NComputing: Little Box, Big Aspirations

The chairman and chief executive of NComputing in Redwood City, Calif., is pursuing a computer revolution with a small box that turns low-cost desktop computers into servers that feed dozens of work stations.

In tech parlance, it's called "thin client" technology -- devices that have no processing power and store information on servers. NComputing's virtualization software taps into unused capacity in high-performance PCs and disperses that power to up to 30 other terminals.

Lofty Goals

NComputing expects to sell 1 million "seats" -- the thin box that connects a monitor, keyboard and mouse to a nearby PC -- this year at a cost of just US$70 each.

Dukker and others in the developmental aid field see NComputing as a relatively inexpensive way to connect the poorest pockets of the world to the Internet. The start-up has 14 offices around the globe that provide tech help to create an ecosystem to support the devices -- a critical component in narrowing the global digital divide.

"If you depend on governments to do this, you will fail," Dukker said.

The company's model for the developing world competes with that of the non-profit One Laptop Per Child project, which grabbed headlines by declaring it could make a $100 laptop. The machines now sell closer to $200, though OLPC founder Nicholas Negroponte maintains the price for mini-laptops could drop to $75 by 2010. So far, about 600,000 have been ordered globally, with 85,000 shipped to U.S. consumers, according to Negroponte.

Missed the Mark

Dukker, a 30-year veteran in computer manufacturing who founded eMachines, said the OLPC price does not include the costs of transportation and support needed to service computer networks. There are many developing regions where the most basic infrastructure doesn't exist.

"OLPC is a wonderful device, but it trivializes what PC companies do," he said. "It's the equivalent of HP (NYSE: HPQ) saying, 'We are selling a PC for $200, but you have to pick it up in China.'"

Many companies, from Intel (Nasdaq: INTC) to Asus in Taiwan, hope to sell low-cost laptops to the developing world. Intel predicts more than 50 million mini-computers will be sold globally by 2011.

But IDC analyst Bob O'Donnell doesn't think the laptops, which are still too pricey for many in the developing world, will gain traction. "I think the growth will be more muted," he said.

Well Connected

NComputing, which does not disclose its revenue, is profitable, Dukker said. The company has partnerships with numerous international non-profit groups, including U.S.-based Save the Children, Ateliers Sans Frontieres in France, Bangladesh-based BRAC, the Organization for American States, UNESCO and the Azim Premji Foundation, founded by the chairman of the information technology giant Wipro in India.

In addition to being inexpensive out of the box, NComputing's technology costs a lot less to operate and maintain than traditional PCs. The company says its devices are at least 95 percent more energy efficient than computers.

"Most of the developing countries have an enormous number of poor people struggling for survival on incomes of less than $1 to $2 a day," Abdul-Muyeed Chowdhury, chairman of BRAC, said in an e-mail . "This technology, unless something newer and cheaper comes to the market, is the best available solution to the problems of poor people."

Gaining Momentum

NComputing's model isn't new. During the 1990s, Oracle (Nasdaq: ORCL) Chief Executive Larry Ellison, as well as Sun Microsystems (Nasdaq: JAVA) Chairman Scott McNealy, preached about a PC-less world in which networked work stations would operate off a remote server. The movement, though, never took hold.

Dukker believes the time for his model has arrived in today's era of fast Internet service, a growing acceptance of "cloud" computing, in which material is stored on servers, and increasing pressure on companies to be green by using less power. With $40 million in venture backing, NComputing hopes to extend its reach to corporate America at a time of growing interest in centralized computer systems.

"This is a solution for the United States," he said.

But the company faces a host of challenges, including how to deal with software licenses, said Gartner (NYSE: IT) analyst Federica Troni. Its system allows several users to tap into one PC or server using a single copy of the operating system. In emerging markets, Microsoft (Nasdaq: MSFT) offers special licenses, but not in the United States.

The company also must deal with tough competition from entrenched thin-client competitors, such as San Jose-based Wyse Technology.

NComputing has, though, made its mark in providing high-quality computing to the overseas masses. Fifty percent of its business comes from poor countries.

"We may be the first company in the history of IT that has built itself into a sustainable, profitable company based on serving the under-developed world before we became a big hit in the developed world," Dukker said.