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Market For 'Intelligent Appliances' May Be Ripe - Study
NEW YORK, NEW YORK, U.S.A. 2001 MAR 28 (NB) -- By Michael Bartlett, Newsbytes.
More than 230 companies are battling for a piece of market share of what might be the next hot technology product - the "Intelligent Appliance."

According to a new study from brokerage firm Bear Stearns, the future of Intelligent Appliances, or iAppliances, is bright.

The company defines an iAppliance as a handheld device that allows users to sent instant messages, make phone calls, listen to music, take digital pictures, watch video, schedule meetings and even surf the Internet. The device may be used at home or carried during the course of the day, and the connection to the Internet may be wired or wireless.

Bear Stearns said the development of iAppliances is being hastened by the concurrent deployment of three technologies. The first, Bluetooth, enables the wireless attachment of peripherals. The second, known as "Wi-Fi," enables wireless networks. The third is GPRS (General Packet Radio Service), or 2.5G technology, which enables cellular connections.

Ted Chung, a Bear Stearns associate analyst and co-author of the report, said the combination of the three should lead to a fundamental shift towards wireless computing.

"The convergence of the three technologies should really provide a boost for iAppliances. It is akin to a 'Perfect Storm' for the industry," he said, referring to the recent movie in which three weather fronts combined over the Atlantic Ocean to create a once-in-a-century storm.

Mobile handheld devices form one sub-segment of the iAppliance market, the study said. Spurred on by increasing use by business customers, this sub-segment is expected to experience significant growth in the next seven to 10 years. Bear Stevens predicts an increase from the present 20 million units to 200 million to 300 million units.

Wireless e-mail is one of the more popular applications of iAppliances, the study noted. It said wireless e-mail might become the standard on the majority of these devices.

According to Bear Stearns, consumers will continue to use multiple pieces of equipment rather than using a single device that tries to do everything. Andrew Neff, PC and iAppliance analyst for the firm, said there are a number of technological and logistical reasons that will prohibit the success of one all-encompassing iAppliance.

"That does not mean users will miss out, they still will be treated to incredibly convenient and valuable devices," Neff said. Consumers will use the best product in each category and will be unwilling to trade performance for the convenience of a single device. The separate units will increase their efficiency by communicating with one another, he added.

According to Neff, investors who wish to enter the iAppliance sector should identify companies that provide at least one of its component parts, which he said are hardware, software and network services. He said the key is that a company have the ability to maintain lifetime control over a customer and receive a continuous stream of revenue.

Three companies are well positioned to win market share, Neff said. He lauded Palm [NASDAQ:PALM] for its "three-pronged strategy of selling devices, licensing its operating systems and generating fees from services." He said other companies to watch include Sun Microsystems [NASDAQ:SUNW] and Immersion Corp. [NASDAQ:IMMR].

"Sun Microsystems provides critical infrastructure including industrial-strength servers and core technology," Neff said. "Immersion Corp. licenses its revolutionary TouchSense technology to the automotive, computer and other industries."

More information on Bear Stearns is available on the Web at http://www.bearstearns.com .