The next cheap thing

updated 3:05 p.m. ET June 23, 2006

Stephen Dukker is talking a mile a minute, his excited voice filling the small conference room. He's fiddling with a laptop PC, some cables, and a tiny gizmo that looks like something you might pick up in the accessories aisle at Radio Shack as he prepares to demonstrate the wares of tiny NComputing Co.

"I have not been this excited about a company...ever," says Dukker, NComputing's chairman. "I'm afraid I'm going to have a stroke, I'm so excited!"

That's because Dukker is convinced NComputing has discovered one of techdom's holy grails: a computer cheap enough for the world's PC-less masses. Actually, not a computer. NComputing's gizmo — this one, the unsexily named L100 model — once attached to a mouse, keyboard, and monitor, can be used to tap into a PC somewhere else, across the room or across the continent, at a far lower cost than owning a PC yourself. Dukker's cost is less than $50 per user, vs. $250 for a cut-rate desktop PC. And if volumes rise as he hopes, that price could fall below $10. "Pretty soon, we'll have reached the point that the hardware is essentially free," says Dukker.

It's the return of the "thin client," one of Silicon Valley's most hyped concepts of the 1990s. Luminaries such as Oracle Corp. chief Lawrence Ellison and Sun Microsystems Inc.'s chairman Scott McNealy gushed back then over the idea that rather than own powerful PCs, Netizens could use these disk-less, processor-less "dumb" devices to access files and programs, stored on some remote server, via the Internet.

It kind of made sense. After all, the disk drive and processor in your PC make up about 40 percent of the materials cost. And who uses all that processing power, anyway? For many of us, a PC is for sending e-mail and surfing the Web. Unless you're designing rocket ships or flying them in some graphics-rich video game, you barely test a PC's limits.

Ahead of its time
But reality stepped in. With PC prices falling ever lower, customers had a choice between a full-fledged PC and an unproven thin-client device that cost just about as much. The few models that sold were priced over $500 after expensive software licenses were taken into account. So they never really caught on.

Today, all the attempts to reach the world's poor are focused on finding ways to make cheaper PCs. One of the most publicized efforts is the nonprofit "One Laptop per Child" program led by Massachusetts Institute of Technology's Nicholas Negroponte. The computer uses free Linux software rather than Microsoft's Windows and comes with a crank for people who don't have access to reliable power, or the means to pay for it.

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But maybe, just maybe, the thin client was simply ahead of its time. Broadband connections, after all, are far more widespread today. And millions of people are comfortable with using Net-based software such as Google and MySpace. Now venture capitalists are starting to fund thin-client companies again, such as Teradici Corp. of Canada.

Even PC giant Hewlett-Packard Co. is ramping up sales of $300-plus thin-client terminals to companies that want to cut the cost of managing software-packed PCs. HP sees a day when consumers will pay a phone company or Net service provider only for the minutes of computing they use over a dumb terminal.

"This is not just a 'wouldn't it be nice,"' says Philip McKinney, chief technology officer for HP's Personal Systems Group. "There are a lot of things that are starting to converge that begin to make this make sense."

Here's where Dukker would beg to differ. He says it's already happening. Despite having no real sales or marketing effort, NComputing has sold more than 100,000 units since 2004, and is on pace to sell nearly that many in the remainder of the year.

Most are going to small companies and school districts in places like Brazil, Thailand, and Ghana. But interest is picking up with U.S. schools as well. Since stumbling upon NComputing's Web site, Tracy Smith, the director of technology for the Fremont School district in rural southeastern Idaho, has replaced 240 ancient PCs running Windows 98 with 80 NComputing devices.

"I haven't told our Dell salespeople I'm doing this. But that's 240 computers that Dell didn't sell me."

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