Web Appliances: The Report of Their Death is Greatly Exaggerated

Buffalo Grove IL, May 2, 2001-
The last year has not been a good year for web appliance manufacturers as several have withdrawn products, changed business models or gone out of business. Despite these disappointments, the long-term opportunity for web appliances remains excellent. However, the market for Internet-only or web terminals will remain a small part of the market. Web terminals are not cost-competitive with low-end PCs unless they are subsidized by service contracts. Subsidized service contracts have limited potential in the USA and are more viable in countries where Internet access costs have per minute phone charges. The best opportunity for Internet-only device growth is the emerging web pad. Web pads offer easier portability than PCs and web pads have wireless connectivity within homes and buildings. Strong web pad growth is expected in a few years when affordable web pads become available.

The vast majority of web appliances will be as part of existing or new devices that provide Internet access as one of several functions. Examples are PDAs, cellular phones, set-top boxes, TVs, satellite receivers, DVDs and many other products. Cellular phones with web access, PDAs and TV/video-based products will have the largest volume sales.

Yearly Sales (Millions)	2000	2002	2005
Web Terminals (Internet-Only Devices)
USA	0.2	1.9	8.2
W. Europe	0.06	1.2	7.6
Asia-Pacific	0.1	1.9	13.4
Worldwide	0.4	6.5	42.0
Web Appliances (Internet & other functions)
USA	1.4	9.0	54.2
W. Europe	1.5	13.2	78.4
Asia-Pacific	19.9	69.9	153.8
Worldwide	24.6	101.4	322.5

“Internet-only devices will have some success in the USA, but low-cost PCs will limit web terminal growth in the next five years,” says Dr. Egil Juliussen, the author of the reports. “Internet-only devices will do much better in countries with low PC penetration.”

More information is available in “Information Appliances: Technology, trends & Markets”, a market research report by eTForecasts. The report explores technology trends, product segments and market opportunities for information and web appliances.

eTForecasts publishes market research reports for the PC, information appliance and Internet industries.