THE CUTTING EDGE : THE PC IS FRACTURING

TIMES STAFF WRITER

So you've finally gotten used to this whole personal computer thing. You know your way around DRAMs and disk drives and Windows 95. You're no longer puzzled by that odd slogan "Intel Inside."

Now that it's all clear in your mind--what PCs do, how they do it and more or less how much you'll have to pay for it--it's time to . . . forget everything you've learned. Or it may be soon.

For the PC as we know it today is starting to spin off all kinds of very dissimilar progeny. The incredible pace of technological progress, and especially the rise of the Internet computer network, is rewriting the rules of this barely completed book.

For the last decade, even as the power of the PC has grown exponentially, there has, in crucial respects, been remarkable continuity: Unless you've bought into the idiosyncratic world of Apple Computer Inc., then your PC almost certainly is powered by an Intel Corp. microprocessor and software created by Microsoft Corp.--with a price tag of around $2,000.

But beginning this fall, a whole new genre of machines--known variously as the network PC, the Internet terminal, the netbox, or the netsurfer--will begin hitting the market. They will be cheap, around $500; they won't have hard disk drives; and in many cases they won't have Intel chips or Microsoft software. What they will have, though, is the ability to exploit the power of the Internet in such a way that all the missing gear will hardly be noticed.

At the same time, the high end of the PC market is beginning to move off in its own direction. Intel's newest chip, the P6, turns out to be suitable mainly for certain kinds of power-hungry business applications. And when the P7, now code-named Merced, comes out in 1998, it will face a tough fight in achieving the dominance enjoyed by the Intel Pentium today.

The computer industry is bitterly, if predictably, divided about the significance of some of these new directions, especially about the potential of the network PC. Some people--most of whom happen to have an interest in undermining the Intel-Microsoft juggernaut--say the new machines will change everything. Others insist they will hardly make a dent in the PC monolith. But even if the first generation of network PC products fails, it seems certain that the PC as we know it today will soon spawn successful new mutations.

"I compare what's going on now to what happened during the Industrial Revolution," says Oracle Systems Corp. Chairman Lawrence Ellison, the leading booster of the network PC. "For a while, steam power was it until we found better methods of generating energy. And although the personal computer gave rise to the Information Age, the machine that sits on the desk today needs to become a lot easier to use, and it should be cheap."

Whether or not he has found the right solution, Ellison has clearly identified an important industry problem. Only a third of American households own a PC, and it looks as though it will be difficult to convert the rest. Price is part of the problem: Many people just don't have $2,000 for a discretionary purchase. And PCs are still far more difficult to use than almost any other consumer product.

The result is that after growing at a torrid 40% pace in 1994--mainly on the strength of consumer, rather than business, purchases--PC sales growth has slowed to less than half that rate. That's a sign that this still young industry will have to do some things differently if it is to reach "the rest of us," to quote an old Apple TV commercial.

That's much easier said than done. Previous efforts to address the consumer market with novel variations on PC technology--pen computers that substituted handwriting for typing; stripped-down multimedia players such as Philips' CD-I and 3DO's Multiplayer; and even software programs such as Microsoft's Bob, which sought to humanize the computer with quirky characters--have all failed.

But they didn't have the Internet to propel them along. The network PC is based on the idea that the global computer network can essentially become everyone's central computer and data storage system, with the PC as a sleek, stripped-down peripheral.

With a high-speed modem as a crucial component, these machines would be able to access the rich multimedia content of the Internet's World Wide Web. Software for other functions, such as spreadsheets or word processors, would reside on the network to be accessed as needed, rather than taking storage space on the PC. Expensive computer monitors would be replaced by a TV set. Such machines will be cheap and simple, and proponents say they'll do most of what people want PCs to do.

Led by Oracle, which envisions network PCs attached to Internet "hosts" equipped with Oracle's database software, and Sun Microsystems Inc., which aims to make its big Internet computers and Java software the standard building blocks for the global network, a slew of companies are now jumping on the network PC bandwagon.

Oracle is working with the British firm Acorn Computer Group on a $500 machine that it expects to ship in the fall, and Sun is developing a version of its Sparc processor to power a network PC.

Apple Computer, meanwhile, is repositioning its Pippin, originally designed as a home CD-ROM machine, as a network PC: Japanese toy maker Bandai, which is building the Pippin under license, has launched the machines in Japan for about $650; a U.S. debut is scheduled for later in the year.

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Video game maker Sega is adding Internet capabilities to its Saturn game machine. And ViewCall America, a Norcross, Ga., start-up, will be among the first test them when it ships its $350 Webster terminal to 1,000 homes this summer.

Other companies, notably IBM Corp., see the network PCs as replacements for the "dumb terminals" of yore, which connected people to mainframe computers. As corporations race to build "intranets," private company networks that use the elegantly simple Internet technologies, they'll be looking for cheaper ways to get everyone hooked up.

Even the critics are hedging their bets. Traditional PC companies such as Compaq Computer Corp. are designing their own network PCs. Intel and Microsoft, which would have the most to lose if the network PC took off, are also toying with various new devices and the software that would go with them.

"I'm not excited about them," says Avram Miller, vice president of business development for the chip giant. "But just because I said that doesn't mean we aren't experimenting. After all, we can afford to."

Of course, all this activity is hardly a guarantee of success. And skeptics advance a bevy of arguments as to why network PCs will flop: They won't be able to run any of today's popular software; the TV set is a low-resolution display device that doesn't handle text-heavy electronic documents, including Web pages, very effectively; people won't like storing their personal software and information on the Internet any more than people used to like relying on centralized mainframes.

"I've tried to go beyond the 'We hate Microsoft' reasons for these machines and tried to understand how they will be successful," says Josh Bernoff, an analyst with Forrester Research who recently wrote a report on Internet terminals. "But they really haven't assembled a proposition that makes me think it's going to work."

Adds Stewart Alsop, a respected industry pundit and editorial director of the trade publisher InfoWorld: "You're going to have to compromise these things so far that no one's going to want them."

On top of all that, the current Internet euphoria seems likely to fade, at least somewhat, as consumers discover just how frustratingly slow and chaotic it can be. "It's much more entertaining to watch [presidential campaigner] Pat Buchanan on my TV set than to wait for a graphic that will take four minutes to download to my computer from the Web," Bernoff maintains. It will be some time before telephone and cable companies build the communications infrastructure needed to overcome these limitations.

Some of the leading thinkers in the computer industry, moreover, say it will take more--not less--technology to woo new users, and that if the network PC finds a market, it will not be among those who have been resistant to the PC thus far. Technologies like speech recognition that can make computers friendlier require a lot of horsepower, and it has been consumers' desire for more sound and graphics capabilities that has driven the success of PCs based on Intel's powerful Pentium processor.

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Still, it seems clear that in the not-too-distant future, there will be a number of new variations, for both home and office, on the PC technology that we know today. Carl Yankowski, senior vice president of Sony Electronics, which plans to jump into the PC business later this year, sees a rich landscape of interrelated devices.

"The thing that people are calling a $500 computer I call a smart TV," Yankowski says. "And that will be one of the devices in the home, and they'll be tied together with a digital backbone so they can all talk to each other.

"Do you want to do your banking on a 6-foot screen hanging on your living room wall? No, you want something more private and intimate. But do you want to play a game over the Internet on a small screen? No. Sure, this thing is going to be there, but to think it's the only thing is a myopic view."

For those who want power, there will be lots of possibilities. Although Intel's Pentium still has plenty of life left, there may well be a dogfight for dominance of the next generation as raw processing power--and the shifting requirements brought about by the rise of the Internet--erode the advantages of sticking to the Intel standard. Similarly, in software, Microsoft will face a complicated, multifront battle in maintaining its operating system software as the dominant standard.

All of this will mean more choices, but also more confusion. In technology, that always seems to be the trade-off.

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Julie Pitta, who covers Silicon Valley from The Times' San Francisco bureau, can be reached via e-mail at Pittaj@aol.com

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Expanding PC Universe

A number of major companies have plans in the works for low-cost computers--most of them using a TV set as a monitor--that are designed for surfing the Internet. Here's a brief rundown:

* Acorn Computer Group: Acorn's Internet computer, dubbed the NetSurfer, will be among the first on the market. It ships later this month in Britain, priced at just under $500. No U.S. version is planned.

* Apple Computer: The Pippin, originally developed as a low-cost CD-ROM player, will first be produced under license by Japanese toy maker Bandai. The machines, with Internet connections and a CD-ROM drive, will begin selling later this month in Japan, with a U.S. version by year-end. Price: $648.

* IBM: Big Blue's InterPersonal Computer will be aimed at businesses as a replacement for the old "dumb terminals" that connected to mainframes. It will have its own monitor and will be the first of a broad new family. Delivery is scheduled for the first half of this year. Price: about $1,000.

* Philips: The Dutch consumer electronics giant has equipped its CD-I multimedia player with a modem and has begun selling it as an Internet machine in Europe for just less than $500. No U.S. launch is yet planned.

* Oracle: The Silicon Valley database software company, a leading cheerleader for the new concept, is working with Acorn to build its $500 Network Computer. It plans a new company, Network Computer Inc., and hopes to ship by September.

* Sega: The Japanese video game firm has added modem, cabling and a keyboard to its Saturn video game machine and will introduce the Internet-equipped device in Japan in April, with a U.S. version to follow later in the year. Price: $400 to $450.

* Sun Microsystems: The workstation maker has built 300 prototypes of its NP Zero, which is powered by a Sun Sparc chip and runs Sun's Java, the hot new programming language for the World Wide Web. Sun hopes to deliver the machine sometime in the third quarter. Price: $500.

* ViewCall America: Not only does the Norcross, Ga.-based start-up's Webster use a computer screen as its display, it will also use a remote control rather than a keyboard. A simple menu will guide novice users to select Internet sites. Delivery is scheduled for June. Price: $249.

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