Compaq Computer Corp.s decision to extend mobile Internet services on foundering Metricom Inc.s Ricochet wireless network is raising questions about the offering and fueling speculation that Metricom may be ripe for a takeover.
Compaqs new iPaq Mobile Internet extension was announced last week and is designed for “on-the-go businesspeople.” Under the initiative and through a deal with WorldCom Inc., which will act as service provider for Ricochet, Compaq will offer its notebook and iPaq handheld users wireless service at data rates of up to 128K bps.
But theres a problem. John Cornwell, vice president of business development at Metricom, in San Jose, Calif., said his company is on the brink of insolvency and that “without further funding, the company is not going to continue operation.” That would mean the end of Ricochet services, which run over the proprietary MCDN (MicroCellular Data Network), which Metricom alone operates.
Potential users doubted that Compaqs involvement would make the situation more attractive. “We wouldnt risk investing in a strategy that appears to be on its way to dissolution,” said Lester Morgan, senior manager of technology for the National Football League, in New York. “Long-term initiatives such as wireless require solutions that are stable in every respect.”
Still, Compaq officials said they chose Ricochet because its speed is an improvement over what the Houston vendor currently offers with its Cellular Digital Packet Data services, which run no faster than 19.2K bps.
“Customers are really clamoring for high-speed data,” said Ted Clark, vice president of Compaqs iPaq Mobile Solutions. “In the cities where Ricochet is deployed, it works really well.”
Clark said Compaq had faith in the survival of Metricom, but for the future, the vendor plans to support upcoming generations of wireless data, including General Packet Radio Service and Code Division Multiple Access.
The Ricochet service—which has received much critical, if not financial, support—requires a Novatel Inc. Wireless Merlin Ricochet PC Card for $299 and carries a flat monthly fee of $75.
But in addition to its shaky financial future, Ricochet reaches only 15 cities—13 with 128K-bps service and two with 28.8K-bps service. Metricom had planned to expand coverage to more than 30 cities but nixed those plans in February as part of a restructuring, adding another reason for skepticism.
“We have a business presence in more than 30 markets nationwide and would be unlikely to consider any wireless solution that only served half of them,” the NFLs Morgan said.
“[Compaq] just wants to collect as many things as they can,” said Ken Dulaney, an analyst at Gartner Inc., in San Jose, Calif. “But [Ricochet] has got to be on its last legs. It works, but [Metricom] has to spend millions they dont have to make it viable.”
Dulaney added that he didnt see much of a future for MCDN technology. “What can you do with it? You cant combine it with voice. Its sort of a regional network,” he said.
Metricoms Cornwell said that despite persistent rumors, there are no plans to sell Metricom to any of the carriers that offer Richochet services, which include, in addition to WorldCom, Wireless WebConnect Inc., GoAmerica Inc., Juno Online Services Inc. and EarthLink Inc.
“Acquisition is not imminent,” he insisted. “We like to believe that the involvement of Compaq is a very effective way to show that we have a good chance to continue to work.”
Along with the Ricochet support, Compaq last week announced that in June it will begin offering new installation and orientation services for customers deploying iPaq Mobile Email and iPaq Mobile Intranet. The company also introduced several client-side add-ons to support 11M-bps wireless LANs, as well as a new notebook. The Presario 800 weighs less than 3.5 pounds, with prices starting at $1,799.