Magazine Article | May 1, 2000

Offer Storage To Support Internet Appliances

Source: Business Solutions Magazine

Wireless technology will allow people to do business even while walking the dog. Internet appliances will take the telephone's place. That's why systems integrator and telecommunication systems manufacturer Alliance Systems, Inc. completely revamped its business plan to provide infrastructure to the telecom market.

Business Solutions, May 2000

Jon Shapiro, CEO of Alliance Systems, Inc. (Plano, TX), believes Internet appliances will make the telephone obsolete in the next few years. Internet appliances are devices that don't look like conventional telephones and PCs. They are a new generation of low-cost, Web-access appliances. These include smart handheld devices, PDAs (personal digital assistants), auto PCs, Web TVs, digital set-top boxes, smart phones, and digital cameras. They also consist of smart cards, vertical application devices, and thin server appliances.

Behind all these little devices will be a complex system of servers and backup that must never fail. "It is going to require a new generation of infrastructure that actually receives and delivers communication back and forth from devices," said Shapiro. This is where Internet appliance servers come in.

Shapiro is ready for the Internet appliance boom. He has found a niche in the market that Wall Street calls Internet infrastructure. Shapiro started his business from his garage in 1992 by providing interactive voice response technology for telephone communications routing. Today, Alliance Systems has 70 employees, expects $65 million in annual sales for the year 2000, and routes communications for more than just telephones.

"Internet appliances have network capability, a simple function, and the ability to do one or two things really well," said Shapiro. "People used to think it was a miracle to enter their account numbers and get their balances by using their Touch-Tone phones. Now people want information delivered to their cell phones when they're on the road," said Shapiro.

Internet Appliance Market - What's In It For VARs?
VARs should care about Internet appliances, because everything about them translates to opportunity. BancBoston Robertson Stephens (New York), an international investment banking firm, forecasts phenomenal growth in the overall U.S. Internet appliance market. A 100% CAGR (combined annual growth rate) in unit shipments is expected for the next five years. BancBoston estimates that the market will reach 42 million units by 2002. In fact, the Internet appliance market is expected to grow at a much faster rate than the PC market.

"The world of devices used to be made up of telephones and PCs," stated Shapiro. "PCs were hooked up by modems. Hundreds of millions of new devices can be built in the next two or three years. These wireless devices will need to hook up to networks."

Shapiro thinks there is spectacular opportunity for building technology that makes communication happen. "Companies like Palm, Panasonic, HP, and Nokia will concentrate on building devices," he said. "Microsoft, Linux, and Sun will develop operating systems for those devices. Intel and Texas Instruments will manufacture silicon. Transmission companies like AT&T will want to provide the network, back end, and switching systems for these devices to hook up to. And then there will be companies that make equipment to sell to transmission companies." VARs and systems integrators can plug into any one of these areas to make money.

Telecom Growth Fuels VAR Opportunity
According to the "BT World Communications Report 1998/99," the number of cellular mobile subscribers worldwide has grown from 10 million in 1990 to 200 million at the beginning of 1998. Most world telecom markets are now competitive, driving down prices. Digitalization is leading to a convergence among communications, computing, information, and entertainment. It is becoming a world in which computers can make phone calls, TVs can access the Web, and mobile phones can download share prices. Simple net terminals download CDs and take customers on worldwide shopping sprees.

"The Internet is becoming cheap, ubiquitous, and adaptable," said the report. It links 29 million host computers worldwide - an increase from less than 1 million in 1993. Its growth has encouraged the emergence of hundreds of national Internet service providers (ISPs) and software entrepreneurs. Traffic on the Internet is doubling every six to nine months.

Almost unknown in 1994, by 1997 over half of all large corporations had implemented an intranet. As a result, many corporations are seeing 100% data growth per annum.

BT World predicts highly competitive, transparent markets, containing global, one-stop partners and fast, flexible, highly skilled niche suppliers. If businesses grasp these new opportunities, they can only benefit.

Internet Appliances Need RAID Solutions
A big factor driving the Internet appliance market is the declining cost of storage. According to IDC (International Data Corp.), the cost of storage per GB was nearly $300 in 1995. In the year 2000, it's barely over $10 per GB, and it is expected to keep falling.

"The new Internet appliance devices will be freed up from legacy computer networks. But you won't want to download a huge amount of information to a little device," stressed Shapiro. "Software will be developed to allow you to create ‘My WAP (wireless application protocol) Phone' or ‘My Device.' Employees will go to Yahoo! and will be able to retrieve information from their company's network. Options on the screen will allow the user to select the particular Internet appliance being used. The Internet site will probably know the limits of a particular device's display. The device's setup can be configured to receive stock quotes every two hours. It will be able to receive weather forecasts and baseball scores. Employees will be able to get their company e-mail."

More Data Will Be Placed On Networks
"More and more data will be placed on networks, rather than on PCs. As devices become the rule, the network is where information will be stored," explained Shapiro. "RAID (redundant array of independent disks) companies like Adaptec/DPT should see a major change from client/server computing to device/network computing. The network has to be real. It's run by serious people. All the data will be stored on hard drives, and no one will buy a cheap setup for the network. Internet appliance servers that send stock quotes to your wireless will be bought by the wireless carriers in your area."

The worldwide telephone network has been built on routers and mainframes. The movement to devices and appliance servers will result in huge growth for the telecom solutions providers. RAID and Fibre Channel will help support the new communications system. "The more we communicate with the network, the more hard drives will be sold," said Shapiro. "That means more RAID towers and more of my appliance servers will be sold. We'll help consumers fill up their lives with these little devices."

"It's the real thing," said Shapiro. "It's not hype. You and I will own these devices in our lifetime. We will have many of them in our homes. We'll carry them in our pockets and in our cars. They'll deliver useful value to us. Our lives will be more hectic because of them. The pace of wireless systems sales is the validator. I'm probably silly enough to carry around one of these devices. It will tell me my company's sales numbers, my bank balance, and the number of hits to my Web site. It will report the weather and give me the first few lines of my important e-mails. I carry a cell phone. I'll probably carry one of these gizmos. And, I'm not a geek. This stuff will sell."

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