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November 24, 2002 Provided by System Dynamics Inc.

The "Evolution of the Monitor" -- Microsoft's Smart Displays

At the Consumer Electronics Show (CES) in January 2002, Bill Gates talked about two concepts that caught our attention - one code-named Freestyle and the other dubbed Mira. Microsoft rolled out version one of Freestyle last month, in the form of H-P's Media Center PC (see ). At Comdex this month, Gates announced that the first "Windows Powered Smart Displays" (aka Mira) will be available to U.S. consumers beginning Jan. 8, 2003, and ViewSonic announced the features and pricing of the first products.

The rollout of Smart Displays proved sensitive from a PR perspective, since it presented great opportunity for confusion between two similar-looking devices: the Tablet PC (introduced November 8th) and Smart Displays. Both have a touch-sensitive LCD screen, allow input without a keyboard, are Wi-Fi connected for mobility, and are based (although in different ways) on Windows XP Pro.

In a telephone interview with Aubrey Edwards, Microsoft's Director of Marketing, Embedded Appliance & Platforms Group (EAPG), we discussed the differentiation, Smart Displays product positioning, and their future potential. Aubrey was ready with lots of helpful analogies, since this has clearly been the subject of many questions over the past months.

Tablet PCs are the evolution of the laptop computer. Based on an advanced version of Windows XP Pro, they are self contained and provide local execution of applications anywhere they are taken. Their initial target is the knowledge worker, not the user at home. Some Microsoft executives believe that tablet PCs will replace conventional laptops.

On the other hand, Smart Displays are "the evolution of the monitor when you cut the cord". They are targeted for the home, and enable a user to pick up the screen and have the same PC experience in any room. The target user wants access to her PC applications and data in more relaxed locations than at the PC. Sample applications include Web surfing from the couch, downloading recipes in the kitchen, checking email from the deck or showing digital pictures to a visiting neighbor over a cup of coffee in the kitchen.

A Smart Display system has three essential elements: a host PC running XP Pro, a Wi-Fi network, and a Smart Display. Since the preponderance of intelligence is in the host PC, users should be able to buy a more powerful PC later and benefit from its increased intelligence delivered through the Smart Display bought earlier. Since its intelligence is external, a Smart Display would be less susceptible to obsolesence than a Tablet PC.

Smart Displays are limited by wireless coverage distance and are tethered to the home environment. So the Smart Display is like a cordless phone--you can take it around the house and into the nearby yard as long as it still communicates with its base station. The Tablet PC is more like the mobile/cell phone which you can use wherever you take it; the analogy isn't perfect since the cell phone is limited by coverage of a compatible carrier--but you get the idea.

Although the Smart Display is conceptually the monitor with the cord cut, Microsoft found that to meet users expectations the display did, in fact, have to be fairly "smart". It contains a wireless network card and a fast processor running Win CE acting as the client connecting back to the host PC.

The first versions of Smart Displays (the airpanel(TM) from ViewSonic) are priced at $1099 (10") and $1499 (15") and include integrated wireless support and a USB wireless adapter for the PC to simplify setup. Since early adopters who seem most likely to buy these will probably already have a Wi-Fi network, we expect to see products packaged without the wireless adapter, although setup with an existing network will likely be more complex.

While Smart Displays can handle most PC applications, they can't handle wireless video. Video is not currently supported by the remote desktop protocol (RDP) which provides the link from the PC to the remote display.

Microsoft seems to be grappling with the question of what, if anything, Smart Displays can do when not connected to their host. Current Pocket PC applications won't run locally on a Smart Display. OEM partners can add local applications, such as cycling thru local storage to act as an electronic picture frame or possibly be used as a universal remote control.

Because Smart Displays have touch screens and must be sturdy enough to be mobile, they use LCDs that are expensive compared to those used for fixed flat-panel displays. The initial price points may make users question why they would spend that much for a portable screen when they could buy a another whole PC at the same price. The basic concept of Smart Displays is appealing, but will need to reach a significantly lower price point if it is to become widely adopted.

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