Compaq pulls iPaq Internet Appliance ... for now

Compaq Computer has pulled its iPaq Home Internet Appliances from its lineup after slightly more than a year on the market, the company said Wednesday.

The company said it has sold out of its current inventory of both the IA-1 and IA-2, although there may still be some devices on store shelves, and will not manufacture more until it redesigns the devices. "We will launch a refresh of this platform later this year," said Compaq spokesman Roger Frizzell. "We're looking at different features and different price points."

While sales of the IA-1 and IA-2 have faltered, Compaq believes there will be a market for the redesigned devices. "We projected thousands of sales, it didn't exactly happen as fast as we would want," Frizzell said. "The category should survive, we believe there is a market for it."

While the devices originally cost up to US$500, Frizzell said, the IA-2 is currently priced at $299 on Compaq's Web site.

The comoditization of the PC market appears to have killed off the Internet appliances in their current incarnation, Frizzell said. As PC prices continue to drop, people aren't willing to spend nearly the same amount of money on an Internet appliance. Compaq's devices are exactly what their names imply, appliances with no hard drive and Web-only e-mail access. The company is now looking at different markets, including vertical markets and hotels, where people might not need a full-fledged PC, Frizzell said.

The devices include 32M bytes of RAM, 16M bytes of flash memory and a display. Both devices run Microsoft Corp.'s MSN Companion 2.0, which allows up to nine user profiles to be created. Users then had to subscribe to Microsoft's ISP (Internet service provider) MSN for $21.95 per month for Internet access. If the user chose to use a different ISP, they still had to pay Microsoft $9.95 per month, which can equal the cost of some competing ISPs.

The IA-1 and IA-2 were sold online as well as in stores including Radio Shack Corp., Staples Inc. and Wal-Mart Stores.

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