounted for 96 percent of the Internet access devices shipped in the United States.

IDC predicts that non-PC devices, products such as personal digital assistants, television set top Web-access boxes and Web-enabled telephones, will exceed PC unit shipments by 2004 or 2005. Accordingly, the research firm is encouraging PC software and hardware vendors to aggressively develop a strategy to enter the appliance market, or to cede that market sector to the consumer product giants -- companies that sell things like televisions and radios.

Consider a second report IDC issued, which tracked the growth of PC shipments during the first quarter of 1998. Growth in Q1 was 15 percent in the United States and 11 percent worldwide. But IDC expects shipment growth during the second quarter of this year to dip to 14 percent in the United States and down to 9 percent on a worldwide basis. On top of the continued decline of shipments, expectations are for price pressure to continue, leading to lower margins per unit.

While the PC shipment growth is certainly not even close to zero, it doesn’t have the kind of appeal that a market growing at 40 or 50 percent might have. For the Internet access appliance market to achieve a dominant position by 2004, there needs to be phenomenal growth in that market sector.

This means that you’re going to have another type of client device knocking on the door to your electronic commerce engine -- real soon. That also means you’re going to be in the business of supporting these Internet access appliances.

There are some pretty important ramifications of this trend. Unless these Web-enabled devices can be remotely and transparently upgraded regularly with the latest browsers and virtual machines, they’ll go out of date within months of purchase. We all know that all Internet clients are not created equal. I’m heroically (and futilely, at that) fighting off an upgrade to a version 4 browser on my laptop due to a chronic shortage of disk space. But it’s getting to the point where I have no choice but to bite the bullet and do the upgrade, which also means I get to replace the machine.

That mode of operation won’t sit well with your average consumer. After all, when’s the last time you upgraded your television or your stereo system? I know I haven’t installed firmware, memory or a new modem into any of those appliances since I bought them several years ago. For the vast majority of consumers, such appliances are replaced when they get old and die, but not because they won’t play the latest video cassette or compact disk, or won’t receive a new FM station that goes on the air.

The adventurous consumers who can tolerate the upgrade-per-month syndrome already have computers. But the people who make up this huge contingent that IDC expects to become Web enabled will almost surely prove to be much tougher and less technology-savvy customers than you have today. And like every other computer technology issue, making these new client devices work with existing infrastructures will be pushed back in the IT department’s lap.