Latest Net-Only PCs Debut at $350

In an attempt to test the waters before releasing his latest version of an Internet-only computer to the general public, Oracle Chairman Larry Ellison is making the first 10 units available through an online auction.

The units are being auctioned as individually numbered “limited editions” through Amazon.com, with certificates of authenticity signed by Ellison. As of early Friday morning, 91 bids had already been placed with the high bid reaching $350 (US$). The bids do not include the $59 shipping fee.

Manufactured by Oracle’s spin-off New Internet Computer Co., the units, nicknamed “NIC,” lack a hard drive and operate on a Linux operating system. The computer is made strictly for surfing the Net via a Netscape browser rather than a Microsoft Explorer browser.

Second Attempt

Although NIC has no hard drive, it still has a 266 MHz microprocessor and 64 megabytes of memory. Moreover, its operating system is stored on a CD-ROM, allowing each unit to work independent connected to the Internet via a modem or Ethernet network.

The Linux-based product is the second attempt by Ellison to replace a hard drive. He began pushing the idea in 1996, when he introduced what were then called “Network Computers” for about $500.

However, the prices of conventional PCs soon plummeted, making Ellison’s simpler systems unattractive. Additionally, at the time, few corporations were willing to give up their existing Microsoft applications for a product based on another operating system.

This time around, Ellison is betting that the growing popularity of Linux, coupled with a low price point, will be the spark that makes the new unit ignite the marketplace.

Education Market

The company will initially focus on the education market by selling units via its Web site to schools, according to reports, a consumer version of the NIC will be made available to the general public sometime next week.

Meanwhile, it is also being reported that Ellison’s black box will soon have plenty of competition, as America Online is working in tandem with Gateway, Inc. to bring a similar non-Windows system to market sometime in the near future.

Replaced by Wireless?

Many analysts have said that e-commerce will reach critical mass only when PCs become as inexpensive as portable TVs. However, some industry observers are now going so far as to say that PCs will become obsolete due to the proliferation of new handheld wireless devices.

Still, a recent report from research and consulting firm Ovum, titled “Mobile E-Commerce: Market Strategies,” says that consumers may not be willing to pay for services simply because they are wireless.

“It’s debatable whether ordinary consumers are actually demanding mobile e-commerce services right now,” said Jeremy Matthews, Ovum analyst and Asia Pacific mobile specialist. “It’s more a case of suppliers sensing an opportunity to make money, and pushing the idea at them.”

Further, Matthews said that wireless e-commerce is not likely to be a moneymaker in the short term. Consumers will probably lag far behind business users, and even businesses will likely not pay a premium for services that are already available using a telephone or PC.