Will the elegant simplicity of thin-client computing succeed in the education market?

The acquisition of Wyse Technology on May 24 by a little-known company raised some eyebrows in Taiwan’s IT industry, but it did not attract significant media attention. The little-known company, Chi-Ta Systems (transliterated from Chinese), was established on December 12, 2002 with just NT$1 million in capital by one of Taiwan’s top three finance giants – the Koos Group. According to media reports following the acquisition, the resulting company will operate under the Chinese name of Chi-Ta, while retaining the English "Wyse" brand (referred to as Wyse in this article). Although the acquisition has been approved by over 99% of the shareholders, final approval from Taiwan’s OTC (over-the-counter) market is pending.In the first week of June, Wyse applied to be delisted from the OTC. Originally launched on the exchange in 1999, Wyse’s stock plummeted from a high of NT$128 to below NT$20 by October 2000, hitting an all-time low of NT$8.3 in September 2002. The final acquisition was made at NT$14.5. The merger reflects the stark realities of shrinking profits and the restrictions placed by the diluted stock value on future growth. Wyse management believes that the merger offers a chance for re-organization and renewed growth.Claiming to be the number one manufacturer in the world’s desktop thin-client market, Wyse on its website quotes International Data Corporation (IDC) numbers between 1998 and 2000 to demonstrate its rapid growth and 40% share of the world’s thin-client market.Already successful in many industries and the education sector, the future of thin-client computing remains open to question. One emerging opportunity, with a variation on the thin-client theme, may be in the Asian educational sector.Emerging thin-client opportunities in South Korea and China? The governments of both South Korea and China have recently launched major projects to upgrade their elementary school computer facilities. The project in South Korea was launched at the end of 2002 and is scheduled to run through 2005. The size of the project remains unclear, but vendors such as Samsung Electronics and Hyundai have been involved in the bidding. China’s project also started in 2002 and is estimated to be worth 800 million yuan (about US$100 million).South KoreaThe South Korean project is targeted at local vendors, although overseas solutions can be used if they are sold through a local Korean partner. In establishing project guidelines, Korea’s Ministry of Education has specified that old PCs should be re-used. Apart from potential cost-savings, this requirement is seen as an important environmental protection step and is being leveraged to educate the students and public at large about the importance of recycling. Two alternative solutions are emerging: the replacement of existing hard disks by flash memory with the client software and boot-up kernel pre-loaded, and the insertion of an add-on card incorporating the necessary software and new functionality.Software developers in South Korea, Taiwan and Singapore are choosing the flash option with Microsoft’s RDP (remote desktop protocol) or Citrix’s ICA (Independent Computing Architecture) client software migrated to a flash memory module with an integrated Linux-based boot-up kernel. The small-size flash memory module, sometimes called a Disk on Module (DOM) or Disk on Chip (DOC), is a key element in this solution. The price for a DOM with ThinSoft’s RDP 5.1 software costs between US$120 and US$150 per unit. Installation is a simple matter of replacing a PC’s existing hard disk with the DOM, connected to the standard IDE slot. Some older PCs may encounter driver compatibility issues with this solution because older add-on cards may not have Linux drivers.One South Korean add-on card vendor is developing a three-in-one (network, graphics and sound) PCI interface card with ThinSoft RDP 5.1 software pre-installed. Installation just requires users to replace their existing graphics card with the new three-in-one card and optionally removing the hard disk. This minor installation effort is a considerable saving compared to discarding the old PC and buying a new one and the solution meets the government’s requirement to re-use existing PCs. For the vendors, the attraction is not the card sales or the client software licensing, it is the server-side installation.From a performance perspective, one of Taiwan’s other thin-client vendors suggests that for more demanding applications, like image editing, the centralized server will need to be at least a dual-Pentium 3 platform with 2GB RAM to service up to 30 clients. For a 50-client classroom, an Intel dual-Xeon server will be required to assure smooth performance.ChinaChina’s education market is a different story. The government has issued a plan to create a networking infrastructure that links all elementary and junior high schools together through the Internet. The government is not directly funding this project. Rather, students will pay an additional fee to take computer lessons. Although it is not clear where the lump sum needed up front to put the infrastructure in place and purchase the computers will come from and there are many issues regarding the financial management of the project, it has attracted the attention of several PC giants.One of the solutions currently generating a significant amount of interest is called SOPCA (software platform for connecting appliance). The SOPCA architecture differs from a pure thin-client arrangement in that the server just provides virtual hard disk space and a boot-up agent service for the clients. The majority of the processing is left to the clients. The system can support Microsoft 98/95 or Windows XP and feels to users as if they are running a standard Windows PC.The major benefit for the SOPCA solution is that it can support more than 50 clients at the same time. In demonstrations in Beijing’s Zhongguancun demo area, 50 SOPCA "thin-clients" can play video files at the same time without any noticeable dropped frames or discontinuous motion. The performance is quite amazing compared to traditional thin-client computing. One drawback may be software deployment on SOPCA systems. Once new software is installed to the system, a lot work needs to be done on the server side, creating headaches for MIS managers. SOPCA engineers have claimed that this has been improved in recent releases.The MIS managers responsible for the purchasing decisions in both China and South Korea’s educational sectors will of course be comparing hardware and software licensing costs for a range of solutions, but they may be most concerned about the installation and set-up complexity, post-installation management and security, the applications they intend to run, and future expandability (and the potential of low-cost incremental expansion).Thin-client market sizeAccording to a Market Intelligence Center (MIC) report published in July 2002, Taiwanese thin-client manufacturers generated US$175 million in sales and output 687,000 units in 2001. In 2002, estimated sales were about US$223 million on about 901,000 units shipped from Taiwan. Taiwan’s worldwide market share in 2001 and 2002 was 57.5% and 52%, respectively. Thin-clients are categorized as information appliances (IAs) by MIC, but the total output represents less than 6% of the total IA pie.What is a thin-client?A thin-client computer is a slimmed-down desktop PC with storage and processing power concentrated at a centralized server. A thin-client has no need for PC components such as a hard drive, and application software programs are run from the server. Traditionally the thin-client targets enterprise customers such as chain store retailers, hospitals, hotels and other server-centric environments. The idea is similar to the early concepts of mainframes and text terminals. Migrated to the modern Microsoft Windows platform, through a cooperative project with Citrix Systems, Microsoft built the terminal service around the Windows NT operating system. Microsoft’s more recently released operating systems for servers all incorporate its functionality as standard. The major benefits of a server-based thin-client installation are a more secure and easily-managed computing environment, with a lower total cost of ownership.But whether or not a thin-client installation really saves money remains an issue of debate among users. As traditional PC prices have plummeted, the initial savings of a thin-client system have dwindled, leaving only the relative performance and flexibility of the systems plus running and maintenance costs open to debate. On the performance side, a lack of strong multimedia application support remains a major block to more widespread adoption of thin clients, especially in the education sector. Flexibility also remains the domain of the traditional desktop. It is only in centralized management and security control that the thin-client remains ahead of the desktops.On the software side, the two biggest camps in the industry are Microsoft and Citrix Systems. Microsoft Server 2003 terminal service and Microsoft RDP is stacked up against Citrix Metaframe (for the server side) and Citrix ICA. The previous Microsoft RDP version 5.0 only offered support for 256-color displays and was hard pushed to compete with Citrix’s 64,000-color (16-bit) ICA solutions.Microsoft seems to have put some effort into its solution and now, with the release of Microsoft Server 2003, RDP version 5.1 supports 16-bit color and offers an improved terminal service and VPN (virtual private network) features for enterprise applications. The company’s acquisitions of Great Plains and Navision, and its cooperation with PeopleSoft, are strong indications of their ambitions in this part of the market.For the rapidly growing education market in Asia, including the upgrade projects for elementary schools and the introduction of multimedia classrooms in South Korea and China, thin-client computing still faces many challenges.Source: DigiTimes