Intel to Offer 'Net Appliances by Mid-Year

Intel Corp. will enter the home-appliance market later this year when it plans to release a simplified computer that allows consumers to make telephone calls over the Internet, the company announced today.

The device will be the first in a family of so-called Internet appliances that Intel plans to offer this year. The Intel-branded products, which will also include a device for online shopping, will be sold through telecommunications companies and other types of service providers, Intel officials said in a statement.

The announcement coincides with the start of the giant Consumer Electronics Show here in Las Vegas, which is expected to feature an array of Internet appliances, as well as digital televisions, handheld computers and just about every other digital consumer gadget imaginable.

Intel's foray into the 'Net appliance market is only the latest step in a strategy to diversify its revenue base. The company, which is far better known for its PC microprocessors, already offers a videoconferencing system, a slew of networking products and other communications devices.

"We see a significant business opportunity to bring the Internet to new devices in the home," Claude Leglise, an Intel vice president and general manager, said in a statement. Besides the appliances, Intel will offer management technologies and service-package building blocks that carriers and service providers will be able to use to offer services that build on Intel's devices.

The telephony appliance will be available in mid-2000 and will be based on the Linux operating system and use Celeron processors, said Bill Calder, a spokesman for Intel. A prototype of the device, expected to be on show at CES here this week, looks like a minature television set with a built-in telephone handset and a keyboard.

The appliance will integrate Internet access with telephony features such as call management and unified messaging, Intel said in the statement. The company is working with Telcordia Technologies Inc. (formerly Bellcore) and Lucent Technologies Inc. to develop the sophisticated telephony features.

Intel has also teamed with telecom operators, Internet service providers (ISPs) and e-commerce retailers around the world to help them deploy new services later this year that will be based on its Internet appliance platform. In Japan, NEC Corp., which operates the Biglobe ISP, plans to sell the appliances to banks and home users for online trading and banking. In France, Laser-Galeries Lafayette Group will provide consumers across Europe with personalized e-commerce services by working with several retail and services companies, Intel officials said.

Internet appliances are viewed by many analysts as one of the next logical steps in the Internet's evolution, and are expected to be popular among the mass of people who either can't afford a PC or are daunted by the technology.

The devices typically perform a limited range of functions, like checking e-mail, surfing the World Wide Web or shopping online, and are often less expensive and easier to use than PCs.

The giant chip maker will face plenty of competition when it rolls out its first appliances mid-year. A horde of companies both large and small have announced plans to ship Internet appliances in the coming months, most notably Microsoft Corp. and Acer Corp.

Intel, in Santa Clara, California, can be reached at +1-408-987-8080, or at http://www.intel.com.

(IDG News Service Washington correspondent Margret Johnston contributed to this report)