Computer Terminals

SIC 3575

Companies in this industry

Industry report:

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.

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 and provide a more stable working environment than some PCs.

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 had decreased, 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. The computer terminal manufacturing industry continued in a state of decline into the late 1990s and 2000s. The overall value of product shipments fell sharply from about $1.5 billion in 1997 to $478.8 million in 2008. Meanwhile, industry employment fell from about 18,000 in 1988 to 1,670 people in 2008.

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.

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 are deployed, terminals can offer advantages in costs, centralized control, and security.

During the mid-1990s, terminal manufacturers increased revenues with new products, such as X-terminals and Windows terminals. X-terminals contained internal software and therefore allowed 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. In the mid-2000s, however, X-terminals were largely supplanted by low-cost Windows PCs.

Network Computers.
A hybrid that straddled the PC and terminal designations was 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 came in many configurations, NCs were in essence networked PCs without disk drives for local storage. Instead, they downloaded applications and files from a server and stored all their data on the server, but they still had their own processors and memory for running applications locally. Many of those applications were intended to be Internet-related, such as web browsers, or portable, system-independent applications created in the Java programming language.

NCs, which are not terminals but are sometimes seen as competition to terminals, never took off as their backers hoped. Critics, especially those in the terminal industry, complained that NCs are not 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 do not perform any kind of application downloading or processing. A dearth of Java software and standards for NCs likewise made them hard to market, whereas terminals can display almost any kind of software that the server can run, including popular programs like the various versions of Windows.

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 made 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. In fact, by the 2000s, Microsoft Windows was the dominant operating system in the global PC market. By then, Microsoft had released Windows 7 as well as the mobile operating system, Windows Mobile 6.5.

Other important manufacturers of Windows-based terminals and similar thin-client devices in the late 2000s included Dell, Hewlett-Packard, IBM, and Sun Microsystems. Outside the United States, Asia was an important and growing source of terminal hardware.

Cloud Computing.
In the early 2010s, so-called cloud computing threatened to turn the traditional PC industry on its head. Although there are several versions of the exact definition of cloud computing, basically it means that applications such as Windows, Java, Linux, UNIX, and web-based applications are run on a central server, rather than from a server within the computer itself. By 2010 companies such as IBM, Microsoft, and HP had jumped on the cloud bandwagon largely led by Wyse. According to research firm IDC, Americans will spend $42 billion a year on cloud services by 2012.

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