Only 41,000 subscribers at the end.
thestandard.com
Metricom Post-Mortem
By David Sims
Aug 09 2001 02:14 PM PDT
Costly infrastructure and high subscription rates made the
Ricochet service a tough sell. But the rise of alternative
wireless technologies also led to the wireless Net access
provider's failure.
So what killed Metricom, anyway?
San Jose, Calif.-based Metricom shut
down its Ricochet wireless Net access
service last week and laid off its
remaining 282 employees after failing to
come up with a plan to pay off $1 billion
in debt, just a month after filing for
Chapter 11 bankruptcy protection.
To date, most of the post-mortem
analysis has focused on the company's
expensive proposition of building out a
proprietary network across 15 cities. The
media have also blamed the service's
high monthly fees ($79 or more, after
spending up to $300 for a wireless
modem) that kept the network's
membership under 50,000 subscribers.
The company remained optimistic right
up to the end that it could leverage its
unique position as the first wireless
networking provider to the mobile
warrior. As recently as May, Metricom
Chief Technology Officer Mike Ritter said
that the company would be in good
shape if it raised another $500 million to
build out its network. But the company
wouldn't collect that kind of funding in
the current economic environment, especially not with only
40,900 subscribers by the end of the first quarter of 2001.
Metricom launched its road warrior service in 1995, embarking
on a plan to build a proprietary network covering dense,
metropolitan areas. But competitive technologies may have
made its service obsolete even before it was built out
completely. Mobile Insights analyst Tim Scannell, speaking on
CNET Radio last Friday, called Metricom a "classic pioneer" and
accused the company of spending too much money "buying
geography." (Remember, pioneers don't always end up as
statues; they're also the guys lying on the trail with arrows in
their backs.)
The rise of wireless networking - in particular the 802.11b
standard, also known by the catchier if contrived term Wi-Fi -
may have helped doom Ricochet by offering a less expensive
wireless service. While it's true that users can't generally
access the Net over an entire metropolitan area using Wi-Fi, as
they could in 15 cities with Ricochet, they can use it
increasingly in the places that matter most. Companies such as
Wayport and MobileStar have set up coverage in major U.S.
airports, business hotels and convention centers. MobileStar
made headlines this spring by announcing a deal to offer the
service in Starbucks cafes, and it is offering it at dozens of
outlets in five metro markets. And grassroots community
wireless efforts sponsored by big-hearted system administrators
are cropping up in some cities, including San Francisco, Seattle
and Boston, which anyone with an 802.11b card can log on to
for free - if they're in range.
E-mail pagers have to take some of the rap for Metricom's
downfall, too. E-mail, the most popular online application, is
often the only reason professionals log on to a notebook
computer. In an Information World article last month, columnist
Ephraim Schwartz noted that 80 percent of one law firm's
attorneys travel with their notebook only to retrieve e-mail. The
Los Angeles firm Paul, Hastings, Janofsky & Walker reportedly
saved $300,000 on laptop purchases in one year by buying
Blackberry pagers for employees.
Finally, the imminent availability of competitive high-bandwidth
services on mobile phone networks may have contributed to a
wait-and-see attitude that kept potential subscribers from
making the leap. General Packet Radio Service (GPRS) has been
rolling out on mobile networks throughout Europe this year,
offering speeds similar to Ricochet's: around 128 kilobits per
second. AT&T Wireless began offering GPRS service on a limited
basis in Seattle, to users who buy a handset for the service.
Metricom aimed at laptops and PDAs, and GPRS service is aimed
squarely at mobile phones, but the extension to data seems
inevitable, and the wider reach and deeper pockets of the major
cellular carriers pushing the service may have frightened
investors away from further backing the maverick Metricom
service. |
