Internet Appliances: The Next Big Thing

The development and adoption of Internet appliances will explode during the next 12 months, according to the report “Internet Appliances and Universal Access” by Hambrecht & Quist’s Internet Research Group.

Internet appliances are defined by H&Q as any non-PC device that leverages the capabilities of the Internet to extend content, services, and applications to the users of those devices.

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According to the report, by leveraging the capabilities of the Internet, Internet appliances stand ready to revolutionize the way information is used and accessed by enabling universal access — the ability to access any information, over any network, from any device. The report also predicts that rather than developing proprietary systems to support the underlying platform capabilities necessary to support Internet appliances, service providers will turn to third party infrastructure software and services companies that have begun to address the unique challenges of the Internet appliance market.

Internet appliances made headlines last week when Yahoo inked a deal with Online Anywhere, a company that makes technology allowing Internet providers to rapidly reformat and deliver their content to televisions, personal digital assistants, and wireless devices.

“Internet appliances have become a reality, with universal access becoming less fictional than it was just six months ago. Yahoo’s agreement with Online Anywhere is a perfect example of growing momentum in this nascent space,” said Danny Rimer of H&Q’s Internet Research Group. “We would look for traditional access providers such as telcos, ISPs, cable operators, and wireless carriers to drive the mainstream acceptance and uptake of Internet appliances.

A new generation of infrastructure software and service providers will emerge to bridge the gap to Internet appliances and universal access, the report found, much in the way Netscape, Checkpoint, VeriSign, and Inktomi developed the software and services to enable PC access to the Internet.

“It’s too early to tell who the winners will be, but one thing is apparent: the winners will be the service providers that marry the benefits of the Internet with the specific functions the appliance performs,” said Rimer. “We expect that communities will spawn out of the widespread adoption and use of particular appliances and their respective services. We expect Internet appliances to play a fundamental role in driving usage time on the Internet to over 72 hours by the end of 2002.”

In addition to Yahoo, Companies such as America Online, Microsoft, and Excite have announced initiatives to make personalized content and services universally accessible to users regardless of the appliance or network they are using.

Other findings of the report include:

  • Internet appliances will not replace PCs, but in many cases will provide different services
  • Standards being pursued by industry groups will be critical to kick-start the widespread adoption of Internet appliances
  • Certain devices will capture the imagination and enthusiasm of the public, which will add to the viral effect of device adoption
  • The Internet will become the platform to store and access unified content
  • New portals will emerge — either spinoffs of existing portals or entirely new portals to reflect heavy traffic generated from connecting Internet appliances with the Internet.

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