Thursday, May 04, 2006

The Tech Hey-Day

So the is celebrating 10 years of being online with a variety of features. One that caught my eye was "The Best of the Worst" article on things that have gone bust during the Internet era. Every great revolution, including the Internet Revolution, is wraught with mistakes and failures. The covered the top 10 biggest flops in the technology era.

See the article pasted below or see it here.

The Best of the Worst

May 3, 2006

What were they thinking?

The Internet spawned so many weird gizmos and bad business ideas that mocking dot-com duds became something of a sport in the post-bubble era. But some ideas still stand out for pure silliness. These are products and services that attracted lots of publicity -- and, in some cases, millions of dollars in funding -- before folding.


In the earlier days of the Web, "nobody seemed to care if there was a real business there," said Alan Meckler, chief executive of Jupitermedia Corp. and Internet industry pundit.

[Join our discussion]
Remember other offbeat ideas from the dot-com era? Join our discussion.

If It Seems Too Good to Be True

Take, which thought it could make money by giving stuff away for free. The online retailer, founded in 1998, sold an assortment of goods at heavily marked up prices (some items going for up to 10 times their retail values), but promised customers a hefty rebate that often amounted to 100% of the purchase price.

For example, CyberRebate charged about $1,100 for a 13-inch RCA television that normally retailed for a few hundred dollars. Buyers could get a full refund of the purchase price as long as they jumped through some hoops -- rebate forms had to be submitted by a deadline, and checks came 10 to 14 weeks later. CyberRebate banked on the idea that some percentage of buyers would forget to fill out the rebate form, or fail to do so in time, leaving the company to pocket the money.

[cyber-rebate logo]
CyberRebate promised hefty rebates, but didn't deliver.

But selling items at such wildly inflated prices just about guaranteed customers would go out of their way to get their rebates, quickly sinking CyberRebate into heavy debt. The company, founded by law school student Joel Granik, filed for Chapter 11 bankruptcy protection in May 2001, listing liabilities of $83.4 million. Much of that debt was owed to consumers who were promised rebates but hadn't received them.

Both Mr. Granik and his business partner, Joseph Lichter, settled with the Federal Trade Commission for $40,000 in August 2004 and were barred from running a rebate-based business. Some rebate claimants eventually received partial reimbursement of about nine cents for every dollar, according to a statement on CyberRebate's Web site.

Money Matters

Then there was, which tried to create a form of digital currency. Similar to the also-ill-fated, users could purchase "flooz" and give it to others as a sort of virtual gift certificate. Flooz could only be spent at participating online retailers, which included and J. Crew.

Flooz signed on actress Whoopi Goldberg to promote its online currency.

The company managed to raise over $50 million in funding from 1999-2001 and even signed on comedian Whoopi Goldberg as a celebrity spokeswoman before bad times hit.

According to Flooz founder and Chief Executive Robert Levitan, who previously co-founded women's Web site iVillage, the beginning of the end came in spring 2001. That's when Flooz's corporate clients began to cut back on orders for gift certificates to be used in promotional giveaways -- a revenue stream Flooz was counting on -- amid the softening economy. Then a ring of thieves in Russia and the Philippines charged about $300,000 in Flooz to stolen credit cards. The online piggy bank officially declared itself broke in August 2001.

Several other online-payment companies also failed, though PayPal survived, largely because it positioned itself as a money-transfer service. PayPal's offerings became particularly popular with online auction users, and that company was acquired by eBay Inc. in 2002.

"I would have wanted a different outcome," said Mr. Levitan, who has since moved on to start-up Pando Networks Inc., which aims to simplify the sending of email attachments. "But I am proud of what we accomplished."

The Sweet Smell of iSmell

The "iSmell," a product created by the now-defunct Digiscents Inc. in 1999, promised to enhance the Web surfing experience by engaging users' senses of smell.

Digiscents created a prototype iSmell but never released the product.

By plugging iSmell into the computer through a USB port, the device would generate different scents. So in theory, someone looking to purchase beauty products could smell a new perfume before buying it, or videogame fans could conjure up the smell of a ballpark while playing a baseball game.

But how well the device worked, and whether customers would really spend money on it, remains a mystery, because Digiscents never got around to actually releasing the product (a prototype was on display at the 2001 Consumer Electronics Show in Las Vegas).

Hit by skepticism and the weakening economy, Digiscents shut down in 2001. Its creators, biotech entrepreneurs Dexster Smith and Joel Bellenson, now run Upstream Biosciences Inc., which is working to develop tests that can aid in the early detection of cancer.

"It was a heartbreaking experience, because we had put so much into it," said Mr. Bellenson, who said he still hopes to revive the product someday "when the timing is right."

Turns out he's not the only one still hoping bring smell to the world of media. Some movie theaters in Japan this summer will use a device made by telecom company NTT Communications Corp. that will waft odors at audiences viewing the adventure movie "The New World."

CueCat Falls Flat

CueCat was another favorite target for mockery among dot-com critics. The pen-sized device, which was shaped like a cat, was connected to a personal computer via the keyboard port. A user could then flip through magazines or newspapers while sitting near a PC and scan special bar codes on ads, which would automatically bring up relevant Web pages with more information. Users' Web-surfing habits were also monitored, and anonymous data were used for marketing purposes.

Millions of CueCat scanners were given away in 2000.

Digital Convergence Corp., the company behind the product, raked in $185 million in venture capital funds; investors included big names like Coca-Cola Co. and General Electric Co. In 2000, four million CueCats were given out across the U.S. (some handed out free in RadioShack Corp. stores and others sent in promotional mailings).

But the device that generated so much excitement with marketers failed to catch on with consumers. Unenthusiastic reviewers included The Wall Street Journal's Walt Mossberg, who questioned whether anyone would use the device while sitting in front of a PC, and called it "unnatural and ridiculous." And there were other problems, including a security breach at the CueCat Web site that sparked privacy concerns.

Still, the digital feline has since managed a second life. Computer hackers figured out a way to "declaw the cat" by snipping a small wire that lets them use the scanner to reach sites or read any bar code without leaving a trail for marketers. Scores of CueCats are available for purchase on eBay, with sellers touting the device's usefulness as an inexpensive, personal barcode scanner to catalog books, CDs, videocassettes, and DVDs.

"The cat got butchered, but it has spawned a cottage industry," said the device's inventor, J. Hutton Pulitzer, who now operates a patent holding company in Dallas. Mr. Pulitzer (who changed his name in recent years from J. Jovan Philyaw) laments that he let himself get swept up in the Wall Street frenzy of the late 1990s. "Hindsight is just that," he said. "You can't do anything about it."

Surfing in the Bathroom?

Microsoft's iLoo became a PR problem for the company.

Big companies -- not just small start-ups -- have had their own share of digital duds. Software giant Microsoft Corp. generated plenty of buzz in May 2003 when it announced plans for the iLoo (an Internet-enabled toilet), but the captivating commode is probably best remembered for the public relations fiasco that followed.

The company's MSN division in the United Kingdom announced plans for a portable toilet complete with a computer, waterproof keyboard and wireless Internet connection, to be used at summer music festivals in England. But the project was soon the butt of jokes around the world. Microsoft initially responded by saying the project was a hoax, then later changed its story, saying the iLoo was in fact real.

A company spokesperson blamed the mixed messages on "international miscommunication." With such a reception, plans for the iLoo were flushed.

Not Just Any 'Audrey'

Then there was the "Audrey." 3Com Corp.'s Audrey was one of several so-called "Internet appliances," or stripped-down PCs intended for email, Web access and calendars.

3Com's Audrey aimed to bring Web surfing to the kitchen.

These terminals -- similar products were released by Gateway Inc. and Compaq Computer Corp. -- were marketed toward what the companies believed were technology-shy users, namely senior citizens and housewives. The gadgets promised simple setups, and powered up quickly, without the lengthy boot times required by a full-fledged computer.

The Audrey, released in late 2000, was a futuristic looking nine-by-twelve-inch box with a touch screen and clear stylus; the stylus would blink with a green light when new email was waiting. It retailed for $499.

But users still had to go through the hassle of dealing with an Internet service provider in order to get the gadget online, which added to the cost and made the Audrey more complicated. Also, as prices on traditional computers plummeted, it was hard to justify spending $500 on a stand-alone Internet device.

3Com discontinued the Audrey in March 2001 after sales lagged behind expectations. The device, however, can still be found on eBay auctions and has been embraced by hackers who reprogrammed Audrey to play MP3 files, display photos and control household lights and appliances.

PointCast Disappoints

PointCast used a custom browser to serve up news headlines, stock quotes and other information, along with advertisements.

Who could forget PointCast? Computer geeks everywhere were gaga over the company's "push" technology, which was software that subscribers downloaded onto desktops as a screensaver with feeds from a select list of content providers. The program would then automatically deliver news and headlines over the Web to the user's PC. (The Wall Street Journal was one of PointCast's content partners.)

PointCast, launched in 1996, reportedly spurned an offer from News Corp. -- which wanted to buy the start-up for up to $450 million -- in hopes of making it big with an initial public offering. But users complained the software clogged then-dominant dial-up networks, and marketers began using the technology to flood users with unwanted ads.

PointCast was eventually bought for about $7 million in 1999 by Launchpad Technologies Inc., and the service ceased operation the next year.

Remember other offbeat ideas from the dot-com era? Join our discussion.

Write to Katherine Meyer at


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