March 18, 2000
From Geek Improvisers, a $99 Personal Computer
By AMY HARMON
ince it was founded just over a year
ago, a Texas company called Netpliance
has spent millions of dollars to reach its
target market: nontechnical folks who
want a simple, inexpensive device to connect them to the Internet without a full-fledged personal computer.
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Sam Morris for The New York Times
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Ken Segler, with the i-Opener, musing
at his home in Las Vegas yesterday.
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So it came as a not necessarily welcome
surprise this week when an insatiable demand for its product emerged from the
geek subculture. For an extra $100 in parts,
an electronics engineer in Las Vegas figured out how to tweak the $99 terminal,
designed solely to serve as an Internet
appliance, so that it works like a fancy PC.
Last Saturday, he shared his discovery
on a Web site called Slashdot, a gathering
spot for computer engineers whose masthead reads "News for Nerds." Within a
few hours, tinkerers across the country
were trooping into Circuit City outlets --
the only retail chain selling Netpliance's
device, the i-Opener -- and jamming the
company's toll-free telephone line.
The unanticipated demand may sound
like good news for the company. But under
its razors-and-razorblades business model,
it loses money on each machine it sells.
Profits are expected to come from the
$21.95 it charges customers each month to
connect to its Internet service -- a service
that does not interest the hobbyists.
And with the device in short supply --
many Circuit City outlets say they are sold
out -- unmodified I-openers are now being
resold on the eBay auction site, with bids
exceeding $250. "This is the one you can
hack!" one seller wrote. "Get it before
they fix it!!"
The attention was not of the sort Netpliance was looking for this week as it
prepared an initial public offering. Its
shares, priced at $18, began trading yesterday and closed at $22.0625.
Kent Savage, Netpliance's chief executive, said the company was not worried,
although it is following the activities of its
new fans.
"We welcome the interest of the technical community," Mr. Savage said. "If this
becomes a problem, we will do what we
need to stop it."
The $99 introductory price is scheduled
to rise to $199 after Father's Day, but
even that will not approach the cost
of production, estimated by analysts
at $300 to $400.
In a testament to the Internet's
capacity to quickly establish a collective wisdom, the Web has been
flooded in recent days with tips and
diagrams illustrating the cheap but
technically delicate operation that
turns the I-opener into a computer
that can run word-processing programs and play digital music files.
Netpliance's unlikely new customer base even came up with a nickname for the sleek device: "I-opened-it."
Company officials said the Internet service had attracted 14,000 subscribers since they started shipping
the product in November. The amateur modification army estimates
that those in their ranks have placed
up to 3,000 orders in one week, based
on the postings in their clogged chat
rooms and e-mail lists.
Aimed at computer novices, the
Netpliance service, which has been
well received by industry reviewers,
includes features like a button to
order pizza online and a light that
glows like an answering machine
when a subscriber receives an e-mail
message. The machine requires no
time to boot up -- users simply turn
it on and off like a television set.
But the computer jockeys lining up
to buy the I-opener have no interest
in all that. And those who have
bought it through Circuit City have
not been obliged to sign up for the
monthly Internet service. For those
ordering directly, Netpliance this
week started billing the first month's
access along with the purchase of the
machine, but customers are free to
cancel after that.
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Netpliance loses revenue
to amateurs who modify
its Internet connector.j | |
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"If people buy the boxes for the
subsidized cost without buying the
service, that's tough on their business model," said Bryan Ma, an analyst at IDC Research. "But opening
up the box and hard-wiring cables
requires expertise that most consumers are not going to have."
Ken Segler, a 36-year-old Las
Vegas engineer who started all the
improvisation, has rooms full of
computers, video games and other
gadgets that he has opened up and
modified over the years. He bought
his I-opener when he chanced to spot
it last month during a visit to Circuit
City, where he was purchasing a
digital video disk player.
Within two hours of bringing the
machine home, he said, he had attached an extra hard drive he had
lying around with a cable that he
modified to fit into the device's motherboard. He set up a Web site to
describe how he did it, and began
selling the cables for $35. So far, he
reports about 200 orders.
"The hardest part," he said, "was
opening it up."
Although it seems there is little
danger that average customers will
be willing or able to wield screwdrivers and solder cables to fashion a
cheap computer, the implications of
the modified I-opener have attracted
interest beyond geek circles.
Andy Carvin, who heads the efforts
of the Benton Foundation to address
inequity in computer access, e-mailed an article on the subject from
the Wired News site to the organization's "digital divide" mailing list.
"Here's a device that opens up
new possibilities for people who can't
afford computers but have the skills
as tinkerers," he said. "It's clearly
not a solution for everyone, but I can
see it being used by clubs and schools
for science projects to make computers available for children who can't
afford one at home. I know a lot of
students who would love to do it."
Those who have experimented
with the modified device say it is
equivalent to a 150-megahertz Pentium machine -- far less powerful
than most PC's being shipped today
but with its modem and LCD screen
still a bargain. Most of the technicians fiddling with I-openers are less
interested in saving money, though,
than in the thrill of transforming a
machine designed for one purpose
into something different.
Roger Tetzlaff, 24, of Brunswick,
Ohio, for instance, intends to use his
in the console of his 1979 Ford Bronco as a combination global positioning system interface and digital music player. He had spent more than
$400 in the last month building his
own prototype of such a device.
"At $99, even if you mess up the
unit, it's worth it just for getting into
it and trying to modify it and adapt it
to your purpose," said Mr. Tetzlaff,
whose mailing list for modifiers has
grown to 600, including several from
Sweden, in a week. "Really the bang-for-the-buck ratio is way too good to
pass up," he said.
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