SAN FRANCISCO, Reuters [WN]: One day in the not-too-distant future, you will be able to check the contents of your refrigerator and pantry via the Internet from your office, then pick up exactly what you need on the way home.

Or instead of stopping at the store, you could order from one of the Internet grocery stores like Webvan Group Inc. <WBVN.O> or Peapod Inc. <PPOD.O >, and have the food waiting at the door by the time you get home. At home, you could look up recipes online, using a kitchen Web "appliance."

This may sound like the home of the Jetsons, the futuristic TV cartoon family, but it's not science fiction anymore. A slew of companies, from startups to older firms reinventing themselves, are developing a wide range of appliances that hope to bring the Internet to every room in the home.

"Five years ago, I did a speech about this and people were on the floor, laughing at me," said Tim Bajarin, president of Creative Strategies, a consulting firm in Campbell, Calif.

Now there's an e-mail-ready refrigerator. In June, ICL, a unit of Fujitsu Ltd. <6702.T> and Sweden's AB Electrolux <ELUXb.ST>, demonstrated a prototype digital refrigerator with a flat-panel screen, a bar code scanner for tracking grocery items and the capability to send and receive e-mail.

With devices like this and others in the works, the totally wired home is "not that far-fetched," Bajarin said.


The appliances now available or in development may range in size, shape, software and hardware, but all have one thing in common -- they are not personal computers and they offer quick, easy, low-cost Internet access.

"I've been talking about these things for about two years, and no one believed me," said Kevin Hause, an analyst at International Data Corp., a market research firm.

"We are pretty optimistic about the category, and the endorsement by Microsoft Corp. <MSFT.O> and the commitments by Compaq <CPQ.N>, Acer <2306.TW> and Vestel <VESTL.IS> will really drive interest in this space," he said.

Last week, at the giant Comdex computer show in Las Vegas, software behemoth Microsoft Corp. gave its endorsement of a low-cost terminal just for accessing the Internet as a way to entice more users to its MSN network of Internet services.

Microsoft announced plans for a low-cost Web Companion to be made by Compaq Computer Corp., Acer Inc., Philips Electronics Inc. <PHG.AS>, Vestel USA, a unit of the Turkish consumer electronics company, and Thomson Multimedia < TMM.PA>, for Web use via its MSN Internet access service.

Pricing, which is expected to be low or perhaps free with a commitment to subscribe to MSN, will be announced when the products are available in the second half of 2000.

This would follow the model of the cellular phone industry, by offering access devices for free or at very low cost in order to gain new subscribers. Many companies developing these low-cost Internet devices are using this approach.


According to IDC, the worldwide Internet appliance market will reach 93.7 million units, or $18.8 billion in sales, by 2003, up from an expected 13.8 million units, or about $4.6 billion, in 1999. This includes appliances, handheld devices such as 3Com Corp.'s <COMS.O> Palm VII with wireless Internet access; Sega Enterprises Ltd.'s <7964.T> Dreamcast gaming console with Internet access; Web-enabled TVs and Web cell phones.

Of the many companies active in the area, one older firm is semiconductor industry stalwart National Semiconductor Corp. <NSM.N>. Santa Clara, Calif.-based National Semi is making the appliance market a big focus, with its Geode chip and its WebPAD reference design, so firms can create their own devices.

One of the best-funded startup companies also was founded by a former National Semi executive.

InfoGear Technology Corp. of Redwood City, Calif. develops an Internet screen phone called the iPhone for $399. The iPhone is a device that looks a bit like a fax machine, with a 7.4 inch screen with a touch interface and a pull-out keyboard.

The company was founded in 1995 by Chaim Bendelac, who conceived the iPhone while he was a manager at National Semi.

InfoGear said it has shipped over 60,000 iPhones so far and sells them in stores, such as Good Guys Inc. <GGUY.O> in the West and RCS in New York. Big Planet, of Provo, Utah, offers a free iPhone, with a 3-year subscription to its Internet and long distance service.


Simpliance Inc., based in Atlanta, developed a $99 device called the eMailBox, strictly dedicated for e-mail and limited Internet service, like news and weather.

The company plans to charge customers about $8 a month for e-mail access, which is viewed on a small screen that stands on a pedestal, with a blinking green light to indicate new messages. Simpliance said it was talking with Internet service providers about bundling its device with Net access service.

Many of these devices can be designed for specific purposes, such as a retailing kiosk or an appliance to replace the constantly evolving yellow pages directory in the United States, similar to the Minitel in France.

Boundless Technologies, a unit of terminals maker Boundless Corp. <BND.A> , is developing the iBrow appliance, which can be branded and targeted to certain audiences, such as banking or brokerage customers.


Another startup, Netpliance Inc. in Austin, Texas, is selling a $199 device with a 10-inch flat panel display called the i-opener, with Internet access at $21.95 a month, for any room in the home. Netpliance was started by entrepreneur John McHale in January and has raised over $30 million in private funding. McHale sold his last two companies to Compaq and Cisco Systems Inc. <CSCO.O>.

But the entry of giant computer and consumer electronics companies into the appliance arena could spell trouble for startups and others now attacking the nascent market.

"There will be a lot of alternatives," said Mike Polacek, vice president of National Semi's information appliance division. "It's a much more level playing field."

Noting the explosion of companies focusing on appliances, he said, like many new markets, "some will fade away, and some will be home runs."

(([email protected], SF Bureau, 415/677-2542)) REUTERS


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