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Net Appliances Make Noise

Virgin Entertainment, Internet Appliance Network announce Web device giveaway.

By Tom Spring, PCWorld   

The Net appliance, called Webplayer, supports both RealNetworks and Microsoft streaming media files. With it, you can download and listen to MP3 music tracks. Virgin hopes you'll buy some of its music CDs and videos, as well as check out Virgin's advertising partners, while you're surfing its sites on the Webplayer.

"These devices aren't about competing with CDNOW and other virtual music retailers. It's about not giving Virgin customers an excuse to go anywhere else," says Russ Pillar, chief executive officer of Virgin Entertainment Group. You can sign up in January at a Virgin Superstore or online to get a device.

Devices like this could herald a wave of Web-centric devices offering cheap and easy access to the Net and chip away at the popularity of PCs.

Next Generation Boom Box

Virgin's Internet access service for Webplayer is called Virginconnect. It's free for one year, then costs $50 annually. Virginconnect includes Internet access, Web surfing, e-mail, and a Qpass electronic wallet for secure online transactions.

The Virginconnect devices have a 10-inch LCD monitor, 32MB of flash memory storage, a wireless infrared keyboard, two Universal Serial Bus ports, a 56-kbps modem, a sound card, and built-in speakers. They're powered by Wind River's VX Works Java-based operating system.

Analysts view Virgin and IAN's unproven business model with cautious optimism.

The Virginconnnect strategy could give Virgin a chance to leapfrog well-established online brands like CDNOW and Amazon.com, says Mary Modahl, an analyst with Forrester Research. But it's still unclear whether such a device will encourage loyalty and electronic commerce.

As a challenge to PCs, Net appliances offer new and different forms, processor configurations, and operating systems. Many companies have announced various types of Internet appliances, but few are available.

Microsoft is working with a handful of hardware partners to put a new version of Windows CE on its Web Companion, but none are past the prototype stage. Mainbrace, Vestel Electronics, and Philips have all announced similar Net devices.

Unless devices are cheap or free, consumers may balk, Modahl says. They won't cough up hundreds of dollars for dumbed-down PCs when full-featured computers cost the same.

Available Elsewhere

Virgin will give away 10,000 units; another 50,000 will be distributed through other deals, says Seth Goldstein, founder of hardware partner IAN.

For example, an investment firm may give away Internet appliances to lure new customers and reward loyal ones. An institution could completely tailor the device with a start page, sponsored links, and custom services. IAN handles the hardware and Internet access, and manages the browser interface.

In markets where companies pay big bucks to attract customers, the devices can be cost-effective, Goldstein says.

"It comes down to whether they want to buy a million-dollar Super Bowl ad, or do they want to put a device on your living room," Goldstein says.