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Technology Stocks : METRICOM - Wireless Data Communications -- Ignore unavailable to you. Want to Upgrade?

To: Sir Auric Goldfinger who wrote (3348)	8/9/2001 6:40:43 PM
From: Glenn Petersen	Read Replies (1) \| Respond to of 3376

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.