SAN FRANCISCO -- NetChannel Inc., the developer of a
television-based Internet service, is shutting down its service on May
3 and customers who purchased the RCA Network Computer will be
entitled to a refund for the device.
NetChannel, based in South San Francisco, developed an Internet
access service that competes with Microsoft Corp.'s WebTV
Networks. The company has been looking for additional funding or a
major financial partner for the past month.
NetChannel, however, said it is not shutting its doors and it is
continuing to look for funding or a strategic partner.
''The company is not closing, there will be come continued
restructuring of the company and there will be some layoffs.
However, NetChannel is still in business,'' said Jim Gustke, vice
president of marketing at NetChannel.
NetChannel now has about 60 employees, after laying off 16 staffers
two weeks ago. It had 125 employees several months ago. There will
be at least 10 more employees laid off.
Thomson Consumer Electronics, a U.S. unit of Thomson SA of
France, markets the network computer device under the RCA brand.
The network computer lets customers access the Internet through the
NetChannel service on their TVs. Thomson said it will refund
customers for the cost of the network computer.
''We were aware that NetChannel would be terminating its services
to the RCA Network Computer and we put together a plan that we
felt would be fair to both consumers and the retailers who purchased
the products,'' said James Harper, a spokesman for Thomson
Consumer Electronics division.
Thomson said the cost of the refunds was ''minimal'' to Thomson, but
he declined to give any estimates. Thomson said it shipped a total of
40,000 units to retailers.
NetChannel said it sent an e-mail message to all its 10,000 customers
saying that its service would shut down on May 3 and that customers
will not be billed at all for May.
Thomson said its customers can return the product to the retailer
where they purchased the RCA Network Computer with a proof of
purchase and they will be refunded the full cost of the device. The
network computer was priced at $199 with a standard keyboard, or
$249 including a wireless keyboard.
NetChannel has reportedly been in talks to be acquired by America
Online Inc. The Wall Street Journal reported Wednesday that its
acquisition talks were still continuing, even amid the shutdown of the
NetChannel service.
America Online, based in Dulles, Va., and NetChannel both declined
to comment.
''AOL certainly has an AOL TV agenda,'' said Gary Arlen, president
of Arlen Communications in Bethesda. ''But I'm not sure what AOL
actually would be buying if they acquire NetChannel.'' He said that
NetChannel's service was one generation behind WebTV Networks,
but he added WebTV has not been such a great hit either, with only
300,000 subscribers.
Earlier this month, NetChannel said it was looking for another round
of financing and said it had been in talks with a number of companies,
including some major media companies.
NetChannel's UK operations were sold earlier this month to UK
cable television and telecommunications firm NTL Inc. for 1.5 million
pounds ($2.5 million). NetChannel UK will be folded in as a division
of NTL Internet.
Tim |
