Did you notice the announcement of WebTV last week? It's an important one. WebTV, from WebTV Networks, in Palo Alto, California, is one of many -- more than a dozen that I've counted so far -- so-called network computers or Internet terminals that have been or will be announced by the end of this year.
The US$500 computer is a dumb concept, mainly because US$500 is really, really expensive in the consumer electronics category and because it's not possible to build a functional, desirable computer for US$500. (You can build a computer for US$500, but nobody wants to actually buy it.)
More important, it's stupid to think that people will give up watching television -- a medium with high production values that offers a group experience and requires almost no physical or psychic effort -- and replace it with Web surfing, an individual experience that usually doesn't work too well and requires you to be ready to interact and constantly choose new options.
Those things said, WebTV is going to be a killer product, meaning that it will be bought by lots of people to get the ability to view the World Wide Web from their television sets. The reason that WebTV is different from all the other products is that its designers (three guys who used to work at Apple and other companies) started with a different objective. Instead of saying that they would make a really cheap computer or that they would make a box to run Java and make Bill Gates poor, they asked themselves what customers would want to do with the Web on their televisions.
That led to the idea that the Web could complement the television experience rather than compete with it. Instead of designing a product that lets people pretend their television is a computer monitor, they designed a product that lets people integrate Web surfing with watching television. While you're watching the Chicago Bulls finally beat the tar out of the Seattle Sonics, you can switch to the Web and find out from ESPNet Sportszone exactly what Dennis Rodman's average baskets per game is and then switch back to watching.
As well, the WebTV people couldn't conceive of your average couch potato struggling with your average Internet service provider and modem configuration string. So the device comes with WebTV's own Internet service. All you need to do to get started is attach it to your television, plug it in and turn it on to get to a screen that asks for your name and credit card number.
As part of that service, WebTV will offer you useful local information. I hope the service will provide you with a television guide that you can use to select channels and graze the television, but press materials didn't mention that.
The makers of WebTV have designed other cool features into the product, such as making it resolve the image of a Web page so that it's readable on a television. During a recent demo, I made them surf over to InfoWorld Electric, which has lots and lots of text on it, and I found it perfectly readable.
And the product comes with a remote control that's simpler than any of the remotes I currently have for my television, stereo, cable box, or VCR. The device comes with a slot for smart cards, so you can use your card to pay for things without having to worry about entering credit card numbers or other passwords through a keyboard.
Indeed, the designers of WebTV clearly believe that people will continue to use one or more personal computers in the same households where WebTVs have been attached to one or more televisions. But -- and this is the most important aspect of the product -- there is no way they could make a successful business if the product cost US$500.
Many people pay between US$300 and US$700 for their primary television. They might pay US$150 to US$300 for their VCR. Maybe US$200 to US$400 for a stereo system. Maybe US$300 or so for a video camera. And they pay another US$20 to US$40 per month for their cable service. They are not then going to go and pay US$500 for a device that competes with all that other stuff and doesn't integrate well.
So WebTV has designed a product that can sell for US$200 at retail and can eventually be integrated right into the television at a parts cost that will add about US$150 to the net cost of the television. That's with a 28.8Kbit/s modem. It can also be designed with a cable modem or ADSL interface, although both of those devices independently still cost more than US$500 -- without the computer.
And that's the business model the WebTV people have chosen: The product will appear in retail stores this fall priced at around US$200 and packaged in a way that you can buy the product, take it home, plug it in, and start using it immediately.
In other words, the designers of WebTV took a systems approach to solving the problem of using the Web as part of the television experience.
They designed a cheap terminal that still satisfies the user in performance and ease of use while at the same time designing an information system that would complement the device and integrate it with the Web. It almost sounds like these guys want to be the IS department for the world!
(Stewart Alsop is a partner in New Enterprise Associates, a venture capital firm, and is the former editor in chief of InfoWorld. He can be reached at email@example.com.)