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While at the Computer Electronics Show (CES) in January, two trends really stood out:

  1. I saw Web browsing TV and telephone products everywhere, but I didn't see Java anywhere.
  2. Almost everything PDA-related was based on Microsoft CE.
So where was Java? JavaOS? And what of our Java Black Box PDA? Has CE elbowed its way into the party at the expense of JavaOS?

Could be... Or, we could view CE-enabled PDAs as evolutionary, with some new device, hopefully our Java Black Box as revolutionary. The CE-enabled PDA makes sense for an evolutionary technology - Windows apps without requiring a full blown portable computer. A next generation device could break with the current Windows paradigm, and that truly would be the revolutionary product. Web-centric, via wireless communications, with loading of Java applets as they are needed.

What will be the key enabler of this revolutionary product? Risk. New technologies (such as E-DRAM discussed in last month's column) will be important, but the revolution will be driven by risk takers. Those new products will be extremely cheap and may be given away by service providers to collect an ongoing revenue stream on content.

The revolutionary products will require a company to take enormous risks, releasing leading edge chipsets into a new market with little confidence in the ROI (return on investment) numbers. To hit the cost targets, this company will have to use a pricing model normally reserved for manufacturing in tens of millions of units; make just a little on each unit, but sell LOTS of units.

It will have to have the infrastructure of the leading semiconductor producer, the technology of the hottest ASIC company and the market instincts of a Commodities Trader. Think Pork Bellies.

In reality, this one company will actually be several companies banded together, each with a key part of the puzzle, each willing to throw some serious money into the trading pit. The risk is high, the reward is literally the future of personal computing.

Are there any examples of companies banding together to create something on the order of our Java Black Box? Consider the Sony PlayStation. Sony, the top consumer electronics brand name, decided to go after Nintendo and Sega for leadership in the game market. Despite a landscape littered with failed game companies, Sony has become a leader. How? Sony has a gold-plated franchise in consumer electronics, and access to top creative material via their investments in Hollywood. They met up with LSI Logic. LSI had just created a strategy of CoreWare, a CPU core and a laundry list of modules which could be connected within a custom chip to create a wide variety of consumer devices. The two companies banded together and stormed the market with a game device that, for about $250, could significantly outperform the graphics on most people's desktop computers. I suspect that neither company made a lot of money on each game machine, but the high risk resulted in high rewards. Sony became the force in the game business, and added significant value to its entertainment portfolio; converting Hollywood content to a revenue stream from games. LSI Logic got a decent revenue stream, and proof of their ability to deliver on the CoreWare strategy.

So, can the industry adapt to this risky new future - the "hardware giveaway" model? The first step is to acknowledge the change in hardware pricing. After that, a company can reinvent itself to thrive in the "PlayStation" world.

Some companies are starting to change. While in the Hewlett-Packard booth at CES, I asked what the price of their upcoming Windows CE handheld computer would be. "Simple," said an HP product person. "The market price...it will be a commodity". The world of high value, low price hardware is coming. Pork Belly Futures anyone?

About The Author
Randy Cook currently manages Business Development for Vsis, a start up focused on high-value silicon solutions for Java, PDAs and 3D. Vsis is funded by Mitsubishi. Randy has worked in development, product marketing and sales management of computer, digital video and interactive TV products. He holds a BSEET from Cal Poly - San Luis Obispo. Randy is married and spends his non-marketing life raising two sons, and tweaking stereo equipment.


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