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Summary:

Years ago, Stephen Dukker helped to disrupt the personal computing industry when the company he founded, eMachines, started selling PCs for $400 each, effectively broadening the number of consumers who were able to buy computers. And now he’s trying to do it again, as CEO of […]

Years ago, Stephen Dukker helped to disrupt the personal computing industry when the company he founded, eMachines, started selling PCs for $400 each, effectively broadening the number of consumers who were able to buy computers. And now he’s trying to do it again, as CEO of Redwood City, Calif.-based virtualization startup NComputing, which just raised $28 million in a second round of funding.

NComputing makes terminals bundled with a keyboard, mouse and monitor that can be hooked up to a PC (given the processing power available in today’s computers compared with what’s needed for most applications, multiple terminal kits can be connected to a single PC.) After selling some 600,000 kits primarily to educational users over the past year-and-a-half, NComputing will take the $28 million it just raised (at a more than $100 million valuation) and use to target the enterprise market.

I spoke with Dukker about the importance of opening up new markets for PCs, and how that can be done using software. We also talked about NComputing’s push into the enterprise market, even as it continues to find success in education and the developing world. Currently the company sells 80 percent of its terminals to educational buyers, with 50 percent of its sales occurring in the U.S.

Q: Why would someone want to get into the PC industry today?

A: At eMachines we proved there is no low-cost PC that allows their suppliers to be profitable. Since the industry has not been able to bring prices down further, we have not been able to open up new markets. So all a PC maker can do to gain market share is to sell at low margins and steal share from other people.

Q: So why did you come back to the PC world?

A: After eMachines, I thought I was through with PCs, and then I got a call from my No. 2 guy at eMachines who was in Germany working with these guys who said they could lower the cost of PC ownership with software. I told him if you can do this, you can potentially change the world. The cost of the PC basically goes away. The chip costs $2 to produce, but the software is hard to do. It’s exactly what companies like VMware, Citrix and Microsoft are doing with desktop virtualization.

Q: What made the software so compelling?

A: With the PC what we have is a classic situation of the exhaustion of an architecture. PCs are becoming supercomputers and the applications are not keeping up. Unless you are doing some super science or are a hard-core gamer, you don’t need the processing power. With our software and hardware you can run a couple of terminals on one computer for about $70 per kit. It costs us about $11 to make the kit. This allows us to charge the customer less and make more at the same time, which is the hallmark of a disruptive technology.

Q: Why go after emerging markets first?

A: We gain credibility. By engaging enterprise customers later we will have more than 1 million people using our machines around the world. I want to further emphasize that this technology was not designed for emerging markets and education. It was originally designed to be a Citrix killer — the most efficient and cost-effective server-based computing solution for the enterprise. The reason we’re seeing the huge response in the education and emerging market is because their needs are immediate, whereas we know the enterprise markets are fairly slow.

Q: Where will you take this next?

A: We accepted the money to pick up the pace on the enterprise side without losing focus on our current markets. We are in trials in many large enterprise environments, and will make a meaningful impact on the Citrix and VMwares of the world in the back half of this year. We are also going to introduce a new product for broadband providers where you could have our chip inside a set-top box. It will be a desktop that’s being served to you for a couple bucks a month over your television by a broadband provider.

  1. I can’t believe that they got an extra 28m funding when you can’t implement what they sell without breaking MS’s EULA for XP….??

    Read NComputings own comments regarding licensing – you are responsible, not them

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  2. Dave, I don’t see any difference on EULA that Apple’s bootcamp, VMware fusion, Parallel offer to end user. They all let end user to be responsible to install and use more license. NComputing only does enabling to share powerful PC to more people. SW license is in grey zone that all industries should do better job for end user. See how many times Microsoft EULA was changed since 2001? million times!!

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  3. Jesse Kopelman Tuesday, January 15, 2008

    I really wish Dukker would acquire the rights to the DEC logo and brand their nuevo dumb-terminals as such. It would be a nice blast from the past for those of us over 30.

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  4. How on earth does this ‘take on VMware’?

    All they do is allow multiple people to log into the same machine, which actually violates Microsoft licensing!!!

    I think Ncomputing had a cool idea, basically hardware initiated KVM over IP… but that’s not application sharing (citrix) virtual hosted desktops (vmware), with possibly application virtualization in the not so near future.

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  5. [...] Comment on NComputing Raises $28M to Take on VMware by Paul FisherI think Ncomputing had a cool idea, basically hardware initiated KVM over IPâ?¦ but thatâ??s not application sharing (citrix) virtual hosted desktops (vmware), with possibly application virtualization in the not so near future. [...]

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  6. [...] Comment on NComputing Raises $28M to Take on VMware by Paul FisherI think Ncomputing had a cool idea, basically hardware initiated KVM over IPâ?¦ but thatâ??s not application sharing (citrix) virtual hosted desktops (vmware), with possibly application virtualization in the not so near future. [...]

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  7. The one thing that you guys are missing that really makes this special is that NComputing’s X300 is the “Greenest Computer Product in the World”. All the other existing technologies can’t touch its <1 watt of power consumption of the X300. This is greater than 95% savings over a PC. Do you know what the equates to? If a client deploys only 100 X300 it is equivalant to the power that a 40kilowatt Solar Panel produces in a year!!! So for every 100 X300′s in use its like installing a 40 Kilowatt Solar Panal. By the way a 40 Kilowatt solar panel cost about $150,000. A 100 X300′s cost about $20,000. And students can use the X300′s. The Solar Panel just set on a roof and looks pretty.

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  8. It is also probably the best e-waste solution on (and for) the planet. Copmapred to about 20 lbs per pc thrown out every 5 years or so, you might toss one of these devices every 7 to 10 years and each one is only about a third of a pound.

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  9. Great technically and environmentally…. aimed at wrong market!

    Their best market is the home/casual user via ISPs (or cable). Most home users simply surf the web… so the ISP can provide boxes that work through servers (Linux would be best and free)… the home users doesn’t even have to buy a computer!

    Throw in TV with the service, and the user can use the same screen for computing and TV needs.

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  10. Use them at home on the LCD, great low cost way to implement computer access in the whole house.

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  11. The X300 is a very dated (16 bit video, thin client sound chip, etc.)SOC that is basically 3 thin clients on a small circuit board. It has nothing to do with virtualization, any more than a session that is running in Terminal Services/Citrix is running virtualization. It is hack to XP that uses Fast User Switching (won’t work on Vista) / RDP to give the end user an XP experience. MS has specifically killed this with http://download.microsoft.com/download/3/d/4/3d42bdc2-6725-4b29-b75a-a5b04179958b/windows_multi_user.docx . If this isn’t specific enough…they even have a diagram of ncomputings X300 with a heading “how not to set up a multiuser scenario” . They do have a workaround though and that’s load W2K8 Server…oh wait a minute, W2K8 server won’t run, so you need to downgrade to W2K3 server so the hack will work. Windows 2003 Server on a PC, or 100 PC’s in the case of a school or business! I wouldn’t have a problem with that, unless some kid with an ERD Commander disk or LiveCD decided to change the administrator password and then add the PC to the domain and then… Dukker isn’t interested in changing the world, he’s just doing the same thing he did at emachines. He’s selling at below cost to get $28M (and more) and then get out. Where’s eMachines now, by the way?

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  12. Hey Dave,

    So do you tink NComputing is going to stop developing its products further? I compare NComputing to Microsoft in 1989. This is their beginning of a new way to do computing. As Windows was when before all we had was dos! It works on 2k3 server perfectly and will work on server 2008 when the time is right. THere is even a very easy way to make server os’s look just like your typical XP Desktop with something caled XP desktop Theme that is apart of the server 2K3 OS. It takes time for these products to develop once MS release a new OS. Not enough potential customers have started using 2008 server yet? So it doesn’t make sense for them to start supporting it until there is a healthy return on there investment. But I assure you it will happen when its time. The ERD disk does you no good if the host is in locked in a server room or at the teachers desk. Take a look at the L230 model. NComputing products are already changing education around the world including in the US. So you can call it what you want but it is helping hundreds of thousands of kids around the world have a opportunity to have access to information, thus giving them a chance to make a difference in the world we all live. Oh and by the way they are not selling it below cost. It sells for as low as $70 a workstaion and how much do you think it cost to make an X300 access terminal kit? Mr Dukker has said many times it cost very little to make these devices so again you are wrong and misinformed as you have been with most of your comments.

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  13. The school I work for has gone for a solution provided by MiniFrame, which does not use proprietary video cards like N Computing. MiniFrame can run off widely available video cards. We have tested both MiniFrame SoftXpand with NComputing X300, and have found that although Office applications work fine running NComputing, We couldn’t get 3D games to work on N-Computing. SoftXpand supports most games, multimedia software, CAD etc, and believe me, we put it up to some rigorous tests.

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  14. So NComputing is in Africa? I came across the following on the net:

    ¨NComputing’s multi-user technology enables greatly expanded computing capabilities by allowing up to 30 users to simultaneously access a single PC. This multi-user desktop experience supports simultaneous users at lower costs in an easy to use, set-up and maintain environment that is eco friendly. The result is a significantly lower cost of computing, on-going nmanagement and power usage that is many times better than a traditional networked PC model. Since most users only utilize a few percent of today’s powerful PCs, NComputing leverages this power with small access terminals and proven software that enables a single PC or server to support up to 30 users at once. The goal in the multi-user environment is to maintain the performance of the host computer across many users; and as long as the host CPU, memory or LAN performance is not constrained, each access terminal should operate at a speed similar to the host. NComputing supports both Linux and Windows. From Windows 2000, Windows XP to Windows Server 2000 and Windows Server 2003. Linux distributions supported include Ubuntu/Edubuntu/kubuntu, SUSE, FEDORA, DEBIAN, CENTOS, REDHAT and others. What I like about the company is their R&D, they are always researching and improving on their products. Remember the Office Station L100? Then came the NComputing L100, ad NComputing L1200, and now NComputing L130,NComputing L230. Not to forget the NComputing Xtenda X300. In East Africa (Kenya, Uganda, Tanzania, Rwanda, Burundi, Congo, Ethiopia, Somalia) you can contact OPENCODE SYSTEMS at http://www.opencodesystems.com. Their telephone is +254-020-3560507/8, +254-722-681971, +254-721-219190¨

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  15. Hello Rommie;

    No I don’t think they will quit developing their products. They will continue to develop their normal thin clients like the L230 that you mention. But that series of products is simply a thin client like many others out there. The X300 is what I was talking about and they won’t continue to update that. Also, the OS that they use will have to migrate to server software, as Vista will never work. The hack that they use will not work on Vista. MS is catching up on that anyway and so are customers.

    Don’t get me wrong…thin clients are the future of Software as a Service. If we are to ever get more computing power in the hands of students, we need to work this out. My problem with nComputing’s methodology is their selling this XP hack as something more than a simple thin client.

    If you want to see something that is more than a thin client, check out http://www.myfiddlehead.com . Our school is implementing this and it has all the advantages of a server based computing environment (and it falls within MS’s licensing agreements), and it does all the things that a PC does.

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    1. vermontechie Friday, July 3, 2009

      Dave;

      Thanks for tell me about Fiddlehead! Totally like a real PC! No probems with licensing, or IP addresses, or applications or slowness on the clients. We could load multiple OS’s and they run at the same time. nComputing raises $28M to take on VMWare! BS! How can anyone say that. nComputing is a hacky software that shares one copy (illegally) of MS Windows XP and that is all. How could that be competing with VMWAre. I am not an expert, but it seems like Fiddlehead is much more competitive to VMWare.

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  16. Dear all,
    You’ve Many Great Comments For The NComputing and It’s Features.I’m Working in a Facility That Depend’s on NComputers But I’ve a Problem and Really Need Help:
    My Call Center Works With New System Now and We’re Upgrading Right Now, We’re Worked With Voip Technology That Randoms The Phone Calls To The PC’s and I’m Using a DHCP Server For Dynamics The IP’s and Ican’t Make It Work Like That .
    Every time The IP Changes I Need To Correct it on The DHCP Manually.
    I Tried to Use The NIU But I Got The Same Result.
    Please Help Me on This Case By Contacting Me On the E-mail Address (haythamsala7@hotmail.com)
    Thanx To All of you.

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  17. We have Fiddlehead in our classes down here in Texas and it seems to be spreading like wildfire. We tried nComputing, and although slightly easier to set up (or so we thought) than Fiddlehead, it didn’t allow us to run several important educational applications. It turned out we had enough applications that wouldn’t allow multiple users to “share” the same application that it wasn’t really usable. The Fiddlehead system doesn’t have any of those problems. It’s kind of like a BIOS update, and once you’re done with that, just load Windows like normal on one “seat” and then clone to the others. You can then clone to any other Fiddlehead enabled system in the district QUICKLY! …and it doesn’t make any difference what kind of hardware, the image is agnostic. And Fiddlehead can be loaded on 4 heads, or 2 heads or a single PC! We used to have dozens of images per school, because of our disparite PC’s, but now we have only one!

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