Everybody knows that personal computers are getting cheaper every month, right? Don't tell George Brenner, chief information officer for MCA Inc. Sure, hardware prices are falling, but on average, the movie studio spends about $5,000 annually on each of its 5,800 PCs to keep them running--and that figure is rising. Between the ever-increasing complexity of computer hardware and constant software upgrades, gripes Brenner, ``the cost of desktop computing is going sky-high.''

That's why he and some of his fellow CIOs are lining up to be the first to try network computers--slimmed-down desktop computers such as those proposed by Oracle Corp., Sun Microsystems Inc., and others. Their initial cost--as little as $500, compared with at least $1,500 for a PC--is just the first saving. The real attraction is the promise of much lower support, software, and training costs--all because the network computer can be upgraded, diagnosed, and controlled from a central location without dispatching humans with individual machines.

How much can a network computer save corporations? ``Some major savings,'' says W.S. (Ozzie) Osborne, vice-president for systems strategy at IBM Personal Computer Co. According to a study IBM did with one of its customers that's testing a prototype network computer, the annual cost of owning and maintaining a desktop machine (including purchase price) can be cut from $9,500 a year per PC to $5,500 with a network device. Says Michael B. Prince, CIO for Burlington Coat Factory Warehouse: ``Economics will favor the network computer.''

The first players to attack this market are the companies that now sell the terminals that link midrange and large-size computers to desktops, reservations counters, and warehouses. Some 30 million of these ``tubes'' are still in operation. Now, in hopes of recharging the terminal business, Wyse Technology, SunRiver, IBM, and other computer makers are adding more-powerful microprocessors and faster network connections. With software from Citrix System, Wyse and SunRiver also give their $500-and-up network terminals the ability to use Microsoft Windows programs that run on a network server.

The explosion of corporate intranets--internal networks that are based on Internet technology--could drive additional demand for network computers. These machines will be based on Internet standards, and they may not even use conventional software such as Windows--or conventional PC hardware, based on Intel Corp. chip designs. That could give CIOs a novel problem: too many choices.

By Robert D. Hof in San Mateo, Calif., with bureau reports


Updated June 14, 1997 by bwwebmaster
Copyright 1996, Bloomberg L.P.
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