A Taxonomy of Internet Appliances Paper 112

The world is evolving from one in which almost all access to the Internet comes from personal computers (PCs) to one in which so-called Internet appliances (IAs) will make up a greater share of end-user equipment. Today's PC is a general-purpose, highly configurable and extensible device – an "intelligent end-node" of the sort the Internet's designers had in mind. As such, it allows users much freedom of choice (such as which service provider to use, which Web sites to visit, and which new software to download) in exchange for dealing with associated complexity. An IA is a device connected to the Internet, but beyond that there is little consensus on functionality and target markets. There is, however, general agreement that it reduces the level of complexity seen by the user. A variety of approaches to reducing complexity are being pursued. These fall on a spectrum from totally fixing the function of devices, to automating the configuration of more general purpose systems. In the middle are devices whose functions appear more or less fixed to the user, but which retain some limited capability for upgrade through their Internet connection. We argue that truly fixed-function Internet-connected appliances make no sense unless they are extremely cheap, throwaway devices. We speculate that general-purpose end-user equipment will endure but evolve into a more modular form, driven by user frustration with a proliferation of devices with overlapping functionality and the desire for consistency across multiple environments (such as home, car and office). Finally, we observe that most appliances being developed today fall into the middle category. These vary in the degree to which they bind users to particular service providers, both technically and through their business model. Our analysis suggests that appliances in and of themselves do not introduce new opportunities for walling the Internet garden, but that industry players seeking to consolidate control over potential Internet choke points, such as broadband access networks or WAP gateways, may attempt to leverage appliances toward this goal. To the extent that appliances provide services already available over the PC-based Internet, we speculate that such efforts will fail. 1 Authors' email: {sharon, wlehr}@rpcp.mit.edu; {ddc, jtw}@lcs.mit.edu. The authors gratefully acknowledge the support of the industrial sponsors of the MIT Internet & Telecoms Convergence Consortium (ITC), listed on ITC's web site at http://itel.mit.edu. Gillett, Lehr, Wroclawski & Clark 2 Introduction The world is evolving from one in which almost all access to the Internet comes from people using personal computers (PCs), to one in which so-called Internet appliances (IAs) will make up a greater share of end-user equipment. In this paper we consider whether this shift has implications for industry structure that might require regulatory intervention. We conclude that in most cases technology and market drivers will perpetuate the wide range of business models presently observed, but that policy makers may need to intervene if industry players use appliances to further leverage control over existing monopolistic choke points. As a general-purpose computing device, the PC has complemented the flexibility of the Internet's architecture to support a spectrum of business models with varying degrees of vertical integration. Broadly speaking, the more vertically integrated the service, the easier it is to use but the less flexibility it provides to users. To date, multiple models have co-existed, serving groups of consumers differentiated by their relative weighting of these two attributes (ease of use vs. flexibility). At one extreme lies a fully disaggregated model selected by consumers who place a premium on flexibility and freedom of choice. In this model the consumer buys her own PC and phone line, selects an Internet service provider (ISP) from among many competitors, loads the software of her choice (any Web browser, e-mail program etc. conforming to Internet standards) and configures it to visit whatever pages she wants, download email from whatever server she wants, and so on. In the middle lie semi-integrated models such as broadband Internet access delivered via cable modem or America OnLine (AOL). The consumer still buys her own PC, but other portions of the overall package are bundled. Cable modem services, for example, bundle the cable-based network access with ISP services such as assignment of e-mail and IP addresses. The user gives 2 Our primary focus in this paper is on consumer access to the Internet. Appliance-like devices that are deployed first in commercial settings (e.g. vertical markets such as rental car operations, point of sale or inventory control applications, factory or office environments) or are embedded in other devices in a way that is transparent to the consumer (e.g. in automobile engines) are beyond the scope of the present discussion.