(FORTUNE Magazine) – Unless you've spent the Past year under water, you've probably heard about the network computer, often referred to as the NC. Depending on how one defines the beast, you'll also hear it called the "thin client," the "Internet appliance," and "the $500 box." Marquee CEOs like Oracle's Larry Ellison, Sun Microsystems' Scott McNealy, and IBM's Lou Gerstner have spent lots of energy and loads of cash realizing their various ideas of the NC. Even notable naysayer Bill Gates has softened his critical stance a touch--enough that Microsoft will at least produce or adapt software for the things. (Whew! Lots of us were getting worried that Microsoft didn't want our money anymore.)

The debate has generated huge hype, but there has also been progress toward an honest-to-goodness product. Contrary to the hoopla, the first NCs are neither cutting-edge devices nor consumer products. (For an example of a next-generation device for consumers, see the following story.) Early NCs are aimed at FORTUNE 500 companies with high-speed networks. The price per unit: $500 to $3,000 or more. Sounds higher than advertised, but here's the sales pitch that counts: According to estimates by Gartner Group, a Stamford, Connecticut, research firm, a typical company will spend around $40,000 over five years to support and administer a Windows PC; a network running NCs could cost $4,000 to $12,000 less per device.

In practice, the early NCs aren't the stylish gunmetal-gray boxes you see in glossy computer magazines. Since the whole idea is to make them inexpensive, interchangeable commodities, it should be no surprise that the first NCs are putty-colored and resemble medium-size pizza boxes. Most have standard plugs for a keyboard and monitor and a jack for connecting the unit to a network.

Inside the pizza box there's more variation from machine to machine, but most models adhere to certain standards: They let you add memory, they include slots for attaching devices like disk drives or video cameras, and they promise to run all the sound and video you find on the Internet or your corporate network. While there's much sniping about which NC is going to be the first to do a great job running those small software programs called Java applets, most will run the applications you really need.

The most mundane aspect of the network computer? Using it. Familiar applications like Microsoft Office and Netscape Navigator run pretty much the same as on your PC. In some cases, the programs trot rather than gallop--but you shouldn't notice a difference unless you're crunching the company payroll. More likely, your only complaint will be that the only games you can play are those your employer installs on the network server.

Ah, yes, the server. No matter how good anyone makes these NCs, what you get out of them depends on how well they are integrated into your network. If your network is down, your NC is down.

Nevertheless, some early adopters are geared up. Manuel Roy III, information-technology supervisor at Blue Cross/Blue Shield's Southern Region in Miami, is running a pilot installation of ten NCs. Hooked to two servers, they provide 14 users with Microsoft Office 95, Netscape Navigator, and other applications. He says, "Most of our people don't see any difference at all." Users, he says, can sit in front of any NC, "log in, and the desktop is customized for them. I don't need to go around and fix or change anything because there's nothing users can change that gives you problems." Since setting up the system, he adds, "our maintenance has gone to almost nil." If the fledgling network successfully handles more users, Roy plans to replace 120 of his department's PCs with NCs within two months.