In 1995, Oracle’s megalomaniacal CEO, Larry Ellison, decided to announce a product that would wipe Microsoft — and Bill Gates — off the map, but he did not time his attack well:
“A PC is a ridiculous device,” he said, launching an attack on Microsoft’s core business. He ran down a list of the desktop’s deficiencies: It was hard to learn to operate, expensive, overpowered, and — thanks to the arrival of the World Wide Web — increasingly irrelevant. That’s why he was ushering in the post-PC era with the network computer, or NC, which Oracle would help build within a year. The simple $500 box would be a stripped-down unit that served one purpose: to connect to the Internet. For the NC, the Web wouldn’t be a mere feature but a utility, as fundamental as water and electricity. “What the world really wants,” Ellison told the crowd, “is to plug into a wall to get electronic power, and plug in to get data.”
Obsessive competitiveness may have inspired Ellison’s idea, but it also contributed to its downfall. His turf battle with Redmond ended up kneecapping his product. Looking to stem the momentum of Windows, Ellison promised to release low-cost machines within a year. That meant rushing out computers before they were fully developed. When it hit stores in the fall of 1996, the Acorn NC — commissioned by Oracle to be the model around which the new market would coalesce — had an underpowered ARM processor that produced blocky graphics and strained to render a Web page in less than four seconds. IBM’s Network Station computers — the flagship corporate version of the NC — didn’t fare much better. They were too slow, too limited, and too complicated to coordinate with company servers. Irving Wladawsky-Berger, who ran the Internet division at IBM and ultimately oversaw its NC project, was embarrassed. “We thought we had a full product,” he says. “But when we took it to market, we realized it was an alpha.”
Oracle’s rush to market also meant that the NC hit shelves before the infrastructure existed to support it. The machine was supposed to run lightweight Web applications instead of installed software — and everyone believed Java would be up to the task. But it was never able to support powerful-enough applications. And with wide-scale broadband penetration still many years away, Internet apps didn’t stand a chance against local software.
In 1999, after spending four years and losing nearly $175 million, Oracle pulled the plug, changing the name of its network computer spinoff to Liberate Technologies and focusing its business on set-top box software for interactive television.
The NC is dead. Long live the NC:
Now that the Web-software environment has been established, NC-like hardware has begun to proliferate. The first example, of course, is netbooks. Debuting just two years ago, they currently account for more than 20 percent of PC sales. In the 12 months ending in September 2009, sales jumped 77 percent. Yet while the netbook may be the direct descendent of the NC, its cousin, the smartphone, is seen by most alumni of the NC movement as the more powerful force. Every day, iPhone and iPod users download 4.5 million applications — grown-up versions of the widgets that Ellison predicted would run on the NC. “Ellison is often time-dyslexic — right about the fundamental trend but wrong on timing, ” says David Roux, a partner at private equity firm Silver Lake and a former Oracle executive vice president. “It’s hard to look at a $299 netbook and not see the NC vision come to life.”