July 15, 1996
WebTV's integration of television and the Web is clever and priced right
Did you notice the announcement of WebTV last week? It's an important one.
WebTV, from WebTV Networks Inc., in Palo Alto, Calif., is one of many -- more
than a dozen that I've counted so far -- so-called network computers or
Internet terminals that have been or will be announced by the end of this
The $500 computer is a dumb concept, mainly because $500 is really, really
expensive in the consumer electronics category and because it's not possible
to build a functional, desirable computer for $500. (You can build a computer
for $500, but nobody wants to actually buy it.)
More important, it's stupid to think that people will give up watching
television -- a medium with high production values that offers a group
experience and requires almost no physical or psychic effort -- and replace it
with Web surfing, an individual experience that usually doesn't work too well
and requires you to be ready to interact and constantly choose new options.
Those things said, WebTV is going to be a killer product, meaning that it
will be purchased by lots of people to get the ability to view the World Wide
Web from their television sets. The reason that WebTV is different from all
the other products is that its designers (three guys who used to work at Apple
and other companies) started with a different objective. Instead of saying
that they would make a really cheap computer or that they would make a box to
run Java and make Bill Gates poor, they asked themselves what customers would
want to do with the Web on their televisions.
That led to the idea that the Web could complement the television experience
rather than compete with it. Instead of designing a product that lets people
pretend their television is a computer monitor, they designed a product that
lets people integrate Web surfing with watching television. While you're
watching the Chicago Bulls finally beat the tar out of the Seattle Sonics, you
can switch to the Web and find out from ESPNet Sportszone exactly what Dennis
Rodman's average baskets per game is and then switch back to watching.
As well, the WebTV people couldn't conceive of your average couch potato
struggling with your average Internet service provider and modem configuration
string. So the device comes with WebTV's own Internet service. All you need
to do to get started is attach it to your television, plug it in, and turn it
on to get to a screen that asks for your name and credit card number.
As part of that service, WebTV will offer you useful local information. I
hope the service will provide you with a television guide that you can use to
select channels and graze the television, but press materials didn't mention
The makers of WebTV have designed other cool features into the product, such
as making it resolve the image of a Web page so that it's readable on a
television. During a recent demo, I made them surf over to InfoWorld Electric,
which has lots and lots of text on it, and I found it perfectly readable.
And the product comes with a remote control that's simpler than any of the
remotes I currently have for my television, stereo, cable box, or VCR. The
device comes with a slot for smart cards, so you can use your card to pay for
things without having to worry about entering credit card numbers or other
passwords through a keyboard.
Indeed, the designers of WebTV clearly believe that people will continue to
use one or more personal computers in the same households where WebTVs have
been attached to one or more televisions. But -- and this is the most
important aspect of the product -- there is no way they could make a
successful business if the product cost $500.
Many people pay between $300 and $700 for their primary television. They
might pay $150 to $300 for their VCR. Maybe $200 to $400 for a stereo system.
Maybe $300 or so for a video camera. And they pay another $20 to $40 per month
for their cable service. They are not then going to go and pay $500 for a
device that competes with all that other stuff and doesn't integrate well.
So WebTV has designed a product that can sell for $200 at retail and can
eventually be integrated right into the television at a parts cost that will
add about $150 to the net cost of the television. That's with a 28.8Kbps
modem. It can also be designed with a cable modem or ADSL interface, although
both of those devices independently still cost more than $500 -- without the
And that's the business model the WebTV people have chosen: The product will
appear in retail stores this fall priced at around $200 and packaged in a way
that you can buy the product, take it home, plug it in, and start using it
In other words, the designers of WebTV took a systems approach to solving the
problem of using the Web as part of the television experience.
They designed a cheap terminal that still satisfies the user in performance
and ease of use while at the same time designing an information system that
would complement the device and integrate it with the Web. It almost sounds
like these guys want to be the IS department for the world!
Stewart Alsop is a Menlo Park, Calif., partner with New Enterprise
Associates. Write to him at email@example.com_
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Copyright ( 1996 by InfoWorld Publishing Company