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'NET APPLIANCES' A CHEAP WAY OF GETTING ONLINE

Fourth-grader Loren Spikes has used school computers "since the day she started pre-K," her mother Lori Halton says. But until recently, she had no computer at her Buffalo home to do homework with.

Then last week the New Internet Computer Co. of San Francisco gave Loren one of its Internet "appliances," a stripped-down computer built for low-cost e-mail and Web browsing.

The San Francisco company came to Buffalo to launch its national consumer sales effort, with a press conference at City Hall. Spikes, a standout student at Hertel Academy, will be one of the first in the region to use the NIC appliance.

Billed as simple and inexpensive -- the NIC costs $199 plus $129 for a monitor -- Net appliances may connect the Internet to more low-income households, bridging the "digital divide" between technology haves and have-nots.

"Our goal is to enfranchise the disenfranchised," said Gina Smith, chief executive of New Internet Computer.

A bevy of Net appliances like the NIC are coming on the market now with price tags below $500, and some analysts say they could unseat the PC as the primary on-ramp to the Internet.

New Internet Computer is the brainchild of software billionaire Larry Ellison, the head of Oracle Corp. and a perennial thorn in the side of Microsoft. Smith said that Ellison "wants to be remembered as the man who helped close the digital divide."

He picked a good place to start.

Although Buffalo sits at a crossroads on the Internet, more than half of area homes lack a personal computer, leaving residents walled off from the information highway. The metropolitan area is one of the least plugged-in cities in the U.S., according to Scarborough Research in New York.

That's not just another bruise on the regional ego. Low computer use could become an anchor on the region's economy in the information age. Through "distance learning," some schools are teaching courses entirely over the Internet.

"This is a serious problem -- people at the low end of the economic spectrum are falling further and further behind," Buffalo Mayor Anthony Masiello said at the press conference announcing the NIC on Monday.

People without computers and Internet access may be cut off from getting the skills and training required by an information-based economy, according to a U.S. Commerce Department report, "Falling through the Net." The report also found that low-income households were least likely to have a computer or Internet connection, and that a large number cited equipment costs as the reason.

"Increasingly the Internet is playing a day-to-day role in our lives, from education to finances and banking to shopping," said John B. Sheffer, a former state legislator who now serves as director of the Institute for Local Governance and Regional Growth at the University at Buffalo.

The idea for cheap network appliances isn't new, but the devices are hitting the market now in numbers. There's the iOpener from Netpliance, costing $299 plus $21.95 a month for Internet access. Compaq launched its iPAQ last month for $199 after rebates, plus connection fees of $21.95. And a device called the ePodOne also goes for $199, plus $24.99 a month for a 36 month service contract.

Appliances generally have a processor, memory and a modem to access the Internet, but they lack a hard drive for storing files and software. The NIC, like competing appliances, has connections for printers, so users could perform word processing tasks using Web-based software. Deals with software Web sites will be revealed in coming weeks, Smith said.

Unlike other appliances, the NIC doesn't tie the owner to a single access provider and a monthly charge. The appliance in Lori Halton's home is set up to access the Net for free through a no-charge Internet service.

At about $200 with no monthly fee, the NIC is in a different price class than even low-cost PCs, Halton said.

"I have a lot of friends and family who think that's an excellent price," she said. New PCs cost about $800. A home day-care provider with three children, Halton calls that "a lot of money to gamble on your kids," who can be rough on computer technology.

But the idea behind the NIC goes deeper than a low initial price. Ellison's vision is for people to use software that's housed on the Web instead of on their desktop computer.

That would slam the brakes on the computer technology treadmill of new Microsoft programs, a new Windows operating system and eventually the need for a new computer every few years. The NIC runs on the inexpensive Linux operating system, which can be upgraded by sliding in a new CD-ROM. But the idea hinges on the development of a base of "application service providers," who host software that can be used on the Web.

Ellison has pledged to donate $100 million worth of the appliances to schools nationwide, seeding the market. Schools and libraries -- important bridges over the digital divide -- face high costs to install PCs that must be replaced every three to five years.

"We'd like to put this on the bench and see what it'll do," said David Lanz, director of information services for Buffalo Schools. The district bought 2,000 PCs for student use in the past year. Today 32 of Buffalo's 79 schools are outfitted with recent-model computers and software, he said, and upgrades continue school by school.

Network appliances could be used for limited purposes, such as a research terminal in a library, Lanz said. But he doesn't see the devices driving PCs out of the classroom. Highly interactive programs, like the kindergarten reading program Waterford, would be cumbersome to use over an Internet connection.

"People still seem to want to support access to their own software at their own device," he said.

The Buffalo and Erie County Public Library will also look at appliances for potential use as public access terminals, Chief Information Officer Shirely Whelan said.

"We haven't rushed to adopt them -- they have to prove themselves," she said. The library has 484 computers for public access and pays about $1,700 for each new one. "We decided our best investment would be a full-service computer, so users can not only have access to the Internet but also to other software."

Some analysts predict appliance sales will explode over the next few years, ushering in a "post-PC era." International Data Corp. in California projects sales of 89 million units worldwide in 2004.

Milosz Skrzypczak, an analyst at the Yankee Group in Boston, isn't so sure.

"They've been projecting huge numbers for the last few years, and they didn't come through," he said. Initial sales of the iOpener at 34,000 units don't bode well for the market. And Ellison's record so far in the appliance market is O for 1. Oracle introduced a Network Computer in the mid-1990s aimed at business networks, but it missed the mark and had to be discontinued.

What's sure is that more and more electronic devices are coming out that connect with the Internet -- sometimes as an afterthought creating more potential crossing points on the digital divide. The Sega Dreamcast game console is Net capable, and Sony will make a "big splash" shortly with a Playstation II that surfs the Net in addition to playing games and DVDs, Skrzypczak said.

And in Western New York, Adelphia Communications plans to add Internet access via TV as one of the services available over its digital cable service, company officials have said.

The idea of a post-PC era is "intriguing," Skrzypczak said. "But right now it's quite early to say if any one thing is going to succeed or not."

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