Gateway, AOL take wraps off Web appliance

Gateway and America Online on Friday unveiled their long-anticipated Web appliance, the Touch Pad, which taps technologies from chipmakers Broadcom and Transmeta.

As previously reported by CNET News.com, Gateway is positioning the appliance as part of its "connected home" concept, and AOL will fit the device into its "AOL Anywhere" strategy. The companies had planned to unveil the Web appliance at next week's Comdex trade show but moved the announcement up to Friday.

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Along with the Touch Pad, Gateway unveiled another product for the connected home--the Connected Music Player. The device, which plays MP3 files, looks like a stereo system component but connects to a PC.

Gateway won't start taking orders for either device until December, but it plans to have them on display at its Country Store retail outlets later this month.

Built around a 10-inch LCD display, the $599 Touch Pad is designed to sit on a kitchen counter, table or desk, and, unlike a PC, it is intended to be used strictly for access to the Internet or email. Gateway provides the hardware, while AOL is responsible for the software, called Instant AOL, and Internet access.

Compaq Computer and Microsoft beat Gateway and AOL to market with the iPaq home Internet appliance, but the latter two are hoping that niceties such as a touch screen with large icons will give them an edge.

Gadgetry alone, however, won't necessarily translate into strong sales. In recent years, a number of computer makers and other companies have toyed with variations on this theme, without sparking a fire among consumers.

"I am hesitant on this whole concept, as other people have been there and haven't made a lot of inroads thus far," said Gartner analyst Kevin Knox. "The Gateway appliance, with the exclusion of including AOL, isn't going to make that much of a difference."

Steadily falling PC prices dilute the argument for a strictly Web-access device, Knox said. If the Web appliance cost much less, on the order of $200 or even $300, rather than about $600, the appeal might be much larger, he said.

"The challenge for Gateway is they have to subsidize the hardware somewhere, whereas AOL and some of the other software provider--it's a good move for them," Knox said. "I don't know if they can sell enough of these things to justify the production cost."

The Touch Pad differs from the Compaq-Microsoft appliance in several ways. Rather than running a flavor of the Windows operating system, Gateway and AOL chose Mobile Linux. The device also uses Transmeta's Crusoe processor and Netscape's Gecko engine for Web browsing. The Instant AOL graphical user interface features AOL 6.0 rather than Microsoft's MSN service.

"Instant AOL is all about making the Internet even more convenient than ever before. A lot of families keep their PC in a bedroom or study but spend most of their time in the kitchen and family room," Barry Schuler, president of AOL Interactive Services, said in a statement.

Like Compaq's iPaq, the Touch Pad features a wireless keyboard, augmenting the touch screen, which can be activated by stylus or finger.

Gateway is positioning the Touch Pad as the first in a series of products focused on the connected home, a concept it will promote through its more than 300 Country Stores. The Touch Pad features Home Phoneline Networking Alliance (HomePNA) 2.0 chipsets from Broadcom, which let consumers link devices in a network over a telephone line.

San Diego-based Gateway has quietly included the HomePNA chipsets in Performance and Select PCs shipped for about the past five weeks. The company plans to market a number of products with HomePNA, including other consumer electronic devices.

"Linking PCs and other devices to each other throughout the home adds a new level of convenience and usefulness," Gateway chief executive Jeff Weitzen said in a statement.

Both the music player and Touch Pad feature HomePNA, with the latter requiring the technology to take advantage of high-speed, or broadband, connections such as DSL and cable modem. The Touch Pad comes with a modem for connecting to the Internet but must be networked over a phone line with a PC to take advantage of broadband.

Gateway isn't the first company pushing phone-line networking. Compaq has been offering the option on some consumer Presario PCs for some time. Rival Dell Computer sells a digital music device that, like Gateway's, uses a phone line to connect to a PC.

While Sonicblue (formerly S3) provides the technology used in Dell's music player, Gateway partnered with Voyetra Turtle Beach. In mid-December, Voyetra Turtle Beach will start selling a retail version of the music player under the AudioTron brand.

Gateway is gambling that the relationship with Broadcom will put phone-line networks in a number of other consumer electronic devices, which can be hooked together or with a PC, to give it an edge over rivals.

Gateway will begin taking orders for the Touch Pad and for the $299 Connected Music Player on Dec. 1 and will begin shipping the devices Dec. 15.