Oracle's NCI sees bright tomorrow, despite red ink today

Tokyo - At a press event and interview here today, the new head of Network Computer Inc. (NCI) predicted the long-term success of NCI's parent company's network computer effort, but said NCI's profitability is at least a year away.

NCI's CEO David Roux predicted that NCs will take the form of telephones, set-top boxes, digital-satellite receivers, automobile-dashboard computers and computers located in the backs of commercial airline seats.

The networked machines will spread into "the fabric of our lives in a way that is unimaginable today," said Roux, who also serves as executive vice president of corporate development at NCI's parent company Oracle Corp. "The number of NCs will not be hundreds of thousands or hundreds of millions. We believe over the next decade the number of NC devices will be measured in the billions - vastly outnumbering the PC population as it exists today."

Roux's upbeat prediction comes at a time when some analysts are taking his replacement of former NCI CEO Jerry Baker last month as a sign of trouble at the Oracle affiliate. In addition, some analysts also saw last year's layoff of 30 NCI employees - at the time representing 15 percent of the company's workforce - as a sign that Oracle's NC strategy was faltering.

But Roux shook off these concerns in today's interview, saying that his appointment is a natural evolution of NCI. Roux was responsible for the creation of NCI when it was a separate unit within Oracle and since then has served on NCI's board of directors.

The thrust of NCI has changed from its early days when it needed to raise interest in network computing to its current mission of delivering network computer systems, Roux explained. The first mission is complete - companies and network providers are demanding NCs - so that NCI's current challenge is to deliver NC systems, he said.

"Originally it was 'if we build it they will come,'" Roux said. "Now, a year and a half later, we have a different problem ... all of a sudden the dog has caught the bus." But while interest has come, profits have not, Roux conceded.

"Probably not this year - could be next," he said, when asked when NCI will be profitable. "The business is actually generating a fair amount of cash now as it starts to scale, so we don't really have very dramatic cash needs. We booked a lot of business in the last few months.

"The issue when you're at this stage is 'are you going in the right direction?'" he continued. "If you're going in the right direction then the anxiety level is low -- revenues are up sharply, our cash use is way down and the dogs are eating the dog food."

Over the next year Roux said he expects to step up alliances with systems integrators that can help build solutions for customers. NCI will also likely partner with more network providers, including cable companies, digital satellite service providers and large telecommunications companies, he said.

Over the past couple of months the ruminations of cable companies -- such as Tele-Communications Inc. choosing hardware and software suppliers for next-generation digital set-top boxes -- has attracted the likes of Sun Microsystems Inc. and Microsoft Corp., who see the set-top boxes as a door to the coveted consumer market.

NCI is talking with all major cable companies about using its software in set-top boxes, Roux said. As an example he pointed to an announcement this month that Cable & Wireless Communications PLC will use NCI's digital television operating system software in set-top boxes shipping in this year's third quarter [see "Cable & Wireless Taps NCI Technology for Set-Top Boxes," March 10 ].

"We're in swinging with everyone," he said. "I think what you'll see is -- between now and the end of 1999 -- most of the major cable companies in the U.S. and Europe will place their bets."

And where will that be?

"I think there are only going to be two players -- it's going to be us and it's going to be Microsoft," he said. NCI and Microsoft are "the only companies that have the financial wherewithal and the technical prowess to address the range of issues and concerns and multiple platforms," he said.

On the corporate front NCI sees the spread of networks based on the Internet Protocol as a perfect foundation for strong sales to companies, he said.

The announcement today that Fuji Electric Co. Ltd. is selling a bundled set of NC hardware and software should advance the corporate NC push in Japan, Roux said. In addition Japan's Kanagawa University announced today that its library is testing a NC-based system with 30 NC clients from Funai Electric Co. Ltd.

The problem is not knowing when such trials turn into real business, Roux said.

"Everyone's testing. There are pilot projects all over the place," Roux said "What's hard to determine .. is what will the large-scale deployment schedule look like (and) we just don't know."