SIC 3575
COMPUTER TERMINALS



Companies primarily engaged in manufacturing computer terminals, teleprinters, and multistation cathode ray tubes (CRTs) make up the computer terminal industry. Personal computers, workstations, minicomputers, and other systems that contain central processing units (CPUs) are classified in the electronic computer industry. Establishments primarily engaged in manufacturing point-of-sale, funds transfer, and automatic teller machines are classified in SIC 3578: Calculating and Accounting Machines, Except Electronic Computers.

NAICS Code(s)

334113 (Computer Terminal Manufacturing)

A form of so-called thin-client computing, a computer terminal acts as an interface between a user and a system server that has a CPU and storage capacity. Typically, a network of terminals is attached to the server. While some network systems allow terminals to have unimpeded access to the server, most systems require users to share the processor. As a result, such "timeshare" servers can operate more slowly, as more users access the processor. Advanced software on terminal systems can help maintain a minimum standard of service though and can even provide a more stable working environment than some PCs. According to one late 1990s estimate, there were 30 million traditional, non-PC computer terminals in operation worldwide.

Terminals were first used to access large mainframe and minicomputer systems that became popular in the 1970s. As the speed and memory capacity of computers increased, and prices of desktop computers fell during the 1980s, however, the popularity of systems that used terminals declined. By the mid-1990s the market for traditional terminals without CPUs appeared moribund, with demand channeled toward PCs and other devices.

Terminal sales lagged, as corporations began looking to PC-oriented networks to replace so-called dumb terminals. Contrary to the rapid growth most computer hardware companies enjoyed, terminal manufacturers' shipments fell from $2.3 billion in 1988 to about $1.9 billion in the early 1990s. By the early 2000s, the computer terminal manufacturing industry was in a continuing state of decline. The overall value of product shipments fell sharply from about $1.5 billion in 1997 to $415.1 million in 2000. Meanwhile, industry employment—which fell from about 18,000 in 1988 to less than 5,800 in 1997—had dropped to a mere 3,270 by 2000.

Despite these declines, a resurgence was taking shape in the business under the mantle of thin-client computing and terminals that embraced Windows and other popular operating systems. By 2001 domestic shipment values began to increase again, rising slightly to $452.1 million. Worldwide, thin-client shipments reached 1.1 million units that year, exceeding 1.0 million for the very first time, according to research firm IDC. More than 50 percent of these shipments took place in the United States. Through 2006 IDC predicted that shipments would enjoy a compound annual growth rate of almost 23 percent in the United States. Globally, this growth rate was expected to be somewhat higher, at 30 percent. However, even though the number of global shipments increased in the early 2000s, values were declining because of lower average unit prices.

Despite their limitations, terminals offer several advantages over stand-alone workstations, which are known in a network environment as thick clients. For instance, microcomputers and workstations run applications locally and therefore require more memory and an operating system. When working on a network, thick clients can require large amounts of bandwidth because they transfer data back and forth for processing. Terminals, on the other hand, run only the display part of a computer application locally and rely on the server to handle data processing and storage. For large companies, this can greatly reduce the cost of owning and maintaining a system over time. Thus, depending on how they're deployed, terminals can offer advantages in costs, centralized control, and security.

X-Terminals. During the mid-1990s, terminal manufacturers increased revenues with new products, such as X-terminals and Windows terminals. X-terminals contain internal software and therefore allow the interaction of concurrent applications running in the popular Windows environment. In addition, X-terminals cost nearly 50 percent less than PCs in 1996. X-terminals also offered higher resolution, larger screens, and greater networking capabilities than many desktop and workstation computers. However, the disadvantages of X-terminals included slower running applications and slower Internet access than that of PCs.

Sales of X-terminals grew in the early 1990s due to concerns about system and information security in companies, as well as budget and staff cutbacks in system support departments. X-terminals also reduced the need for hardware upgrades with the introduction of new software. With uneven growth, shipments of X-terminals rose from about 178,000 in 1994 to approximately 269,400 in 1997. By the early 2000s, X-terminals continued to experience uneven growth. However, they remained the strongest product category within the computer terminal industry. The number of X-terminal unit shipments increased from 204,632 units in 2000 to 240,287 units in 2001. Shipment values also increased, climbing from $129.5 million in 2000 to $167.0 in 2001.

Network Computers. A hybrid that straddles the PC and terminal designations is the network computer (NC). These scaled-back PCs were first promoted in the mid-1990s by companies like Sun Microsystems and Oracle Corp. as solutions to the costs, complexities, and inefficiencies of using thick clients in large networked environments. Although they come in many configurations, NCs are in essence networked PCs without disk drives for local storage. Instead, they download applications and files from a server and store all their data on the server. But they still have their own processors and memory for running applications locally. Many of those applications are intended to be Internet-related, such as Web browsers, or portable, system-independent applications created in the Java programming language.

NCs, which aren't terminals but are sometimes seen as competition to terminals, never took off as their backers hoped. Critics, especially those in the terminal industry, complain that NCs aren't true thin clients because of all the data the devices must download and upload in order to function. Terminals, by contrast, only transmit basic input and output data and don't perform any kind of application downloading or processing. A dearth of Java software and standards for NCs likewise has made them hard to market, whereas terminals can display almost any kind of software that the server can run, including popular programs like Windows NT and Windows 2000.

Windows-Based Terminals. Holding perhaps the key to the industry's future, meanwhile, Wyse Technology Inc. led the introduction of Windows-based terminals in 1995. These terminals give users the ability to access Windows-, mainframe-, or Unix-based applications. Unlike traditional terminals, they can display the full range of color graphics familiar to PC users. In fact, the only processing power in a Windows-based terminal is for displaying graphics, as application processing and memory is generally left to the server. Still, to the end user, the terminal may look and feel much like a PC, complete with a mouse and a local printer hook-up. Some Windows terminals have the operating system, a Web browser, and emulation programs embedded as firmware.

Wyse, which also makes the more traditional monochrome terminals, emerged in the latter part of the 1990s as a dominant force in the business. The company's 2001 sales of $151 million were almost 26 percent lower than 2000 levels. In the late 1990s, Wyse found itself holding 65 percent of the fast-growing Windows-based terminal market. By the early 2000s, Wyse continued to introduce new Windows-based products for its customers, including a spectrum of thin clients based on Windows CE Net and Windows XP. In the broader thin-client market, Wyse's share was estimated at 38 percent of unit shipments worldwide. When Wyse terminals sold under the Hewlett-Packard name are considered, this percentage was closer to 50 percent. Windows-based terminals undoubtedly helped bring positive growth back to a flagging industry.

Other important manufacturers of Windows-based terminals and similar thin-client devices include Dell Computer, Hewlett-Packard, IBM, Neoware Systems, Networking Computing Devices, and Sun Microsystems. Outside the United States, Asia is an important and growing source of terminal hardware.

Further Reading

Bekker, Scott. "IDC: 2001 Thin Client Shipments Surpassed 1 Million Units." ENT News, 14 August 2002. Available from http://www.entmag.com .

Caton, Michael. "Sun Plays Right Card with Sun Ray Terminal." PC Week, 24 January 2000.

"Corporate Profile." Wyse Technology, Inc. 29 December 2002. Available from http://www.wyse.com .

Deckmyn, Dominique. "Thin Clients To Get Win 2K Boost." Computerworld, 14 February 2000.

Kovar, Joseph F. "Wyse To Unveil New Windows-Based Thin Clients." CRN, 19 August 2002. Available from http://www.crn.channelsupersearch.com .

Rand, David. "Thin Client Technology—An Introduction." National Hotel Executive Magazine, May 2002. Available from http://www.hotelexecutive.com .

Rice, Valerie. "The Disposable Alternative to the PC." PC Week, 18 October 1999.

U.S. Census Bureau. Annual Survey of Manufactures. Washington, D.C.: U.S. Department of Commerce, Economics and Statistics Administration, February 2002. Available from http://www.census.gov .

——. "Computers and Office and Accounting Machines:2001.". Current Industrial Reports. Washington, D.C.: U.S. Department of Commerce, Economics and Statistics Administration. September 2002. Available from http://www.census.gov .

Wyse Technology Inc. "Thin Clients, Windows-Based Terminals, NCs: What's the Difference?" San Jose, CA, 1999. Available from http://www.wyse.com .



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