On Junk Heap of the Net

For Jeanne Miller, the Internet revolution was crystallized in a wondrous device called SportBrain--a $99 clip-on unit that measured her physical activity throughout the day and relayed the information to a personalized Web site.

“Everywhere I turned, people were touting SportBrain,” said Miller, a Seattle marketing executive. “Oprah had it, of all people!”

She saw the gadget as high technology’s ultimate gift to fitness and was immediately addicted--for all of four months. In July, the company went out of business, rendering Miller’s and 40,000 other SportBrains useless.

“It’s not like $100 is the end of the world, but if I had known in advance that it would only work for four months, I wouldn’t have paid that,” she said. “There’s more than one way of investing your money in high tech and losing it. You can invest in the stock, or you can buy their product.”

Along with mountains of worthless stock certificates and heaps of pink slips, the 18-month-long high-tech meltdown has left behind a growing pile of dot-com junk. Included in the debris are expensive wireless modems that worked only with a now-defunct service, hand-held gadgets that could display entertainment listings only from another vanished company, and untold dollars worth of Internet currencies that no longer have the power to buy anything.

The accumulation has unleashed a wave of consumer frustration rivaled only by the ire of the now- jobless thousands who actually worked for those companies.

“I cannot tell you how sick I was,” said Linda Pratt, an Ohio real estate investor who ran up a $6,100 bill with CyberRebate.com. The company had promised to eventually rebate as much as 100% of the price of anything bought through its Web site. But Pratt didn’t get her rebates. The company went belly-up in May.

“I felt I would throw up,” she said. “I was shaking. I didn’t even tell my husband for four days. It was the stupidest thing I’ve ever done in my life.”

Edgar Dworsky, founder of an online consumer resource guide called Consumer World, noted that “historically, it has been only the venture capitalists and stockholders who lose money” in high-technology companies. “Now, more and more individual consumers are suffering financial losses when a dot-com goes bust.”

The flakiness of some online ventures seems obvious now. But the early buzz about the Internet was so hot that any business that was online appeared to have boundless possibilities.

Few predicted that the dot-com frenzy would end so abruptly.

When prices for tech stocks began their precipitous decline 18 months ago, it took some companies only a few months to burn through whatever cash they had left. Many closed shop with little or no warning, leaving consumers fuming about how the tech revolution was turning out.

Scout Electromedia Inc., maker of a wireless hand-held device, shut down so fast that Rohit Khare never got a chance to use his.

The device, called a Modo, was designed to display restaurant and entertainment listings transmitted over the air. The service wasn’t available where Khare lived in Seattle, but he figured he could use the gadget on his frequent trips to San Francisco and New York City. So he plunked down $99 for a Modo. Two weeks later, Scout Electromedia was no more.

“I was just a big old dope,” said Khare, chief technology officer for a network equipment company now based in Mountain View, Calif.

And Pratt is still smarting from her experience with CyberRebate. “I am the most thrifty, money-conscious person you have ever met in your life,” she said.

The idea behind the company seemed odd at first. Its prices were wildly inflated--$33 for a plain toothbrush, $77 for a set of toy racing cars, $60 for a bunch of Lincoln Logs that usually sold for $10.

But CyberRebate had a gimmick that was tough to resist. The company offered rebates for as much as 100% of the purchase prices, banking on the fact that a small percentage of shoppers would never bother to collect all the paperwork necessary for a reimbursement.

In March, the company was the seventh most popular e-commerce site on the Internet, drawing 5.6 million visitors, according to Jupiter Media Metrix.

Pratt didn’t put her trust in CyberRebate right away. For five months, she quizzed friends and family members who bought items on the site, checking to make sure the rebate checks arrived as promised. She read everything she could about the company and discovered that the New York attorney general investigated CyberRebate and allowed it to stay in business.

Finally, she got tired of sitting on the sidelines. In less than a week, she ran up a $6,100 bill on a mini-refrigerator, a wooden salad bowl, several stuffed animals and assorted other merchandise.

Shortly before her refund checks were due to arrive in late May, the company went out of business. It left several million dollars worth of rebates unpaid, according to a group of stiffed consumers called the CyberRebate Recovery Alliance.

“I got sucked into this because it was free,” Pratt said. “I had no idea that my money was at risk.”

Unique Devices Swiftly Find Obsolescence

Adam Greenfield had doubts from the start about Scout Electromedia’s business plan when he saw ads for the sleek Modo. He wondered how the company could survive without charging a service fee to pay for a lifetime of continuously updated listings and reviews. But the self-described gadget junky decided to buy it anyway.

“I wasn’t sure how the business model was going to work,” said Greenfield, who parted with his cash enthusiastically as soon as the service went live in the Bay Area. “But I knew if I got a year out of the thing, I’d be really happy.”

As it turned out, Greenfield didn’t get but a month’s use out of it. Two weeks after buying his Modo, the company went under.

In New Brighton, Pa., Kim Tkacik spent countless hours--as many as three hours a day--collecting an online currency called Flooz by surfing Web sites such as CBS SportsLine. During nearly two years, she earned more than $400 worth of Flooz, some of which she used to buy books and videos for her kids and a new computer monitor for herself. Tkacik was such a fan of the stuff that she devoted several hours a day to maintaining the FloozNooz Web site to help others earn Flooz.

So when she got word that the company was shutting down, she hit the ceiling.

“There was no warning,” said Tkacik, who had $188 worth of Flooz stranded in her account. “I was a mess. I called them right away. All I got was voicemail. I was so mad. I worked my butt off trying to find ways to try to get Flooz to people.”

In previous eras, when technology was more evolutionary than revolutionary, new devices typically were built to run on existing infrastructure and could survive if the manufacturer went out of business. Even a discontinued Edsel could be kept running by a decent auto mechanic.

But with the Internet, almost everything was created from scratch. That produced many unique devices that couldn’t work with other systems.

Loss of Service Bigger Than Loss of Money

Metricom Inc. of San Jose was the first company to offer high-speed wireless Internet connections with a service called Ricochet. It was a groundbreaking service that attracted 51,000 customers and rave reviews.

But when the company shut down its Ricochet service in August, all of its customers’ specialized modems were rendered obsolete because they couldn’t be used with any other Internet service.

Dennis Davis became such a fan of Ricochet that in addition to paying $99 for the modem, he bought a laptop computer to take advantage of Ricochet’s mobility. The Anaheim man was so impressed he invested $10,000 in Metricom stock.

When the company filed for bankruptcy protection just 11 months later, Davis, an assistant city manager for Cerritos, was nonchalant about the money he had watched go down the drain.

Davis shrugged off the loss for the modem and even the $10,000 in stock, which had been worth as much as $100,000. “What really bothers me more is losing that [Ricochet] system,” he said.

For all the disappointment, it might well be Internet consumers who have the last laugh.

Internet author and consultant Rick Broadhead of Toronto believes all of these useless artifacts will be worth something someday.

In the last three months, he has spent $1,200 on a Furniture.com baseball cap, a car magnet left over from the home delivery firm Kozmo.com and an aluminum loading dock sign that once belonged to the shuttered online toy seller EToys.com, among other items.

He has bid as much as $170 in EBay auctions for the nominally worthless stock certificates of defunct companies such as Pets.com, Webvan and Theglobe.com. He is still on the lookout for certificates from Mortgage.com and MotherNature.com.

“I believe one day there will be a dot-com museum somewhere that will be full of these items, and people will marvel at them the same way they go through a museum of any other nature and marvel at artifacts from the second World War,” Broadhead said.

Many consumers, however, aren’t so eager to consign their beloved gizmos to the dustbin of history.

Miller has held on to her SportBrain device despite her feelings of betrayal. Like a jilted lover yearning for a reconciliation, she still is hoping against hope that someone might buy the bankrupt company and reinstate the service.

In the meantime, she has discovered that her SportBrain, which used to be clipped to her belt every waking minute, works just fine without the Internet.

“It’s a great paper clip,” she said.