It’s Back: New Version of Ellison-backed Network Computer

The latest, and allegedly first marketable, version of the New Internet Computer was released at the Showcase conference in Palm Springs this week. Funded by Oracle CEO Larry Ellison, San Francisco-based The New Internet Computer Company is the tech titan’s latest attempt to sell the network computer concept he first pitched in 1996.

But unlike the earlier NCs which used proprietary software, the new NIC 2.0 is based on a standard Linux operating and may be the first device of its kind to support Macromedia’s Flash format as well as other streaming video and audio formats such as Real Player’s G2. Setup has also been streamlined on NIC 2.0

Best of all, NIC has kept the $199 price (sans monitors) of the original model. Other features in the 266 MHz unit include a built-in 56 Kbps modem, and 10/100 base-T Ethernet connection for high speed access, CD ROM drive, and a CD of software including Netscape Navigator 4.7, and the Internet plug-ins to handle different media files.

“It’s very important they’ve gone to a legitimate operating system (Linux) and I haven’t heard of any other terminal of this kind that can handle offers Flash and streaming media,” says Tim Bajarin, CEO of the consulting firm Creative Strategies. “And the price point is superb.” Still, Bajarin doubts there is a much of a market for the NIC in the U.S. where some 65% of homes already have PCs. The NIC’s prospects could be much brighter he says in Europe, Asia and other more price sensitive countries.

“Larry Ellison was widely criticized for the NC but he was ahead of his time,” says NIC Chairman, Gina Smith. But unlike Ellison’s original goal of replacing the PCs dominance, NIC goals are much more modest. “We’re not designed to replace the PC, but to add to it for those who need a quick point of access to the Web, or for schools and other institutions,” says Smith.

As for the business model, Smith says her company makes a “razor thin” profit margin on the $199 price, and also gets revenue from ISPs when NIC customers sign up for Internet access, ecommerce referrals from partners, and from peripherals such as the $115 and $299 models of monitors it offers for the NIC.

NIC biggest score to date was a sale of 15,000 units to a hotel chain. Smith says Ellison has committed to giving away $100 million dollars worth of systems to schools and non-profit institutions. The first NIC shipped in August, but was barely marketed as the company refined the product. “This is our first mainstream system that’s ready to be marketed,” says Smith a former technology journalist and TV personality.

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