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David Coursey
Why Moxi, darling of CES, might now be as good as dead

David Coursey
Executive Editor, AnchorDesk
Thursday, March 7, 2002
TalkBack!Add your opinion
It looks like BusinessWeek   has stumbled onto Silicon Valley's latest version of "The Emperor's New Clothes," starring Moxi Digital as the emperor, a bunch of industry types who should have been smarter as the townspeople afraid of looking stupid, and BusinessWeek  (and of course, yours truly) as those who saw the truth and told it.

You know the story, written by Hans Christian Andersen in 1837, about the vain emperor who was hoodwinked by two swindlers into buying an exquisite coat that had but one problem--it didn't exist. Yet everyone, including the emperor, exclaimed over the coat's beauty, having been told that only intelligent people could see the special cloth. That continued until the emperor's procession passed a small child, who saw the emperor for what he was: naked.

OUR VERSION starts Jan. 7 at the Consumer Electronics Show where, to wild acclaim and a "Best of CES" award, Moxi introduced a box that combined TV, video, music, Internet, and home networking into a single device. Time   magazine gushed over the new device and its first customer, EchoStar Communications, saying, "Can world domination be far behind?"

Well, yes, actually. On Feb. 20, Moxi founder Steve Perlman stepped down as CEO amid concerns the company, which last year raised $67 million for investors, is running short on cash. Into his place went Rita Brogley, the company's former VP of business development and marketing.

I happened to interview Brogley at CES and found her to be one of the more clueless senior executives I've ever met. If that interview is any indication, Moxi is as good as dead.

Which it may be anyway, at least according to the BusinessWeek  investigation, which paints Moxi as a company that misled the media, paid Perlman (who remains on its board of directors) exorbitant rent on empty office space, overstated the commitment of EchoStar, and is on the ropes if more money or a buyer doesn't show up fast.

PERLMAN, YOU MAY remember, is the founder of WebTV, the first company to tie together the Internet and television. Perlman got out of that misadventure while the getting was good--Microsoft paid him $425 million for WebTV (probably some of the worst money ever spent).

Nevertheless, that cachet brought Perlman credibility when he brought out Moxi. Analysts swooned, at least in part because Moxi said EchoStar, which owns Dish Network and is trying to buy DirecTV, would do a major test of the device. More recently, EchoStar told BusinessWeek   that no contract exists between the two firms.

Moxi also said its device could be sold to cable-television companies for $450 each. That number--which Moxi said would be covered by rental fees paid by customers--is much higher than cable companies are used to paying for set-top boxes. Now, insiders tell BusinessWeek   the devices cost more like $750 to produce, which I think makes Moxi a non-starter.

There were only a few discouraging words said about Moxi at its introduction. I think this was partially because people wanted to believe in Perlman--why, considering his WebTV track record, I don't understand--and also needed to find something at the show to get revved up about.

In my column from CES, I was skeptical of Moxi. I was more so in private discussions with analysts and probably on my radio program. Given that Moxi wasn't supposed to show up in people's homes for more than a year, I figured I had plenty of time to complain in the future.

NOW IT LOOKS like I might not have to, for if BusinessWeek   is right, the Moxi experiment could be over very soon. I'd caution any potential buyer that from what I've seen, Moxi's technology really isn't that special. Sure, they were there first--except that it's turned out there's no "there" there.

This may not be the last we hear of Moxi, but if it is, the company won't be missed. I feel sorry for the talented people who tried to make it fly, but have to express particular sympathy for Mr. Perlman, who today appears much more like a confidence man than the industry visionary he's usually portrayed as being. Which is sad, because Steve is actually a very bright guy--who should never be CEO of anything larger than a 7-11 ever again.

Do you think Moxi's a lost cause...or am I (and BusinessWeek)  being too hard on the company? TalkBack to me, and take my QuickPoll below!

    HEAR MORE:
  • Listen to David Coursey's discussion about Moxi with BusinessWeek's  Ben Elgin and InteractiveTV Today's Tracy Swedlow on AnchorDesk Radio...Player link: CLICK HERE TO LISTEN.

Do you think Moxi Digital is as good as dead?
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I don't know

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