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New Netpliance has same 'problem' as old

A new, "unmodifiable" $99 Netpliance device meant to foil hackers can be upgraded into an ordinary PC, just like an earlier version the company pulled off the market.

A new, "unmodifiable" $99 Netpliance device meant to foil hackers can be upgraded into an ordinary PC, just like an earlier version the company pulled off the market.

Netpliance made headlines last month when hackers modified its inexpensive "i-opener" device--which costs about $300 to produce--into a modest but capable Linux-based PC. The product--essentially nothing but a flat screen, keyboard and modem--was intended by Netpliance to be used solely with its $21.95-per-month Internet service.

The Texas-based company quickly announced a second-generation appliance, notifying customers who had ordered terminals from Circuit City that "modification of the i-opener in any way is no longer possible in the new model."

The changes included a layer of epoxy intended to keep an essential chip from being upgraded.

But Ethan R. Dicks, an Ohio computer techie, and another experimenter, Anthony Shadwick, both said they were able to modify the new-style I-opener.

"I was able to modify my box with no problem," Shadwick said.

Programmers can modify the i-opener2 routines without having to remove its firmware chip. A small software utility program is available to convert the units to full PC functionality.

"It took me about two hours," Dicks said.

Munira Fareed, Netpliance's director of marketing, said the i-opener2 was supposed to be hack-proof, but "I would never say it's impossible."

Netpliance tried to address the first hack by changing the terms of its user agreement, prompting complaints from would-be consumers. The company said that as of March 31, buyers would have to agree to sign up for at least 90 days of Internet service at $21.95.

The letter said that if buyers failed to open the Internet account within 30 days of purchase, Netpliance would charge their credit card $499. Buyers could also cancel their order or return the unopened i-opener box within 30 days.

Although Netpliance officials say they won't try to charge anyone who received the units after March 31, some legal experts say even buyers who picked up their i-openers after receiving Netpliance's letter might not be legally required to sign up for service now.

Steve Calkins, former general counsel of the Federal Trade Commission (FTC), said, "If a consumer bought a $99 product in good faith, it would be very problematic for Netpliance to hit them with another $499 charge."

Charles Schafer, professor of consumer law at the University of Baltimore, added, "This whole idea that you are bound by the terms of an agreement that you didn't see before you bought the product is very questionable at best."

Buyers of the i-opener, however, can rest easy for now. Circuit City's Stewart says, "We have no agreements to charge any customer that $499 and we do not have any intention to charge our customers that."

The stumbles aren't helping Netpliance turn a profit. With new appliances, such as the $49 WebSurfer Pro, already available, Netpliance may have trouble recovering.

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