A clear trend to emerge from the Comdex trade show last week was that the venerable desktop PC is no longer the only game in town. New products, along with upbeat statements from industry leaders, suggest that the Internet is at last delivering on its promise to drive a new model of computing.

Internet proponents have long questioned whether the fully-fledged desktop PC is the right tool for computing on the Internet. Better to use smaller, less complex appliances, they say, and to store applications and data on servers where they can be managed more easily and at a lower cost.

While supporters like Sun Microsystems and Oracle have been plugging that message for years, the big players in the desktop PC world have been reluctant to embrace the model - until now.

"The traditional PC is far more than what is required to gain access to the Internet," Jerry Meerkatz, vice president of Compaq's Internet Access Appliances division, said in an interview last week.

Compaq, until now a stalwart supporter of the PC, has carved a new division from its commercial desktop group focused on Internet access appliances. Devices like its new iPaq, a simplified computer designed for quick and easy access to the Internet, could account for 20 per cent of the units it sells to businesses by the end of next year, increasing to 60 per cent in three to five years, Meerkatz said.

Compaq is also ready to explore alternatives to Microsoft's software and Intel's microprocessors to run those devices. "Do you really need a full-featured operating system to do computing on the Internet? The answer is probably not," Meerkatz said.

Compaq isn't alone in thinking along these lines. Hewlett-Packard recently launched its desktop Internet appliance for businesses, the e-PC, and IBM last week showed its own contender for that space, the iStation. Apple's iMac moniker seems to have been adopted faster than its exciting design.

On the consumer side, the show floor was jammed with single-function appliances that shun the PC's complexity and aim to make it simple for users to access email, the Web and other Internet content. While those products in the past were offered by firms outside the PC mainstream, this year they were hawked by Advanced Micro Devices, Acer, Compaq and others.

Perhaps most significantly, Microsoft unveiled its Web Companion, a desktop appliance designed to whisk users effortlessly to its MSN service. In his keynote speech last Sunday, Bill Gates, Microsoft's chairman and CEO, seemed to acknowledge the PC's changing role. As well as storing data and applications, he said, the PC will act as a server linking a variety of Internet appliances throughout the home.

"The PC will be a server where you store information and create documents. But in terms of browsing the 'Net and seeing what's going on, you'll have a whole range of devices to choose from," Gates said.

One analyst called Microsoft's Web Companion a "clear capitulation". Microsoft has seen that the Internet may draw users away from fully-fledged PCs, and is hedging its bets by planting a stake in the appliance market, said Dana Gardner, an analyst with the Aberdeen Group.

Some analysts believe the biggest threat to the home PC will be posed by Sony's PlayStation 2, which was unveiled by Sony President and CEO Nobuyuki Idei. Armed with a powerful microprocessor, the gaming device, which is due next year, will also play DVDs (digital versatile disks) and perform other tasks now carried out by desktop PCs.

"That thing should be regulated by the government - it's like a supercomputer," Scott McNealy, Sun Microsystems' chairman and CEO, said of the Sony device in his keynote address Wednesday.

McNealy, among the PC's most vociferous critics, used his speech to slam the idea that software applications should reside on "bulky" desktop computers. The future will be ruled by an array of handheld computers, smart phones, TV set top boxes and other devices in which the operating system and software applications become irrelevant to end users, he said.

"Comdex should not exist," McNealy proclaimed. "I hope I'm not raining on the PC show, but that's just how we see it, it's inevitable," he said.

While many analysts and users here agreed that the PC faces serious challenges, opinions varied widely as to how quickly and how completely it will be displaced. One big question, they said, is how quickly businesses with massive investments in PC-based infrastructures will be willing to transition to a new type of device.

While the stability and efficiency of the PC have often been questioned, no other device has proved itself capable of replacing it, said Stephen Baker, senior hardware analyst with PC Data. "That's why Windows became so dominant in the first place; for better or worse, you knew what it was," he said.

The PC has empowered users by allowing them to store and manipulate data on their own desktop, the analyst said. Users will be unwilling to give up that sense of control, and for that reason the PC will survive for the foreseeable future, he said.

Others noted that content developers, designers and other types of professionals will likely always need a powerful desktop computer to do their jobs. But where space is at a premium, and where businesses see the potential to reduce IT management and deployment costs, the Internet appliance will find supporters, they said.

"I think (the Internet appliance) will be a real trend, but I'm not sure many companies have recognized the importance of it yet," said Marc Hammerich, an assistant to the executive board of GE Capital Information Technology Solutions of Kerpen, Germany, which provides PC distribution and consulting services to businesses.

Other observers pointed to the culture of change and urgency that the Internet has fostered, and said a transition away from desktop PCs may happen sooner rather than later. "When the Internet came on, no one knew things would change so quickly. Nowadays, things that used to take two to three years take six months," said Sunder Velamuri, vice president of sales and marketing with MediaQ, which makes chips for mobile devices.

Compaq expects to see sales of Internet appliances ramp steeply in the next two to three years, Meerkatz said, as customers reluctantly acknowledge the benefits.

"There aren't a whole lot of commercial clients out there (who) even want to go there, but they know it's inevitable," Meerkatz said.

Ultimately, he said, customers will decide the fate of the PC.

"It's really going to be driven by the consumer, rather than by the traditional pillars saying, 'This is the way it's going to look and operate because this is the way it's always looked and operated' " Meerkatz said.

(IDG News Service correspondent Terho Uimonen contributed to this report.)