Slashdot Mirror
Meeting with Netpliance
Kalin Harvey writes: A while ago I posted an announcement
on Slashdot asking for feedback to take to Netpliance regarding the i-opener
and their relationship with the hacker community. Since then I have
met with Netpliance and basically concluded that a lot of the dialogue
we were having about the company was missing the mark. Netpliance
is a different company than many of us thought and basically don't have
the ability to sell vast quantities of i-openers to the hacker community;
their whole focus is the service, on many devices, not just the i-opener
hardware. However, they also are big fans of open standards, and
would love help to contribute to an open development model and see the
embedded linux appliance market grow. They are also already making
commitments to working with the open source community. You can read
my full account
on linuxpower.org
I read the article and all I came up with was a resounding duh. The author acts as if it is a surprise that Netpliance was selling the terminals as a loss to gain market share to later recoup the cost on charging for service. Well ...Duh, they were selling a PC for $100 - $300 (depending on what discount you got). It was obviously at a loss.
Personally, I have begun to grow tired of these so called emissarys of the open source movement who make the open spource community seem like raving fanatics or clueless cheapskates. It doesn't take a genius to realize that Netpliance was always planning to sell the service and to go there and ask them to change their entire business model to satisfy a bunch of geeks who are not part of their target audience is ludicrous (heck, some ISPs still don't support Linux). It seems to me that if Open Source advocates want to be taken seriously by corporate interests they should be conversant with basic economic concepts and have an idea of real-world business practices. If this doesn't happen then corporate interests will continue to view Open Source advocates with disdain, suspision (sp?) and distrust.
Then again, do we reallly need corporate interests to satisfy all our wants? For example, if all you want to do is hack an I-opener, buy it, pay the $20 a month (if you're a good hack you make that much in an hour or two at work) and hack away. I'd simply see the $20 as a payment plan, similar to what I have on my car as opposed to buying a service (which it half is).
Netpliance is doing wonderful things. I'm dead serious; they're one of the few companies I've seen who I've really gotten the sensation that They're Getting It.
But they're a perfect example about how a corrupted market can affect even non-corrupt entities such as Netpliance.
Consider the $300 to $400 rebates that have been applied to computer prices across the country. It's a nice way to subsidize the cost of a computer--"and all without the government stepping in". But suddenly prices are no longer as advertised; you can't even look at a computer product anymore without looking for the fine print to see what it REALLY costs.
More than any other market, technology abuses the core concept that what you buy is A) What you think you're buying and B) Costs what you think you're paying. Old Man Murray(the ridiculously brutal commentary page at www.oldmanmurray.com) recently savaged Origin Systems for, as they said, "They've broken the sacred bond of trust between gamer and gaming mega-corporation: that there is actually a game in the box you're purchasing."
You just don't get that in other industries, but a combination of clueless newbies who don't even know the primary purpose of what they're buying and intensely focused techies who don't care about anything *besides* the primary purpose of what they're buying has fostered an environment where technology companies feel free to make bolder and bolder moves against basic consumer presumptions. The FTC, afraid to put the brakes on "the engine of the New Economy", is afraid to step in, even when scams such as UCITA are propogated and computers get advertised at blatantly false prices.
Netpliance doesn't sell boxes, folks. They sell a damn cool service. For $99 down and $20 a month, you go from Zero to Net Connected. Obviously this requires hardware, which Netpliance was willing to provide at a loss. The same happens for Cable Modems and DSL, for that matter. That's what they wanted to do, that's what they're built to do, and that's what they would be doing, if the rest of the market--if the big boys at AOL/Compuserve, and Microsoft, and Prodigy, and everyone else--hadn't defined customer expectations as a computer at a couple hundred bucks as long as you got that net connection "you were going to get anyway" through them.
Once the market had been polluted by the big players, where do we get off raging against a little guy with interesting hardware who did nothing else but enter the market they created?
Yes, it's a scam. But with the ridiculous fear against doing anything about it in government, what is nothing less than bait-and-switch has become a standard for an entire market. In such an environment, who wouldn't expect Netpliance to package their service as a product? It's easier to sell, they didn't invent the scheme, and honestly it gets cheap computers into people's hands, which is a major goal for everyone.
Now, things went wrong for Netpliance, but that's because they went the extra mile and designed a genuinely interesting piece of hardware to accompany their service. To be honest, they should license the design to another company--VA? Point of Sale? Hello?--and let them deal with the hassles of the product market, while they sell their service for $99 and $20 a month. But the FTC will have to step in and enforce honesty in the market first.
Expect this to happen when high speed networking hits critical mass *or* when a downturn in the economy makes large numbers of people cancel their modem Internet service.
Yours Truly,
Dan Kaminsky
DoxPara Research
http://www.doxpara.com
Every debate needs a strong dose of skepticism- and this post provides it in spades. But it's also important to understand the bias of the skeptics as well. The author's website includes a very passionate article that (among other things) displays an extreme and deep distrust of America's power structure of elite, wealthy corporations and individuals, especially when it comes to control of information through mass media outlets. This posting is extremely consistent with that worldview- which I must credit him for. On the whole, I'd agree with him, when it comes to large, multinational corporations.
/. posting, I checked with my local Circuit City, and they were backordered by 16 units. Multiply this by all of the retail outlets they sell through, and it represents a huge and overwhelming surge in orders that they were obviously not equipped to deal with, and that would not generate the ongoing service revenue they needed to meet their financial goals. Most startups are structured financially in a way that would not tolerate an deviation from the plan that is this large. If they missed their early service revenue targets by a significant margin (for any reason) they would be crucified in the public market, and they would effectively no longer be a going concern as a business.
As a counterpoint, I also would say that I don't think startups are in the same league. My bias is that I've worked for several, and understand that environment pretty well. I believe it's highly likely that Netpliance did not "give this guy a line", with the implication that they somehow mislead him about their true agenda or intent in order to generate positive press. I do think the author of the original article could have been a bit less star-struck and written a more balanced account, but I'm guessing that didn't happen because of inexperience about the functioning of startup businesses.
Here's what I'm guessing happened with Netpliance. I believe, as a whole (like many startup Internet companies) that it was formed by smart, well-meaning people who are passionate about a vision, which in addition to having some socially redeeming values (bringing the Internet to the masses) is potentially highly lucrative. I'm guessing that the demand for their appliances caught them completely by suprise, and likely posed a short-term, very serious threat to their financial viability as a business. This is something that, due to the way the investment community works, they would never admit to publicly, unless they *HAD* to. If they *HAD* to, SEC regulations would require them to distribute that information broadly and publicly. You can understand why they wouldn't want to.
Why would they have been in financial jeopardy? After the original
I don't think they made an unreasonable decision, given the circumstance. Being a "nice company" to a large community outside of your target market at the expense of the company's existance is just not an option. Their original misstep was to err on the side of being a nice company, and not lock people into a mandatory service agreement. Should they go out of business because they failed to forsee that the geek community would be so interested in their hardware? I don't think so.
Before you think I'm a total Netpliance apologist, understand that I was burned by this as well- I ordered a unit, and I had it canceled. My experience was that this was handled fairly smoothly, even if there wasn't a lot of communication about it. I understand that many people were handled less smoothly, and we can definitely fault Netpliance for not implementing what was a necessary decision in a way that was less disruptive. But accuse them of lieing to this reporter and "giving us the finger" is a bit much, even for a skeptic.