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Commentary: Score one for Goliath

The failure of Metricom is a "David and Goliath" story--but this time, David's the loser.

    By Bob Egan, Gartner Analyst

    The failure of Metricom is a "David and Goliath" story--but this time, David's the loser.

    Metricom's decision to file for bankruptcy protection comes as no surprise to Gartner, which has long believed that the company was in an untenable position. Intense competition, loss of investor confidence and a fundamentally unsound business model combined to bring Metricom to this point--and it is highly unlikely that the company will be able to recover.

    Metricom was essentially trying to build a nationwide wireless Internet infrastructure, one transmission pole at a time. That would have been a difficult enough task under any circumstances, but Metricom added to its troubles by choosing to compete in some of the toughest markets in the country: first-tier markets such as New York City and other major urban areas. Those markets--unlike the bandwidth-starved areas where Metricom might actually have had a chance--already have robust communications infrastructures and intense competition from digital subscriber line (DSL) and cable providers.

    Because it chose to play in such highly competitive markets, Metricom needed to build its network, establish compelling value and attract sufficient investment in a very short time. The company had the narrowest window of opportunity--and its bankruptcy filing makes it clear that the window has now slammed shut.

    See news story:
    Metricom files for bankruptcy protection
    Gartner believes it is the Goliaths--the providers with established infrastructure, efficiencies of scale and deep, deep pockets--that will win in delivering high-speed Internet access to the first-tier markets. Smaller competitors, such as Metricom, simply face too many business and technical problems--including issues as tiny as how to get easements for transmission pole sites--to beat the big boys at what is very clearly their game.

    Metricom's failure should not, however, be taken as confirmation of some industry observers' predictions that wireless Internet service has no future. In fact, Gartner believes that wireless Internet has tremendous potential--when offered by providers with sound business strategies.

    (For related commentary on wireless communications, see TechRepublic.com--free registration required.)

    Entire contents, Copyright ? 2001 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.