Server-based computing is undergoing a quiet revolution, according to thin client vendor Neoware Systems. While desktop PC sales have stagnated, Neoware said its shipments grew by 157 percent in 2002, making the company the second largest supplier of thin clients after Wyse Technology. Thin clients will not totally replace desktops, but their lower management costs are leading many organisations to introduce them for certain specific tasks, according to the firm.

"Given the current economic climate, companies are finding that they need to do more with fewer resources," said Neoware chief executive Michael Kantrowitz. Thin client terminals, which essentially function as the user interface for applications running centrally on a server, help by being simpler to manage, he added. Compared with desktop PCs, thin clients require fewer IT support staff.

Thin clients were promoted heavily by Sun Microsystems and Oracle with the Network Computer (NC) concept in the mid-1990s, in an attempt to lure corporate customers away from Windows desktops.

"There was a great deal of hype around the Network Computer, but then it all seemed to blow over. Now, we're seeing a lot more interest in thin clients again," commented Kantrowitz.

Neoware has grown dramatically since it acquired the thin client business of rival Boundless. It now builds terminals for Network Computing Devices (NCD), as well as former IBM NetVista customers. Neoware ships three lines of thin clients: the Capio range of basic appliance-like terminals; the Eon range offering embedded Windows or Linux as the operating system; and Voyager tablet-style mobile terminals. The company argues that its success is due to its products offering greater long-term stability than those of rivals.

"Our hardware is good for seven to 10 years, with software upgrades. If you want to add [client-side] features, you just send an update out across the LAN. Other vendors force you to upgrade all your terminals for new ones," said Kantrowitz.

However, Clive Longbottom of analyst company Quocirca said that Neoware's changing fortune did not indicate a boom in thin clients generally. "Neoware's growth looks impressive, but it started from virtually nowhere," he said. Because Neoware effectively took over IBM's terminal business, it is also well positioned to capitalise on firms that are now replacing green-screen terminals, he added.

Even Kantrowitz admits that thin clients are unlikely to ever kill off the desktop PC, but he said the argument for using them for certain applications is compelling. "We are seeing lots of interest in specific industries, such as retail, medical applications, the transport industry, and particularly call centres," Kantrowitz said.

Longbottom agreed: "If you've got a guy in a warehouse keying in transactions, you can give him a box that doesn't have as many parts to go wrong as there are in a PC, but you still need desktops for more heavy-duty applications."

Kantrowitz predicted that there would be continued growth in thin client deployments over the next few years. "A lot of companies renewed their desktops in the run up to the millennium. Those systems will soon be nearing the end of their life, and we expect many firms will want to move to thin clients then," he said.

But some industry observers said that there were reasons why this was unlikely to happen. "Some workers might be doing jobs for which a PC is overkill, but if you then take that PC away and give them a terminal instead, it would be viewed as a demotion," said Longbottom.

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