Mike Arrington has announced his CrunchPad web tablet, covered here, is “dead”, blaming his manufacturing partner for cutting him out of the deal. In the frothy market that is media tablets, just as in other frothy markets Arrington has stirred up, this is a story suspiciously full of holes that make CrunchPad sound like a stunt all along rather than a real project.
Bizarrely, we were being notified that we were no longer involved with the project. Our project. Chandra said that based on pressure from his shareholders he had decided to move forward and sell the device directly through Fusion Garage, without our involvement.
Later, Arrington insists other manufacturers have offered easy terms to him for the rights to manufacture the device and that he had “blue chip angel and venture capitalist investors in Silicon Valley waiting to invest in the company since late Spring. We were simply holding them off until we launched, to eliminate some of the risk.” If he’d said they were holding off for better terms from VCs because the device had launched, I’d have found this plausible. The whole story is too nice to be taken at face value.
Because Arrington, a lawyer, discloses that he never controlled the intellectual property rights to the CrunchPad, other than the trademark, and apparently had very poorly formed business agreements around the project with Fusion Garage, his manufacturing partner, this has the look of a great deal of smoke around something he’d agreed he could market without understanding the business, design and development challenges. At one point, he suggests most of the project was “pushed to open source,” but then why is it impossible to build it with another manufacturer?
Arrington claims that “prototype b” of the CrunchPad was completed by his in-house team. Certainly, it would have represented the major functional features of the design, which, if open sourced, should be available for his use in providing a functional spec to other manufacturers who could have come up with their own solutions with different components. Since he writes that his team had the release candidate device running Win7 and a version of Chrome OS, the components involved surely are commodities supported with well-documented drivers and toolsets.
Why take apart the death notice like this? Tablets and e-readers are the hottest “category” in consumer electronics, with a glut in e-readers and many media tablets on tap for 2010, customers need to read between the lines of announcements that promise revolutions but may represent black holes for their money and time. In this case, Arrington has created expectations that a $250 touch-screen device can be expected to do what consumers want, to “surf on the couch.” He created a baseline expectation that has proven to be out of line with what is possible today. It is certainly possible in six months or a year, yet customers don’t need the noise of empty promises to add to the complexity of making buying decisions.
It sounded too good to be true and it was, yet there are plenty of people who want to buy the idea and will now say it could have been done if not for a legal showdown. Customers need real world class champions of products, not contenders who tell us they could have or should have won if only the breaks had gone their way. Customers’ time and money is too hard won to expect less.
The news is not news, but staged product release. 
Remember that Amazon is still losing money on every bestselling book sold through its store. The company pays publishers about $3.60 more than the list price for a bestseller when sales costs are factored into the expense. If each Kindle accounts for just two bestseller sales, the cost of supporting 3 million Kindles in the market rockets past $20 million (see chart, right, which looked better in Excel. The scale should be 50,000 to 3 million, though this logarithmic curve makes the point that every Kindle sold adds to Amazon’s bestseller costs at $3.60 per title sold).