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PADs: Net-subsidised give away gadgets? - Analysis

National Semiconductor aims to trailblaze the "PC-on-a-chip" market paving the way for a hundreds of consumer Web-ready devices, but the success of these gadgets will depend on the Internet services and content, warn analysts.
Written by Chiyo Robertson, Contributor

The first of National's new PC-on-a-chip Geode family will be ready for full production at the end of this year/early 2000. The Geode SC1400, which will be used in interactive set top boxes "replaces 5 or 6 components. You replace a lot of other silicon," says Graham Jackson, National Semiconductor's European appliances manager.

Already, AOL US has agreed to work with National on an e-mail/web browsing device, and Jackson says National is in discussions with other ISPs. In Europe, the company is talking to consumer electronics firms like Philips and Grundig, ISPs and high-street retailers -- all of who will play a major part in pushing these gadgets and services. "We have talked to Dixons, among many, to keep them informed about our roadmap," says Jackson. "It's all very new, that's why we got into the market early. We're trailing a blaze."

Personal Access Devices (PADs), as they are known, will come in many flavours but will not necessarily replace the PC, says analysts. "Larger devices such as WebTV and screen phones, could end up being the only device you access the Net from for some" says IDC Internet analyst Mikael Arnbjerg. "But smaller access devices, mobile phone-type devices, will only supplement the home PC because graphics will be poor and bandwidth low,"

Arnbjerg says this means a good deal of adapting for each appliance -- a "highly complex" deal. He predicts Internet companies will demand support from chip/equipment makers to drive up demand. "You certainly need some content up there before demand is there. AOL will have to offer something new," he says.

Jackson though says National is no stranger to the freebie model. "Complex? In a way, yes. But the same model worked well in French supermarkets." Supermarkets sold Cyrix-based PCs for £200 provided customers signed up with a National ISP.

Chip giant Intel is also moving down the integration road with its Celeron-aimed 810 chipset and licensing high performance/low power-consumption StrongARM technology. "StrongARM is very significant. Technically, it fits perfectly for personal access devices," said an Intel spokesman. In the US, the company is currently trialling prototype remote Web device for home users. "You'll have a PC in your study at home trawling the Web, then have an access device to look at content in another room," the spokesman added.

Meanwhile, UK electrical retailer Dixons hinted it may sell the iToaster by US company Microworkz.com -- one of the pioneers of cheap PCs over the Web. Free of Windows hassle, the iToaster has an operating system based on both BeOS and Linux.

The move towards silicon-starved appliances chimes with the low-cost PC trend, said Jackson: "Banks, for example, could give away free PCs with Web access to every student in return for them signing up with the bank and other services."

PC-on-a-chip appliances will be many things bar low-cost PCs, according to Jackson. National Semiconductor lost its battle to survive in the PC chip business. It ended up hiving off its PC chip business and laying off 550 employees. "Fighting in that market is very difficult especially at the price range we're looking at," he said.

Detail about PAD costs is scant to say the least. "Clearly, there's a specific barrier it must stay within, but pricing is sensitive," says Jackson, while Arnbjerg comments, "It's just too hard to predict." Either way, analysts believe the price will be subsidised by online services.

After the set-top box, the next range of Geode-based chips from National will be tailored for thin-client and Web-pad devices. And after that, it's anyone's guess what kind of device you'll be able to access the Internet from.

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