BEAR STEARNS RELEASES A COMPREHENSIVE STUDY ON THE FUTURE OF iAPPLIANCES; Who Will Profit From The Strong Growth Opportunities That Exist In This Fast Growing Market?

Business Editors

NEW YORK-New York--(BUSINESS WIRE)--March 27, 2001

A handheld device that allows users to send instant messages, make phone calls, listen to music, take digital pictures, watch video, schedule meetings and even surf the web -- welcome to the world of iAppliances. Advances in Internet, semiconductor, software and communications technology are enabling the development of Intelligent Appliances, or iAppliances, which are changing the way people receive, send and use information, according to Andrew Neff, Bear Stearns senior managing director and hardware, PC and iAppliance analyst. In his latest report, "iAppliance 2001: You've Got the Whole World in Your Hand," Neff looks into new technologies and examines more than 230 companies vying for a piece of what is likely to be a highly lucrative iAppliance market. Some segments of the market could experience 10 to 15 times growth during the next several years, according to the report. "iAppliances are growing in popularity and they are becoming more useful, and that presents a compelling opportunity for investors," Neff said. This latest report is a follow-up to Neff's initial iAppliance report in February 2000.

What Is An iAppliance?

For the purpose of Neff's study, Intelligent Appliances, or iAppliances, are defined as devices in the home, car or carried on one's person that are made intelligent by semiconductors and a connection, either wired or wireless, to the Internet. This new class of products consists of hardware, software and services.

A "Perfect Storm"

The iAppliance market will benefit greatly thanks to the concurrent deployment of three technologies, according to the report. The three technologies -- Bluetooth, which enables the wireless attachments of peripherals; "Wi-Fi", which enables wireless networks; and GPRS or 2.5G technology, which enables cellular connections -- should lead to a fundamental shift towards wireless computing. "The convergence of the three technologies should really provide a boost for iAppliances, it's akin to a Perfect Storm for the industry," said Ted Chung, Bear Stearns associate analyst who co-authored the report.

A Fast Growing Market

An example of the potential growth for the iAppliance market can be seen in mobile handheld devices, a sub-segment within the iAppliance market, which should experience significant growth due to the expansion into the business or enterprise market. The Bear Stearns analyst predicts the market for mobile handheld devices could increase sharply in the next seven to ten years, from 20 million units to 200-300 million units -- between the current magnitude of PCs (140-150 million) and cell phones (around 450 million units).

The Ultimate Solution: One Device Or Many?

The report also explores one of the biggest questions surrounding iAppliances: Will there ultimately be one unit that can do it all, or will consumers continue to use multiple pieces of equipment? Neff believes the latter is more likely. "I think there are number of technological and logistical reasons that will prohibit the success of one ultimate all-encompassing iAppliance," Neff said. "However, that does not mean users will miss out; they will still be treated to incredibly convenient and valuable devices." Ultimately, Neff believes, consumers and businesses will continue to search out the best products in each category and they will be unwilling to trade performance for the convenience of one piece of equipment. Neff does expect, however, that separate units will increase their efficiency by communicating with one another.

What Worked In The Last Year And What Didn't

In the report Neff examines what worked and what didn't in the iAppliance market during the past year. As for the successes, Neff points to handheld computers and wireless e-mail devices. The failures include desktop Internet appliances. And the jury is still out on automotive iAppliances, smart cell phones and Internet enabled machines. "Clearly the biggest success has been wireless e-mail appliances. Don't be surprised if you see wireless e-mail become standard on the majority of iAppliances that emerge," said Neff.

How Should Investors View The iAppliance Market?

Neff believes investors should identify companies that provide integral pieces to the total iAppliance solution, whether that be hardware, software or network services. Neff also places an emphasis on a company's ability to maintain lifetime control over a customer and receive a continuous stream of revenue.

While the iAppliance landscape is just beginning to form he believes there are companies that are already well positioned to win market share, including Palm Inc. (PALM), Sun Microsystems (SUNW) and Immersion Corp. (IMMR). Palm has a three-pronged strategy of selling devices, licensing its operating systems, and generating fees from services; Sun Microsystems provides critical infrastructure including industrial-strength servers and core technology; and Immersion Corp. licenses its revolutionary TouchSense technology to the automotive, computer, and other industries.

More Than A Report

In addition to the report, Andrew Neff will host a series of conference calls discussing growth opportunities surrounding the iAppliance market. The first call, on March 29, will focus on Personal Digital Assistants (PDAs) and feature Carl Yankowski, CEO of Palm, Inc. The second call, which will take place on April 4, will address GPRS technology and will feature Jim Balsillie, co-CEO of Research in Motion (RIMM). Additional calls will take place the following three weeks and focus on wireless ethernets, automobile iAppliances and consumer electronics.

Members of the Press

To read the full iAppliance report or to speak with Andrew Neff members of the press can contact Diane Quinn [e-mail] at 212-272-4282 or Russell Sherman [e-mail] at 212-272-5219.

Founded in 1923, Bear, Stearns & Co. Inc. is a leading worldwide investment banking and securities trading and brokerage firm, and the major subsidiary of The Bear Stearns Companies Inc. (NYSE:BSC). With approximately $25.8 billion in total capital, Bear Stearns serves governments, corporations, institutions and individuals worldwide. The company's business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales, trading and research, private client services, derivatives, foreign exchange and futures sales and trading, asset management and custody services. Through Bear, Stearns Securities Corp., it offers prime broker and broker dealer clearing services, including securities lending. Headquartered in New York City, the company has approximately 11,000 employees located in domestic offices in Atlanta, Boston, Chicago, Dallas, Denver, Los Angeles, San Francisco and San Juan; and an international presence in Beijing, Buenos Aires, Dublin, Hong Kong, London, Lugano, Sao Paulo, Seoul, Shanghai, Singapore and Tokyo. For additional information about Bear Stearns, please visit the firm's Web site at www.bearstearns.com.