A sealed PC, to go on sale for less than $200 (£125) next year, could strike a major blow to the build-to-order market and the just-in-time supply chain.
Details of the bare-bones consumer PC, which features components all attached directly to the motherboard, were announced last week by Samsung.
Other OEMs have since confirmed that they are also developing stripped-down platforms.
If embraced by the market, the systems would enable OEMs to reach out to yet another sub-class of PC buyer. The systems, touted as the ultimate 'throw-away' consumer PC, are also likely to appeal to the technologically timid.
"At that price, the PC has no need to be upgraded. It will simply be replaced," said Bob Eminian, vice-president of marketing at Samsung.
Big changes for the supply chain
The emergence of a purely commodity platform could spell big changes for the supply chain, say industry observers. With fewer components making up each system, purchasers would have fewer parts from which to choose, leaving little room for customisation. That means OEMs selling into the segment could eliminate build-to-order models designed to accommodate last-minute requests.
Corey Billington, director of strategic planning at Hewlett Packard, confirmed that the industry is working to develop the sealed units, but said: "There won't be the risk of trying to juggle inventories for a broad range of parts to manufacture a diverse product line. Because OEMs will be buying limited quantities of a few devices, they can seek aggressive prices from multiple suppliers."
Billington said the likelihood that components for sealed PCs would be sourced from multiple suppliers could stop Intel from taking its dominance in the microprocessor segment to the computer arena's lowest market rung.
"I would like to see Intel-compatible processors from several sources that could be used interchangeably in sealed PCs. Since low price will be the driving force behind these PCs, the buyer will be less concerned with brand name," he explained.
Sizing up the market
The size of the market for a sealed PC is difficult to estimate. The idea owes much to the network computer (NC), introduced in 1995 by Oracle chief executive Larry Ellison as an attack on Microsoft's Windows operating system.
But Oracle's inability to ship NC software and consumer preference for Windows kept unit shipments at less than 500,000 in 1998, according to Zona Research.
Proponents of the NC have since switched to Windows Terminal Server, a Windows-based thin client.
Because of silicon costs at the time, the NC was light on features and lacked a hard drive. With memory and processor prices having dropped in the past three years, Samsung's system is comparatively luxurious. In December, Ellison pledged to resurrect the NC, adding a modem, CD-Rom and keyboard for $199.
The key to the PC's low price rests in part with Samsung's ability to attach the processor and memory to the motherboard, eliminating the need for CPU cartridges and DIMMs, Eminian said. In addition, only a few 128Mbit SDram chips and even fewer 256Mbit Direct Rambus Dram ICs could provide main memory.
Sealed PCs would eliminate a huge cost factor for OEMs: maintenance.
"Many service problems are caused by faulty repairs attempted by the owner, as well as contaminants getting into the PC," said Eminian. It would be easier to replace the unit than service it, he said. OEMs could salvage the processor and hard drive from returned PCs, but the rest of the board could be scrapped.
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