Sonys Un-PC

Will eVilla validate the Net appliance?

Like so many miniature Frankenstein monsters, Internet appliances in various permutations have swarmed into the market with promises of quick and simple access. But they have been feeble creatures, spurned by consumers content to stick with their PCs.

Now, Internet appliances have found their biggest advocate to date: Sony has joined the fandango with the debut last week of eVilla, which the company describes as a "network entertainment center." The success or failure of eVilla will be a critical test of whether such Internet devices have much of a future. If the worlds most powerful consumer electronics marketer cant levitate the Internet appliance concept, many in the industry believe, then no one can.

On the surface, Sonys eVilla looks like most other Net appliances. Designed to boot up instantly, it includes a Web browser, an "e-mail waiting" alert light and information channels that update automatically overnight. The eVilla is based on PC hardware, but it uses Bes operating system — which fits in less than 8 megabytes of memory — instead of Microsofts Windows. The device, slated to ship in April, will cost about $500; Internet access must be purchased through Sony for $21.95 per month.

But the eVilla is intended to be more than an Internet-only alternative to the PC, as are 3Coms Audrey and devices based on Microsofts MSN Companion. Rather, Sony is fashioning the eVilla not only to display content, but to act as a hub for distributing digital entertainment content to other devices. Sonys long-term strategy is to use eVilla as a springboard to sell other Sony products and content, said Richard Doherty, director of research at consulting firm Envisioneering Group.

"Sony is thinking this will become the switchboard for many different entertainment technologies in the home," Doherty said. "Theyre thinking in a five- and 10-year direction."

Of course, the eVilla is just one byway on Sonys overall Internet road map. Last week the company demonstrated a wireless display tablet that will let home users access the Net and watch television.

Sony has also said it plans to incorporate Internet access features this year into its staggeringly popular PlayStation2 game system. Industry analysts believe the most promising "Internet appliance" category will be Net-connected video game consoles, a market in which Sony enjoys a strong first-place position.

For Sony, the eVilla may be simply a trial balloon it can afford to see fail. But the eVilla is extremely important for Be, Sonys small software partner, whose business model gives the consumer electronics giant complete control over the product.

Be, which reported $464,000 in revenue and a $15.9 million net loss for the first nine months of 2000, has bet all of its chips on Internet appliance software. Bes deal with Sony may represent its largest licensing deal since the company repositioned itself early last year; Be will earn an undisclosed licensing fee for each eVilla sold.

"The market will tell us what the [Sony] deal is worth," said Lamar Potts, Bes vice president of sales and marketing. "It definitely looks like theres a lot of energy and excitement behind whats been labeled post-PC products."

Right now, though, its not certain whether Sonys fabled magic touch will be enough.