The $500 Internet cruiser is coming, and Oracle CEO Lawrence J. Ellison was the June 23 guest to discuss Oracle's Network Computer. He was onstage with Robert D. Hof of Business Week's San Francisco bureau, who contributed to the June 24 BW Special Report on the information appliance.
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OnlineHost: Welcome to Business Week Online! Tonight we have a very special guest: Lawrence J. Ellison, chairman and CEO of Oracle Corp., to talk about Oracle's $500 Network Computer (NC) and the concept of the information appliance, as easy to use as your TV. Larry Ellison is here with Robert D. Hof (RobHof) of BW's San Francisco bureau and Jack Dierdorff (JackBW) of BW Online, tonight's moderator.
JackBW: Good evening to all of you on AOL. Welcome, Larry Ellison (LELLISON1), CEO of Oracle. Hi, Rob Hof of BW in San Francisco.
RobHof: Hi, glad to be here.
JackBW: Rob, you played a major role in BW's June 24 Special Report on the information appliance. Why don't you ask Larry Ellison the first question? Then we'll turn to the audience.
RobHof: Some readers have said they think you just want to take their PCs away. True?
LELLISON1: No, we see a world in which the PC and NC will coexist. Personal computers are too complex and too expensive for a large segment of the marketplace. We think that the simplicity, ease of use, and low cost of NCs will be extremely attractive in the home, educational, and even corporate marketplace.
JackBW: Proceres in Tacoma, Wash., has the first question from AOL land -- which you've already answered in part at least.
Question: Is the market for the "Net-cruising info appliance" directed toward the business or home user?
LELLISON1: We think it will be applicable to both marketplaces. A great majority of the PCs in the corporation use only a small number of applications: E-mail, Web browsing, word processing, and spreadsheets. You don't need a machine as complex and expensive as a PC to do those simple applications. The same is true for the home marketplace.
JackBW: StevenChad in Philadelphia also has a market question.
Question: Is the $500 appliance's best potential from the demand in the current television-purchasing market or with the current PC buyers?
LELLISON1: Again, I would say both. Many current users of PCs would be greatly satisfied with the features and functions of the NC, and buyers of home appliances like TVs will be very happy with the increased functionality that the NCs provide.
JackBW: GeeLadee in the audience may be a bit premature. Larry Ellison of Oracle? How soon?
Question: Where can I buy one of these computers?
LELLISON1: You will see the first NCs hit the marketplace around the end of September or beginning of October.
RobHof: Since the Network Computer depends on much faster networks, how soon will we see these in big numbers?
LELLISON1: We have some great technology that will allow us to transmit multimedia not only within corporate networks but across ISDN and 28.8 modems as well. We also believe that the increasing demand for Internet usage will drive the implementation of faster networking technology to the home: ADSL, cable modems, and so on.
JackBW: Here's a followup for Oracle's Larry Ellison.
Question: As greater bandwidth becomes available for computer communications, will it be at an affordable price for the mass market?
LELLISON1: Absolutely. ISDN is relatively cheap today, and ADSL -- which will promise bandwidth of 1 to 3 mgps -- will be even cheaper.
JackBW: Blevins in Miami sends us a sort of corporate-strategy question for Oracle.
Question: What benefits will Oracle receive from its sponsorship of this new hardware, when Oracle is a software company?
LELLISON1: Our expertise in server software and providing storage for large amounts of multimedia information (such as video streams) will be crucial to the success of the NC. So we see Oracle Corp. playing a crucial role in the evolution of this industry.
JackBW: We can't talk about a leading-edge high-tech company without a stock question! Here's one from InvestRght.
Question: Good evening, sir. I have recently purchased Oracle stock. To what do you attribute your gain last week in a terrible market?
LELLISON1: We had an outstanding fourth quarter and a great fiscal year. Our revenues increased over 44%, and we picked up significant market share from our competitors. Most large corporations recognize us as a strategic supplier of information technology. I think the stock market is basically reflecting this in our stock price now.
JackBW: DerbyTims in Derby, Kan., brings up Java.
Question: Will the Oracle database ever be reduced to a Java Applet that could run on the information appliance?
LELLISON1: Not the Oracle Universal server, but we have a product called Personal Oracle Light. This product provides all the functionality necessary for a single-user environment. It is small enough to be downloaded across the network.
JackBW: Here's a provocative thought from AfricanGod, relevant to all emerging nations.
Question: How can your cheaper PCs help in the development of African countries?
LELLISON1: We see developing countries such as those in Africa and in the Asia/Pacific region being great beneficiaries of the NC technology. Such countries typically do not have the capital resources or educational tools required for large-scale deployment of PCs. We have already had many inquiries from major governments interested in the potential of the NC for their educational systems.
JackBW: D Orlando sounds a tad skeptical about the NC.
Question: But do people really want to store their files on some distant mainframe?
LELLISON1: We think there will be a couple of options that people can use to store personal information. Some NC models will come equipped with flash-card slots. Others will provide Zip file capabilities. So basically, the user can insert a small card in the NC to store personal data and carry that card around with them anywhere in the world. We do also expect, however, large ISPs [Internet service providers] to provide centralized data storage capability. A number of companies such as MCI have already announced this kind of service.
JackBW: RobHof of BW has a question next.
RobHof: Larry, my Internet connection often doesn't work. Isn't network unreliability a major hindrance to NCs, especially for consumers?
LELLISON1: I think that you will eventually see Internet connection reliability equal to that of the telephone. Consumers will demand it, and they have a lot of options. If they cannot get it from one supplier, they will go to another.
JackBW: Next, from RAMJET57.
Question: Larry, can you discuss NCs vs. PCs and also comment on the Java language and your vision on how the three entities will play their roles in the ever-changing Net-scape?
LELLISON1: First of all, Java is central to the whole model of the NC. The NC was designed to enable downloading of all information programs and data from the network. Java is the language we will use to support that in the NC.
JackBW: Wheeler1 in Miami Beach is up now.
Question: With the decrease in PC prices, I don't understand "expensive." Similarly, those that are hesitant to sit at a keyboard may also avoid NC (simplicity?).
LELLISON1: As I said earlier, I believe that the NC and PC will coexist in the marketplace. It is certainly true that PCs are becoming cheaper. A great deal of that, however, is a direct response to the competitive threat of the NC. But even at $900, the PC is still too expensive to achieve mass penetration of the home marketplace.
JackBW: Buyerclub2 has this one.
Question: Do you have any response to Grove's and Gates's comments [Andy Grove of Intel and Bill Gates of Microsoft] in Fortune, where they state that connection bandwidth and access time costs will prevent the NC from being a practical device in the near future?
LELLISON1: In response to Grove's and Gates's comment; I would certainly disagree. As I mentioned previously, technology is available today that can deliver very high-quality multimedia over relatively slow networks. We see that technology improving very rapidly. Access cost will come down dramatically, as the number of suppliers increases.
JackBW: Here's one from Peoria, from JJohn14103.
Question: What about such software applications as games? It seems we're light years from the kind of Internet connections that would allow real-time game-playing. Wouldn't that be a good reason to buy a PC instead of your appliance?
LELLISON1: The NC has no advantage over the PC when it comes to real-time game-playing across the Internet. I think eventually you will see a wide variety of games for the NC, but this is certainly not the initial target marketplace. For people who already have PCs in their home, NCs will be cheap enough that they can use that device for Web browsing and E-mail.
JackBW: Another competitive angle, from MikeMerc in South Plainfield, N.J.
Question: Larry, can you tell what you think, really, about Gateway's Destination 2000, which seems to be taking the exact opposite approach of the Network Computer?
LELLISON1: I think you will see many different varieties of network computers in the marketplace. The Gateway Destination I would consider to be one example, albeit an expensive one. At the low end, you will see screen phones costing $200. But I would expect to see more expensive models that would combine the paradigm of the NC with the television.
JackBW: And now an education angle, from BKESM.
Question: When will the NC deliver flat-monitor technology for use on every school desk in America?
LELLISON1: A 4x5-inch flat panel TFT (thin-film transistor) display costs between $100 and $150 from Samsung of Korea or Sharp of Japan.
JackBW: A question from Joe5840175.
Question: How does the NC fit in with the database or applications strategy of Oracle? Also, do you foresee your typical competetitors (i.e., Informix and Sybase) suffering because of the NC? Or do you foresee other competition for the NC?
LELLISON1: The complexity of the new-generation computer architecture is in the server. This allows us to deliver low-cost appliances as client devices. In other words, our advance server technology has allowed us to develop easy-to-use, low-cost clients.
JackBW: QA Surfer asks a basic question. Naturally, Surfer is in California.
Question: How fast will these machines be able to download information?
LELLISON1: The only information that will have to be downloaded is Java Applets and small files. Large files, such as video, will be played -- streamed -- directly from the server. The slowest modem that will support streamed video on demand will be a 28.8.
JackBW: VFR Guy is next. He's in Center Valley, Pa.
Question: No matter how fast your modem is, won't there still be the occasional problem with network traffic?
LELLISON1: The network traffic for the NC will be no worse than for the PC or on an AOL conference. Network speed and traffic will be a factor.
JackBW: Ds7967 asks this one.
Question: Isn't there already a $500 computer -- a 486dx4?
LELLISON1: The issue is not simply the purchase price of the hardware. The real issue is in the complexity of learning to use the NC vs. the PC. The software on the 486 has to be managed, checked for viruses. The files on the PC have to be backed up and recovered. My mom simply does not know how to do this stuff. And I want to stop doing it myself.
JackBW: JunkBond22 is thinking wireless.
Question: What are your thoughts on wireless technology for Internet access?
LELLISON1: There will be wireless ISDN technology to the home in the next few years. I believe that in a few years wireless will be a huge competitor in the local loop.
JackBW: This one is from CoreyJon.
Question: NCs seem to make a lot of sense for businesses, but how will they make inroads into the home market?
LELLISON1: E-mail. Everyone should have E-mail -- especially high-fidelity multimedia E-mail, like Oracle's new interoffice product offers. Buy Oracle Interoffice, call 1-800....
JackBW: A business angle, from Art7777777.
Question: As an early-stage technology innovator, aren't you more likely to get kudos than profits?
LELLISON1: I am not as young as I look.
JackBW: Now, from JDiam5045 in Santee, Calif.
Question: Has Oracle (or others) discussed with telcoms like AT&T, MCI, Sprint, etc., the possibility of providing your NCs to their customers on a monthly lease basis? Like the old $4.95 per month for a rotary phone?
LELLISON1: Yes.
JackBW: A consumer question from WarCrftwom.
Question: With this new $500 computer, will we be able to do anything besides surf the Net easier?
LELLISON1: Electronic mail, spreadsheets, word processing, games, presentation graphics...
JackBW: Marweni takes us to the next stage for the NC.
Question: What kind of a marketing campaign do you intend to use to spread the word about these new NC devices?
LELLISON1: We plan on sponsoring a shuttle launch. I also plan to buy a MiG 29, NATO designation FULCRUM, and have the last two letters of the tail be NC.
JackBW: Wow! Ted Rueter asks the next one.
Question: Just wondering what Mr. Ellison expects the demand for NCs to be following introduction, and how he expects Oracle to participate in this demand?
LELLISON1: The marketing campaign is working already! The demand will outstrip supply for the first six months. We are going to do everything we can to make sure that our software works -- there are bound to be lots of rough edges during the first few months.
RobHof: Larry, are the NC standards specific enough to be really useful in defining a device?
LELLISON1: We think so, though in the end, there probably will be a single software implementation of the NC that dominates, just as the single software implementation of the PC dominates.
JackBW: That's it for tonight. Thanks so much, Larry Ellison, for joining us to talk about the home and office computer of the future. Thanks for your help, Rob Hof. And special thanks to the audience for attending and asking so many questions -- sorry we couldn't answer more of them in the hour.
LELLISON1: Thank you, Jack, Rob, and everyone else online tonight.
JackBW: Transcripts of this and all BW Online conferences are available soon after the event. Look under Talk & Conferences on the BW Online opening screen. Thanks again and goodnight, all!
Copyright 1996 by The McGraw-Hill Companies, Inc. All rights reserved.
