June 2, 2003 11:56 AM PDT

Ellison's NIC Co. to shut down

Larry Ellison's New Internet Computer Co., which sold cheap Web-surfing devices as an alternative to PCs, is closing its doors.

The company decided to wind down its operations after failing to close a round of new investments earlier this year, company President Ken Lambert said in a telephone interview Monday with CNET News.com. The company had gone through a recent reorganization and a push into Latin America, but sales did not pick up fast enough to keep the company afloat, Lambert said.

"Without a cash infusion of several million dollars we really didn't have the wherewithal," Lambert said.

The closure marks Ellison's second failed attempt to offer a low-cost PC alternative. The Oracle CEO's first attempt, Network Computer, eventually switched to software and morphed into TV software maker Liberate Technologies. An Oracle representative said Ellison had no comment on the matter.

Ellison's second go-around, the NIC Co. launched with some fanfare three years ago, with the company auctioning off the first 10 of its Linux-based models on Amazon.com. The devices, which had no hard drive and ran off a version of Linux stored on a CD-ROM, initially sold for $199 without a monitor.

However, the market proved somewhat elusive, with sales and profitability goals often failing to meet promised numbers.

In April of last year, founding CEO Gina Smith announced she was leaving the company. In September, the company said it had raised $2 million in new financing. New CEO Peter Clark said the company had shipped 40,000 of the Net devices, well below the targets laid out by Smith.

A deal to supply the company's hallmark devices to low-income housing projects also failed to meet expectations, Lambert said.

Lambert said the company is still pursuing a few investment leads but decided it is better to begin winding down operations. The company has stopped taking new orders but has still been fulfilling some existing orders and providing customer support. Lambert said the plan is to pay all of the company's bills before going out of business.

In many ways, the closure marks the end of an era for the computer industry. The NIC Co. was the last company truly promoting the concept of a Web-surfing appliance as an alternative to a low-cost PC. It was an idea that flourished briefly in the late 1990s, with 3Com, Sony, Gateway, Compaq Computer and Netpliance all pushing such devices. However, all eventually pulled the plug after limited sales.

Among the few survivors of the category is an e-mail only device known as the MailStation. The device was pioneered by Cidco, which was sold to EarthLink in late 2001.

 

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