IPhone, Palm VII Signal What’s Next for Post-PC Era

The personal computer revolution is poised to devour its young.

After almost two decades of getting faster, better and cheaper, PCs in 1999 had finally moved into more than half of U.S homes and become free, when packaged with Internet access.

Yet in 2000, the debate won’t be about how much further the desktop computer can extend its influence over our lives, it will be about how much of the importance it now commands that it can keep--if any.

IBM Chief Executive Lou Gerstner started calling it the “post-PC era” even before IBM stopped selling its money-losing machines through retail stores.

Average computer prices will continue to fall next year, wiping out much of the profit growth from what International Data Corp. expects to be an 18% increase in worldwide unit sales.

Most observers, such as Credit Suisse First Boston technology analyst Michael Kwatinetz, speak instead of an “extended PC” or “PC-plus” era.

Behind this transition is the shrinking of memory storage, which is now small enough that phones, personal digital assistants and other devices can do many more things than before.

But the deeper current is the exponential rise in importance of the Internet.

In the 1990s, the personal computer was designed to do many things adequately--a word processor for some, games or spreadsheets for others. But the Internet and e-mail increasingly have grown to be the functions that matter above all others.

As a result, small computer makers started putting together stripped-down, simpler machines designed for nothing but the Net--without the clunky, all-inclusive approach that slows down and crashes PCs.

One of the first is iPhone, which shipped 60,000 units in the four months after its July introduction. For about $400, users can surf the Web or send e-mail with the device’s customized keyboard while talking on its second phone line.

Coming from another direction, the Palm VII is the first digital organizer that allows some Web browsing, albeit in a limited way.

And Nokia and other mobile phone makers are adding Web and e-mail functionality at the high end, which will only get more affordable.

America Online, Microsoft and others are also exploring devices that work only with their Internet service.

And appliances such as Boundless Corp.’s iBrow can be modified by a corporate customer so that employees or clients can use only a few functions, including whatever the corporation does.

“We’re all selling easy access and no moving parts,” said Cal Kenney, director of business development at Acer America Corp., which sells something similar called an I-Station.

Even Microsoft’s Bill Gates, who stands to lose the most from the fall of the PC, has begun talking about a new multiplicity of platforms, including slim “Web companions.”

More important, the official monopoly of PC operating systems has allowed Compaq, Dell and the other computer makers to make machines that can’t run all the old programs, but perform new functions more reliably.

“They see the bullet coming and are stepping out of the way,” said Joe Colson, deputy director of the Odyssey Group, a technology investment firm in New York.

In the next year, the appliance market will shake out to the point that the average person will understand what to buy, he said.

“The best two or three ideas are out there, but we need a good fight,” Colson said. “Let the marketplace figure it out.”