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Is an information appliance the microwave cooker of morsels of information or the freezer of data to be preserved? Or is information appliance an oxymoron? To many, it is the convenience of marrying the ubiquity of information with the convenience of an appliance. Yet, there are few appliances which one carries around with them - a watch is hardly called an appliance. Thus, the literal transliteration of these terms into a larger meaning remains vacuous. Some of the major market research firms only see the PDA or tablet as information appliances - and maybe the set top box. Thus, there is no coherency in what is an information appliance.

We offer the following:

An information appliance is a horizontal product based on electronics technology, which performs useful functions for an individual and uses a network to access, retrieve, interact with, report and/or handle information or media.

Note that we have not explicitly included the Internet - the type of network is not important. Further, we have not included industry specific devices - these are vertical products.

Information Appliance Product Categories

In the context of today's products what fits within this definition; we offer the following:

Digital audio
Digital jukebox
Digital radio
eBooks
Digital frames
Internet telephone
PocketPCs
Web appliances
PDAs
Wearables (including wrist devices)
Personal TV
Web phones - web enabled cell phones

Digital Cameras
Not explicitly linked to a network - possible future category to include.

Set Top Box
Potential candidate but these come close to a vertical market product.

Pagers
Especially the latest 2-way products that have limited keyboards. These are viable candidates.

Information Appliance Competitive Space

At 4th Wave we maintain databases on the products in each category. The data assembled includes specific products, their functional details, cost, and category specific information such as content or services. Shown in the table below is the list of the products and the number of companies providing them. This already is a very competitive market. The information appliance space is an embryonic market and there is a proliferation of companies seeking a first mover advantage. Consolidation will take place in the next several years and, at 4th Wave, we expect the number of companies and products to decline significantly.

To better understand the marketplace, we take a look at each category independently.

Digital Audio

The digital audio market is one of the furthest along, if for no other reason that the number of products and companies. According to Forward Concepts, in 1999, 750,000 MP3 players were sold with an estimated 4 million to be sold in 2000 and 30 million in 2010. We counted 35 digital audio players ranging from $99-1,499.

Digital audio players come in every shape and size, but small seems to be the operative parameter. The players vary by design and storage capacity but most have storage capacity between 32MB and 96MB contained in a handheld device with a small LCD screen. There are exceptions though, like HanGo's PJBox that uses technology from Fraunhofer and Compaq to store up to 4.86GB. This 150 x 80 x 26mm device downloads songs with a USB connection from the PC/Internet, has an audio cable for playback on home audio systems and comes with a car adapter kit. It is a bit pricier than other models (on average between $100-350) at $749.99 but the extra storage capacity could explain that.

Other notables include the Diamond Rio players and MaxTech's Moveman which offer Mac compatibility in additional to the traditional Windows functionality. There are several Diamond Rio players. The Rio 500 and Rio 600 support multiple formats in addition to MP3 (including WMA, ADPCM, audible.com content and MPEG-2 (may need upgrades to get these)) and offer up to 96MB (Rio 500) and 340MB (Rio 600) with flash card and expandable snap on packets. The Rio 600 has a car adapter, an add-on FM tuner and personalized snap on faceplates as well. The Moveman offers 80+MB of CompactFlash storage and an LCD with track number, time-elapsed, and equalizer settings (no ID3 tag support) for $99-299.

Digital audio devices lie in a quagmire of uncertainly. MP3 song files are at the core of the digital audio product and an implied association with the lack of regard for property ownership. Currently copyright protection is a significant issue and the future of free downloadable content has a black cloud over it. Flash memory, the dominant storage technology in these devices, is expensive and in short supply. For this reason, despite the success of the line of Rio players, our estimate of units sold is a rather low 2 million. Digital radio (detailed below) is another audio category we are not bullish about. The products sound interesting and could be very exciting, but the quality of the actual audio is marginal and broadband is needed to improve quality.

Digital Radio

The digital radio market is led by Kerbango and AudioRamp, which both plan to offer standalone devices that offer access to streaming media and audio as well as some two-way capabilities, e-commerce and additional data about broadcasts. Both devices (Kerbango Radio and iRad respectively) will use a range of ISP connections including 56k modem and Ethernet in order to connect, but have no need of a PC in order to provide service. Both device releases have been shifted to later this year, and prices range from $399 for the Kerbango Radio and less than $300 for the iRad.

Another company, PenguinRadio will offer a Linux-based device that streams Internet radio stations and MP3 files to a user's stereo for playback. The device will connect to the Internet (not specified with what connection) to search via Ellipso satellite for audio sources and can also use PDAs and cell phones to connect for searches. The device, scheduled for release this year, will be sold for less than $200.

Command Audio will approach audio a little differently, offering a device and service that allows users to select their favorite audio and television programs and even written publications for playback on demand. The RCA CA 1000 Audio-on-Demand receiver will use satellite transmission and FM subcarriers to transmit programming wirelessly to subscribers in the car or in the home. The service is available to consumers now in Denver and Phoenix for $199 and $11.95/month and will be available nationwide in 2001. Command Audio expects to sell the software to OEMs and car manufacturers in the future.

Electronic Books

MP3 files and devices have gotten a lot of attention lately, perhaps at the expense of other electronic products. Such a product, the electronic book, has not gained the popularity that was previously expected. There are three of these products, Gemstar's Rocket eBook Pro, SoftBook Press' Softbook Reader and Everybook's Everybook, each with its own set of features.

Everybook is the only product that offers a color screen - well actually, 2 of them, similar to a traditional book. The Everybook is not available now, but will be released in two stages. The Professional Edition, which will be 11 x 8.5 x 1.75" and will cost $1,600-2,000 will be released at the end of this year. A Personal Edition will be a bit smaller at 9 x 6 x 1.25" and will be released in the second half of 2001 (price to be determined).

The other two products have one grayscale LCD screen, much like a Web tablet. The Softbook reader, which offers 8MB of memory, costs $599.95 if purchased outright and $299.95 with an agreement to purchase newspapers, magazines or books in the amount of $19.95/month for 24 months from the SoftBookstore. The Rocket eBook Pro, with 16MB of memory, can be purchased at Barnes&Noble.com, Powells.com, eBookEmpire.com or eCampus.com for $269 (regular version is a bit less). E-books cost $18-25.

All three products offer similar functionality with touchscreens, a dictionary/thesaurus, and searching and highlighting capabilities. Additional features include the Rocket eBook's scrolling, animation and audio (WAV) capabilities and Everybook's stylus. Despite these features, we believe the acceptance of eBooks will be low in the near future. A lack of standards and compatibility between readers and electronic formats and exclusive partnership deals with publishing and e-commerce sites has resulted in a decrease in content and an increase buyer uncertainty.

Digital Frames

Digital frames have just arrived on the market and offer connectivity for long distance family members and friends. Four companies offer mostly 5-6" LCD frames of varying colors that can be filled with digital images from remote PCs with a phone line connection or Compact Flash card. Weave Innovations StoryBox will not be available till later in the year 2000, but the other three, Sony's PHD-A55 CyberFrame, Ceiva's Ceiva and Digi-Frame's DF-560 are all available today.

Sony's frame allows a user to display not only digital images but MPEG movies using Memory Stick media and a Cybershot or DCR-TRV 10 digital video camcorder. Users can also print images from the frame. This functionality comes at a price though, the frame is $899, Memory Stick (4-16MB) is about $79.95 and the video recorder is $999-1499.

Ceiva and Digi-Frame offer more traditional devices (if you can call sending electronic images cross-country to a frame on a family member's desk traditional) with a slide show format. Ceiva, which uses a phone line and a local number to upload images each night, holds 8 pictures on the frame. The Ceiva Web site offers the ability to handle images in the inbox and on the frame as well as create personal albums to store additional pictures. The Ceiva sells for $249 and has a monthly of $2.99 or $7.99 (depending on the phone number) service fee for the connection. Digi-Frame comes in two sizes, a 3.9" and 5.6" LCD screen and uses Compact Flash cards that can store between 200-500 images. The frame sells for $399 or $599 depending on the frame size purchased.

Digital frames are a strong product concept. However, their potential is limited and pricey which results in a narrow market. The product also has limited appeal, especially with the growth of services that save traditional photographs on a CD-ROM or make digital photographs into printed replicas. That said, one of the WAVE editors purchased a Ceiva frame for a grandparent and is very pleased with the ease of use and ability to send family pictures across the country.

Pocket PCs, Web Appliances and PDAs

Pocket PCs, Web appliances and PDAs have begun to flood the market. We have counted 10 Pocket PCs, 24 Web appliances and 10 PDAs either on the market or in development. The variety of products share certain functions, and many appear visually similar. For our research, we have defined three separate categories by form factor and function.

Pocket PCs are devices that fulfill more functions than a simple organizer and may have full (or close to full) PC capabilities. The devices must be smaller than a small portable laptop, preferably handheld. Pricing in this market is rather steep, and we predict this will hold sales down till product pricing falls to a more PDA level.

The form factor of a Web appliance varies, but most are small PCs or Web tablet shaped devices. The devices have limited functionality and are designed for Internet access and e-mail, rather than word processing usage. These limitations are by design, hoping to capture the non PC literate population, but may also be the devices' downfall. Companies are struggling with high component costs and consumers may not be willing to pay hundreds of dollars for a machine with limited usage. It has yet to be demonstrated whether a less capable device selling for more than $500 can compete with a PC at the same price. Neither the content nor the user interface is compelling enough to justify the cost differential.

The PDA market is driven by Palm and Handspring, with devices that offer organizational functions and recently some e-mail capabilities. Limited networking ability is the only catch with these devices. Advances in Bluetooth and piconet technologies, which would allow devices to communicate and sync wirelessly, could add another dimension to these products in the next couple years.

Examples of products in each category are detailed below.

The Casio Cassiopeia E-115 is a WindowsCE Pocket PC. This device has a color display that offers movie viewing, e-mail/Internet access, and most PC functions for $599. Casio will also offer future models - the EM-500, EG-80 and EG-800 line of smaller PCs that add MP3 compatibility, USB support and LAN connections, in the future. Other models include Hewlett Packard's Jornada, Compaq's Aero 1550 and iPaq H3650 and Psion's Series 7 which offer similar functionality.

Web appliances for the most part are a product of the future. Aqcess Technologies' Qbe Personal Computing Tablet, Hitachi's ePlate and Netnote'sWebnote are the only products that we have seen on the market and these have been strangely unpublicized. Dell released it's WebPCs (fun, wild and blast) earlier this year, but has recently discontinued the product line.

The Qbe is a Windows 98 SE device with a Pentium processor that offers desktop capabilities on a Web pad. According to the company, the pad also offers an onboard camera with still image, motion video and video conferencing capabilities and can be used with a cellular modem card to transform into a phone. A built in 56k modem, Ethernet card and 10/100 Base T functionality will complete the package with Internet access. The device will be sold to the consumer and business market for between $3,995-5,395 depending on the memory and processor included.

Hitachi's ePlate is a Windows CE device with an LCD touch panel and stylus. It comes with a 56k modem and USB connections. This device will offer PC-like functions as well as e-mail and Internet access starting at $1,199.

The Webnote, from Netnote is a PC-looking device (rather than a tablet) that was released in Ireland in 1999 to offer easy Internet/e-mail access. The smart card-based device is has a built-in 56k modem offers connectivity through a telephone line but is also compatible with Ethernet and ISDN. A mobile model offers wireless connectivity using the dual GSM (9600 bps) standard. Netnote has just recently begun to bring publicity to the United States.

Future Web appliances include products from Acer (I-station), Boundless Technologies (iBrow), CMI Worldwide (iCEBOX), Epods (EpodsOne), Global Converging Technologies (Cendis), Netpliance (i-opener), Qubit (Qubit Web Tablet), RS Cordless Technologies (WebPAD), Samsung (Yopy), Siemens (SIMpad), Simpliance (eMailBox), Virgin Entertainment, Intel and Gateway/AOL. Most of these devices offer Internet and e-mail access with a 56k modem and some PC functionality. The I-station, iBrow, icebox, and Qubit also have DSL options and wireless connectivity is offered by SIMpad, RS Cordless' WebPAD and in the future EpodsOne.

Prices on these devices vary by functionality and connectivity options - the most expensive being the Aqcess Qbe at $3,995-5,395 and the least expensive, the Samsung Yopy which is expected to retail for around $99 (late 2000). Many of these devices will also be sold in business markets which will then subsidize costs for their customers/clients.

The PDA market, much like the Pocket PC, has been dominated by familiar players - namely Palm's Palm Pilot and to a lesser extent Casio's pocket organizers and Psion's Series 5MX (Revo late 2000). Handspring's Visor is the newest entrant to the market offering a small device using the Palm OS that offers the typical organizer functions, 2MB and 8MB storage options and USB, serial port and infrared connections to a PC and the many module options. The Visor retails for about $179/249 depending on storage and cradle options.

Wearable Information Appliances

The introduction of wearable information appliances is the next step up in personal devices. At trade shows prototype jean jackets contain musical appliances, eye glasses double as LCDs and padded gloves become input devices. At this early stage though, these types of applications are rare in the consumer market - although VIA, Xybernaut and AnthroTronix have products for use in vertical markets and businesses.

Xircom offers the Rex line of products (5000/5001 and 3000), credit card-sized wearables that offer storage and synchronization of contact information, calendars, and lists/memos for $79.95. The MicroOptical Corporation in partnership with the MIT Media Lab is developing ClipOn Displays and Integrated Eyeglass Displays that allow a user to see a computer display and the surrounding environment simultaneously. These special glasses will connect to a PC or other device (hopefully a mobile one) for connectivity and offer standard VGA, a female DB-15 connector and standard NTSC, and RCA plug. These will be sold to OEMs and system integrators, not directly to consumers.

There is also a variety of wrist devices entering the market offering MP3 playback (Casio WMP-1V), organizer functions (Casio PC Unite and Matsucom (Seiko) Ruputer/onHand PC), digital imaging (Casio WQV-1) and in the near future, cell phone capabilities (Samsung Cell phone watch, Swatch Swatch Talk and Motorola Accompli). These devices are in the early stages, and will obviously be very limited due to screen size, but offer a fashionable set of data and voice services.

Market Estimate

Our estimate for the unit quantities that will be sold in the year 2000 includes:

Our analysis of today's information appliance market shows that it is about products which leverage infrastructure. There is little in the way of new infrastructure behind these products - they just use largely what exists. This is a key reason why web enabled cell phones dominate the market. In many respects infrastructure remains a significant impediment to the emerging market. Be it the limitations of V90 lines for audio downloads or the lack of capabilities to handle VOIP phone calls, infrastructure plays a key role as both an enabler and inhibitor. Typically infrastructure is long term, expensive and reliant on up front cost. Thus, the development of the information appliance market is dependent on many factors that include:

Infrastructure;
Content & Applications;
Services and;
A relentless pursuit of lower costs and higher volume products.

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Page updated 1/24/07
Copyright 4th Wave Inc, 2007