Special Report: Webpads
The next big thing or just a fad?
(January 2002 issue)
by Geoff Walker
The logical place to start this article is by defining
"Webpad." The best definition I've seen is on chip-vendor Xilinx's website: "A
Webpad is a wireless, portable, low-cost, easy-to-use, tablet-shaped,
consumer-focused information appliance with a touch screen and a browser-based
interface to simplify and enhance the internet experience." The only adjective
that Xilinx left off the list is "flash-based". Some of the vendors in the
Webpad business refer to the product more simply as "a browser in a box."
A Webpad is often called an information appliance. What's that? It's what's
created by marrying the ubiquity of information with the convenience of an
appliance. Some market research firms (such as the Carmel Group) define
information appliances as one of only three things: a wireless Webpad with
Internet access, a set-top box with Internet access, or a standalone device with
a monitor and keyboard that isn't a PC. Other market research firms include
PDAs, digital audio devices, ebooks, digital picture frames, personal TVs,
Internet telephones and any wearable computer in the information appliance
category. An agreed-upon definition of "information appliance" is therefore
still quite elusive, rather like Sasquatch.
A Webpad is frequently confused with other types of tablet devices, particularly
with CE Tablets and (Windows) Pen Tablets. The "Tablet Taxonomy" sidebar, along
with Table 1, is intended to help clear up this confusion.
The genesis of the Webpad
Who started the whole Webpad thing? National Semiconductor. On November 13,
1998 Cyrix (a division of National Semiconductor at the time) announced and
demonstrated the first prototype of a Webpad "Internet access device" at Comdex
in Las Vegas. Although it looked like a real product, it was really a reference
design intended to stimulate consumer electronics manufacturers into developing
their own version of the device using Cyrix chips. With the exception of the
memory chips and the display, every component in the device was a National
Semiconductor product.
National Semiconductor further stoked Webpad fever by showing the Geode Webpad in
February 2000 at CeBIT. Prototype Webpads were on display at the same show from
Acer, Boundless, Qubit, RS Cordless Technology (RSC), Samsung, Screen Media,
Tatung and Vestel. It's significant that now, a year and two thirds later, only
three of those eight companies still have a Webpad on the market.
From the viewpoint of the ODM suppliers in Taiwan (several of whom I have visited
recently), 2000 was "the year of the Webpad." Now, near the end of 2001, the
high level of interest during 2000 in Webpads as a potential consumer product is
seen in retrospect as a "bubble". Many of the Webpads that were created during
2000 are no longer on their creator's website.
John Dvorak (my favorite curmudgeon), writing in PC Magazine in January of this
year, aptly expressed his opinion of Webpads heading into 2001:
"I first saw the first one of these things [Webpads] a couple of years ago at
Comdex, where Cyrix was promoting the idea. Everyone was jazzed about a wireless
tablet that people could use to surf the web while sitting on the couch. Who
wants to surf the web while sitting on the couch? I can see using such a device
as an inventory control mechanism or a wireless notepad for a coach at a
basketball game (the sport would have to be indoors, no thanks to display
technology). But these things are not mass market items...these tablets are
designed specifically for surfing the web, as though we all want to spend $500 or
more for wireless networking to go surf the web from all over tarnation. Give me
a break. A few early-adopter nutballs will buy this thing, and that will be the
end of it."
About the term "Webpad"
National Semiconductor trademarked the name "WebPAD" in 1998, where "PAD" stood
for Personal Access Device. That's why you'll sometimes see "WebPAD" instead of
"Webpad" used by companies building Webpads based on National Semiconductor's
CPU. The term "Webpad" quickly became highly descriptive of the device, which in
effect rendered the trademark moot (the same thing happened to "Aspirin").
However, to avoid using the trademarked name during 1999 and 2000, many writers
referring to Webpads other than National Semiconductor's reference design used
either "web pad" or "web tablet", which further confused the terminology. In
this article, I stick with "Webpad", which seems to be the most common usage on
the Internet today.
The Webpad bubble
As noted above, the high level of interest in Webpads during 2000 is now seen in
retrospect as a bubble. What caused the bubble? My theory is that there were
five key steps, as follows:
- 1. Demand for a new product concept is hypothesized.
Analysts, commentators and pundits see the demand for existing portable devices
such as cellphones, PDAs, cordless phones and MP3 players, and they jump to the
conclusion that a similar demand should exist for some new portable product
concept (in this case, the Webpad). Typically this happens without any serious
consideration of the value proposition for the new product concept, and without
any market research to support the hypothetical demand. Even when research is
done, sometimes it's flawed. For example, in the spring of 1999 Intel studied
ten families in Oregon for six weeks to determine if using Webpads would increase
a family's frequency and duration of Internet usage. The study showed that
having a Webpad in the home would triple the family's Internet usage (not exactly
a surprise). What Intel apparently didn't ask, however, was how much the family
was willing to pay for the Webpad.
- 2. Forecasts appear for the hypothetical demand. Market research firms read
about the hypothetical demand for the new product concept and start creating
Excel spreadsheets to project the demand five years into the future. These
numbers are widely publicized and everyone starts believing them because
reputable firms such as Gartner Group or IDC published them.
- 3. The media amplifies everything almost instantaneously. The trade press
picks up the news of a new product category and literally overnight turns it into
a "hot new trend". This is a side effect of living in the "information age". A
few years ago a company could count on having six to nine months to build the
"buzz" for a new product; now, the buzz builds in two months. With the exception
of curmudgeons like John Dvorak (quoted previously in this article), the media is
generally unwilling to write a strongly negative piece about an entire new
product category, even if that's what they're actually thinking.
- 4. ODM companies begin creating products based on the buzz. Much of the
computer business is shifting to an ODM model (see the sidebar on OEM and ODM
terminology). ODM companies are not marketing companies; they're engineering and
manufacturing companies that know how to build products. They see the "hot new
trend" and start developing prototype products. To the rest of the world, these
look like "real" products, but they're really not. ODM prototype products and
chip-vendor reference designs flood CES, CeBIT or Comdex. Often the media (and
most of the public) doesn't understand that these products aren't "real" products
and that nobody's signed up to distribute them.
- 5. And so a bubble is born.
All of the above looks and feels like reality -- but it isn't. The bubble is
mostly full of air, built on a hypothetical foundation. However, there is
usually some element of reality somewhere in the depths of a bubble. In the case
of Webpads, it's the fact that they really do make sense in some categories of
vertical applications. A few companies will be successful with this product
category in vertical markets. But for sure the majority of the 28 products
listed in Tables 2 and 3 won't be around at this time next year.
State of the Webpad market
Instead of asking "What's Up with Webpads," perhaps I should be asking "What's
Down with Webpads". The answer is nearly everything. The state of the Webpad
market can be summarized as follows:
- Consumer sales of Webpads are in four-digit numbers or low
five-digit numbers.
- Consumer-focused Webpad vendors such as Qubit are dying
off rapidly.
- Survival-minded Webpad vendors such as SONICblue and ViewSonic
are focusing exclusively on vertical markets.
- There are still lots of OEM/ODM
Webpad companies showing products, but few customers are signing up.
- The
media is negative about Internet Appliances in general and Webpads in specific.
- New Webpads are surprisingly under-publicized (the buzz is over).
- Trade
press articles about successful vertical Webpad applications are few and far
between.
Forget the consumer for now
It seems clear from the above that Webpads are unlikely to be adopted by
mainstream consumers in any quantity anytime in the near future. I believe that
there are some underlying basic reasons for this, as follows:
- 1. Mainstream consumers aren't interested in gadgets like a
Webpad. Consumers are only interested in a new device if the value of the device
exceeds its cost in time and money. MP3 players and digital cameras are examples
of devices that haven't fully made this transition yet. Consumers are
risk-adverse and won't buy a new device unless it feels like a safe bet. Webpads
aren't even on the typical consumer's radar screen yet.
- 2. There is no consumer sales and distribution channel for Webpads. Retail
stores do a notoriously poor job of educating consumers about new devices; they
do best when consumers come into the store already knowing what they want. There
are surprisingly few stories written about Webpads in the trade press magazines,
and even fewer in mainstream consumer magazines, so it's difficult for a consumer
to become educated about them. And when stories do appear, basic information
such as the difference between a Webpad and a Pen Tablet is often reported
incorrectly.
- 3. Webpads cost too much to sell at mainstream prices. Truly high-volume
consumer products at prices above $300 are rare. It's not that the Webpad isn't
a compelling device, it's that the price is far too high to achieve success with
mainstream consumers. A typical Webpad today sells for at least $1,000. Adding
the cost of a wireless LAN base station with a broadband interface/router ($300),
the cost of a wireless LAN PC card ($150), and the cost of broadband access ($50
per month), the total cost of ownership for the first year is over $2,000! A
story on ZDNet News reported the director of product marketing at SONICblue as
saying that "he and his colleagues spent a month trying to find a business model
[for the ProGear Webpad] that would appeal to consumers, but to no avail. These
[Webpads] are going to be expensive just by their nature."
- 4. A company making and selling Webpads must have really deep pockets to stay
in business long enough to make a profit. It typically takes many years for the
volume of a new type of device to reach a profitable level, and financing is
difficult to find in markets where there is likely to be intense competition.
- 5. Big consumer electronics companies with the most motivation to create a
new class of product such as a Webpad seem to be incapable of creating truly
simple and intuitive user interfaces. Look at the typical VCR -- can you program
all of its functions without referring to the manual? Or take your cellphone --
how many of its myriad functions do you actually know how to use?
- 6. Relatively few successful information-oriented devices were initially
created as consumer devices. Most started as devices for business and then
migrated to consumers. PDAs are an example of a device that's on this path.
Webpads (either in their native form or in the form of a Thin Client or CE
Tablet) are just beginning to appear on business radar screens, so they're a long
way from even starting the transition to consumer devices. It may be that the
first successful consumer tablet devices are more likely to evolve from
Microsoft's Tablet PC initiative (three to five years from now), leveraging
tablet-oriented PC software to create a more functional product than the simpler,
cheaper, single-function Webpad.
[Credit must be given to Michael Slater for his critical thinking in a column on
the adoption process of new consumer electronics devices, published in the
September issue of Computer Shopper.]
Competition with the PC
Does the Webpad compete with the PC? Yes and no. It competes in the sense that
it's an alternative to the PC for accessing the Internet or email. In that
limited comparison, it loses miserably because it is less capable yet costs about
the same as a PC (this is the main argument against Webpads that is seen
frequently in the media). If the Webpad is seen as an addition to (or extension
of) the PC rather than as an alternative, then it's less of a loser. In that
comparison, the value of a Webpad is in its portability. The Webpad allows a
user to "snack on data" (a term used by Janet Leising, the VP of Marketing for
the ProGear Webpad at SONICblue). A Webpad clearly makes access to data such as
email more of a casual, random activity than sitting down at the PC, booting up
and starting Outlook. The problem is, just how much is that portability worth?
Anecdotal reports from current Webpad users (such as Conrad Blickenstorfer, the
editor of Pen Computing) indicate that "snacking on data" can be really
addictive. The ability to grab a two-pound device off the coffee table as you
walk past and retrieve a new email at broadband speed puts a whole new face on
the email experience. Is that ability worth $2,000? Only for technology
hobbyists and geeks. Otherwise neither the content nor the user interface is
compelling enough to justify the cost. And if you're a serious email user with
90 wpm typing skills (such as the author), the lack of a keyboard on a Webpad can
cause instant frustration.
Onscreen keyboards are much too slow, handwriting recognition is still much too
inaccurate (not to mention that handwriting itself is much slower than typing),
and putting the Webpad in a keyboard dock or using an wireless keyboard on your
lap changes the "snack" into more of a sit-down dinner. What's the answer?
Voice recognition seems like a natural. The major difficulties are well known:
(1) recognition accuracy is still relatively low, (2) current recognition
software typically requires at least a 600 MHz Pentium III CPU for decent
response (that's not a Webpad!), and (3) privacy issues are significant (do you
want your family to hear every email you write?).
Eventual consumer market
It's possible that as the cost of LCDs drop and the penetration of broadband and
wireless networking increase in the home, Webpads may eventually evolve into a
consumer product. "Eventually" could be as long as five or more years, however.
The top four factors that I think will cause the development of a Webpad consumer
market include the following:
- Broadband. The spread of broadband is long term, expensive
and reliant on up-front investment by big players, but it's required for a
successful Webpad consumer market. Interviews with SONICblue, ViewSonic, DT
Research and Honeywell executives confirmed this viewpoint -- they all named
broadband as the first or second most important factor in the development of a
consumer market for Webpads.
- Wireless home networking. Broadband by itself won't have much effect on the
Webpad market (since Webpads are portable devices), but broadband combined with
802.11b wireless home networking becomes compelling. Honeywell has absolutely
zeroed in on the right approach by offering a bundle of Webpad and wireless home
networking hardware (see more information on Honeywell later in this article).
- Content, applications and services. A Webpad is a portable Internet access
device. If there are compelling content, applications and services available on
the Internet, consumers should be more interesting in taking advantage of the
mobility of a Webpad to access them. Exactly what the content, applications and
services will be is a matter for conjecture. Even after 8+ years of steadily
growing Internet usage, it's still not clear what the "killer
content/application/service" is for the Internet. SONICblue, with their MP3
player product line and entertainment orientation, believes that music will be
the key content that attracts volumes of Webpad users. Others believe that
interactive TV may be the key (e.g., playing interactive "Who Wants to Be a
Millionaire" on a Webpad while watching TV), or "video convergence" (watching TV
on a Webpad wherever you are in the house or yard). Whatever the answer is,
without compelling content, applications and services, only email junkies will
want Webpads.
- Lower cost and higher volume products. If Webpads are ever going to break
into mainstream consumer market, there must be a relentless pursuit of lower cost
and higher volume products by everyone in the food chain.
Categories of players
It's tough to tell the players in the Webpad business without a scorecard. There
are four main categories of companies making and selling Webpads, as follows:
- 1. Companies making Webpad reference designs (recipes) for
other companies to follow in creating real products. Don't confuse a reference
design with a real product -- it may look like a real product and have what seems
to be a retail product sales sheet, but companies making reference designs are
rarely in the business of making and selling complete computers to end users.
More typically they're in the chip business. Examples of these companies include
National Semiconductor, Philips and VIA Technologies.
- 2. Companies who design and build Webpads that are intended to be branded and
resold by other companies. These companies are known as OEM and ODM companies
(see the sidebar on OEM and ODM terminology). Many of the OEM/ODM companies are
located in Taiwan. Examples of Webpad OEM/ODM companies include AboCom Systems,
FIC, Palmax, RSC, Tatung and ViewTech.
- 3. Companies who brand and resell Webpads designed and built by other
companies, on either an OEM or ODM basis. The most prominent of these in the
Webpad business are ViewSonic, who brands and resells AboCom System's X-Pilot MA
1000, and Honeywell, who brands and resells DT Research's WebDT 325. There are
many less visible examples, such as Hitachi -- their "Flora" Webpad is designed
and built by Quanta, one of the big Taiwanese notebook ODMs.
- 4. Companies who (apparently) design, build, brand and sell Webpads
themselves -- "the old-fashioned way of doing business". (Note that I say
"apparently" because it's often very hard to determine the actual source of a
product. Some of the Webpad vendors listed in Tables 2 and 3 are likely to
actually be customers of ODMs -- some companies guard information about their ODM
relationships very closely.) Companies that seem to be in the "do-it-themselves"
category include AirSpeak, NEC, Siemens and SONICblue. Many (if not most) of
these companies use contract manufacturers to actually build the product -- but a
contract manufacturer is not an ODM or an OEM. A few companies play in both
category (3) and (4). For example, DT Research sells one of their Webpads on an
OEM basis to Honeywell, and sells the same Webpad under the "WebDT" brand into
specific vertical markets.
Tables 2 and 3 list all the currently active Webpad vendors I could find, along
with information on their products' CPU, O/S and LCD. Table 4 lists the URLs of
all the vendors in Tables 2 and 3, as well as a few additional vendors mentioned
only in the text.
Stillborn Webpads
During 2000-2001 there have been a number of stillborn Webpads. Here are five of
the more notable ones:
- Acer showed a Webpad at CES 2001 but never took it beyond a
prototype (it's still on the Acer website).
- Gateway announced a Webpad in 2000 (to be built by Quanta, the ODM supplier
of their notebooks), then announced they were "rethinking" the product.
- Intel announced a Webpad -- apparently a real consumer product, not just a
reference design -- at CES 2001, updated the media on it in February and March,
and then suddenly stopped any further development without any announcement. The
Webpad is still on the Intel website, but the Intel PR people didn't respond to
my email inquiry.
- LG Electronics announced the Digital iPad at CeBIT 2001, but the product
never saw the light of day.
- Samsung announced the IZZI Webpad at CES 2001, then apparently transformed it
into a convertible CE Tablet called the IZZI-Pro Swivel.
Vertical markets for Webpads
According to a report published by Cahners In-Stat in May of 2001, hospitality
(automation of hotels, restaurants and casinos), healthcare, financial services
and education are expected to be the leading vertical markets for Internet
Appliances. (In-Stat's definition of the Internet Appliance category includes
Webpads, wired web terminals, web phones and set-top boxes.) Market growth rate
for sales into vertical applications between 2000 and 2005 is forecasted to be
81%. During that period, In-Stat forecasts that vertical market sales will
increase from 10% to 28% of total Internet Appliance sales.
As little faith as I have in Excel spreadsheet projections such as these, there's
no doubt in my mind that vertical markets are one of the two things that will
keep Webpads alive as a product category in the next couple of years. (The other
is the combination of broadband access and wireless home networking, as noted
above.) The key vertical markets for Webpads are those where access to data via
wireless LAN is important. Since generally available, high-speed, wide-area
wireless is still at least five years away (regardless of what all the hype about
3G says), Webpads are irrelevant in vertical markets that require wide-area
wireless such as field service. In addition to the four markets enumerated by
In-Stat above, the following six vertical markets are seen as good targets for
Webpads:
- Market Research -- Surveys can be tabulated in real time
- In-Store Retail Support -- Use by sales people to support the sales effort
with product information and videos; use by managers and staff to access
corporate systems wirelessly from the sales floor
- Manufacturing -- Production control, documentation access, training, inventory
management, quality surveys, etc.
- Service Businesses -- Auto dealers and repair shops; drive-in auto insurance
claims processing
- Air Transportation -- Servicing or inspecting airplanes on the ramp; use by
roving customer service agents in the terminal
- Home Automation -- Acting as the user interface on home control systems
Webpads and home automation
Earlier in this article, I suggested that "Consumers are only interested in a new
device if the value of the device exceeds its cost in time and money."
Honeywell's approach to selling a Webpad provides the highest value I've seen
from any Webpad vendor. Honeywell sells their Webpad (an OEM version of DT
Research's WebDT 325) as both the in-home user interface for Honeywell's home
control system, and as a general purpose in-home Internet access device.
Honeywell's "Home and Away" system allows the homeowner to control every aspect
of their home's lighting, security, and heating, ventilation and air conditioning
(HVAC) system from a browser. For example, if the doorbell rings while the family
is watching TV, they can use the Webpad to connect to a webcam covering the front
door without getting up from the couch.
The Home and Away system requires a broadband connection. Once the local cable
or DSL provider installs the broadband modem, Honeywell installs an Ethernet
802.11b router/firewall/access point, and wireless interface cards in every
existing PC in the house (Honeywell uses D-link networking hardware). Honeywell
sells, installs and supports the Home and Away product (including the Webpad)
through a network of home systems dealers throughout the US. By bundling the
Webpad as the user interface for the home control system, including wireless home
networking in the bundle, and supporting use of the Webpad at home for surfing
the web, doing email, listening to audio, doing word processing with Pocket Word,
etc., Honeywell is maximizing the value of the Webpad. This is a recipe for
serious success!
In addition to all of the above, Honeywell also markets their Webpad into the
manufacturing & process control markets as a portable user interface to software
that improves yields and throughput. Honeywell's PR office told me that they are
receiving a steady stream of inquiries about the applicability of their webpad in
most of the vertical markets listed above.
According to Tom Rosback, Vice President and General Manager of Honeywell Home
Systems, Honeywell's experience with their Webpad validates the basic concept of
an Internet Appliance, that of an easy-to-use Internet access device without the
complexity and instability of a PC. Some buyers of the Honeywell Home and Away
system don't have (and don't want) home PCs, but after using the Webpad for a
period of time, they find that they really like the ability to send email to
their children and grandchildren, access websites containing recipes, research
holiday gift ideas online, and do other similar activities without the hassle of
a PC.
Other companies to watch
I believe that the top four companies to watch in the Webpad space are Honeywell,
SONICblue, ViewSonic, and DT Research. Honeywell's direction has already been
described above; the other three are all heading towards various subsets of the
10 vertical markets listed above. As Fujitsu knows well, building a vertical pen
computer business isn't easy. It requires (a) developing a strong vertical sales
channel with access to lots of vertical application software, (b) a margin
structure sufficient to support the sales channel, (c) patience and deep enough
pockets to live through 6-18 month sales cycles, (d) enough flexibility in the
product to address multiple markets in order to avoid depending on total success
in a single market, and (e) application-specific peripherals that allow building
real "systems solutions".
- SONICblue is using the "hybrid" nature of their Webpad to move
up the tablet taxonomy and compete directly with Fujitsu in the Pen Tablet area
(Janet Leising, their VP of Marketing, told me that they expect 80% of their
future sales to be with Windows rather than Linux). They have a big job ahead of
them as they develop a vertical channel more or less from scratch.
- ViewSonic is positioning their product as a "Super PDA" in order to catch the
wave of enthusiasm for selling PDAs into enterprise vertical applications. Their
Webpad can then be seen as a PDA on steroids; a highly portable device with
enough screen real estate for serious applications. Tom Offutt, ViewSonic's
General Manager of Mobile and Wireless Products, told me that about 10% of their
6,000 monitor VARs also sell focused vertical solutions, so ViewSonic has a
serious headstart on developing a vertical channel.
- DT Research is different than the other four Webpad vendors in that their
core business is developing OEM/ODM Webpads and related products. DT Research's
effort in vertical markets (described as "low profile" by Dr. Soon Poh, executive
vice president at DT Research) represents an expansion of their business beyond
OEM/ODM.
Based in Silicon Valley, Geoff Walker is a consultant with Walker Mobile. Geoff
has worked on the engineering and marketing of pen computers since 1990 at GRiD
Systems, Fujitsu Personal Systems (now Fujitsu PC) and Handspring. He can be contacted at geoff.walker@att.net.
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