Dead Dot-Coms Can Still Cause Havoc

Before they turned out the lights at ZipLink in February, the

Massachusetts-based wholesaler of Internet hosting services held an auction of

its high-tech equipment. The booty, which included Internet servers and

computer-networking equipment from name-brand outfits such as Nortel Networks

and Cisco Systems, was worth more than $30 million when new. Some of it was less

than a year old and still in original shipping crates. But under the auctioneer’s

gavel, much of it sold for pennies on the dollar. For example, a Cisco 7500

series router that usually retails for $150,000 and resells refurbished for

$11,000 went for just $1,850.

Dirt cheap

Already struggling to reduce inventories and cope with evaporating customer

demand, some high-tech equipment makers and their distributors are under attack

from a third front. Thanks to the rising number of bankruptcies and

delinquencies among dot-coms, plenty of equipment, from used to nearly

untouched, for networking, computing, and telecommunications, is proliferating

at dirt-cheap prices. In fact, auctions of these products now account for about

a third of sales at auctioneer DoveBid, up from just 5% two years ago. That’s

a problem likely to cause big headaches for Sun Microsystems, Compaq Computer,

and Cisco. Although others like Nortel, Compaq, and Lucent Technologies have

also seen some of their gear show up on the auction blocks; the two tech

heavyweights earlier had much greater success selling to fast-growing Net

companies.

Trouble is, a domino effect in the industry is about to make the

used-equipment glut much bigger. Many dot-coms hosted their Web sites through

ASP’s, companies that basically rented them software over the Net. But with

the dot-coms now boarding up shop, the ASP market–which accounted for a

fast-growing portion of Cisco and Sun’s gear sales–is withering, too.

The problem is most severe in servers and routers, although tech equipment

such as PCS is also flooding the market. During the past six months, hundreds of

Sun servers have been sold at the auctions of failed dot-coms. When the ASPs

that served the dot-coms begin to fail in big numbers this year, they will flood

the market with equipment that routes Internet traffic or connects digital

subscriber line customers to their service providers. That’s especially

troubling because much of the equipment is new, or just one generation older

than what’s now available.

In response, Cisco is encouraging its largest distributors, such as Ingram

Micro and Tech Data, to help smaller Cisco resellers sell recovered gear. It can

then be sold as refurbished by those resellers, who account for more than 70% of

Cisco’s sales.

So far, Sun doesn’t see a problem. It has had an agreement with eBay since

December, 1999, that helps it unload excess and obsolete equipment.

Nevertheless, it recently hired DoveBid to host monthly auctions of material it

recovers from failed customers.

But all those efforts aren’t likely to make a big dent in the growing

used-gear market. Cisco underwrote less than 10% of customer purchases. That

means the rights of either to repossess equipment from bankrupt outfits is

severely limited. Instead, they’ll have to spend a growing amount of energy

trying to keep cheap, barely used equipment off the market.

By John Shinal in BusinessWeek. Copyright 2001 by The McGraw-Hill Companies, Inc

Recharging

Now

that the underpinnings for smart robots are falling into place, researchers in

dozens of corporate and academic labs are racing to develop working models that

within a few years may become our cohabitants and co-workers.

Personal robots won’t even approach their full potential in this decade,

but robot makers have already fielded many commercial previews. Although

sometimes clumsy and unpredictable, service robots are functioning as guards in

warehouses, delivering hospital food trays, and carrying documents from one

office to another. The Japan Robot Association (Jara) estimates that by 2002,

some 11,000 service robots will be deployed, 65% of them in hospitals and

nursing homes. By 2005, give or take a year, Jara projects that health-care

robots will be a $250 million market. As for personal bots, a panel of industry

and academic experts last year predicted they will be as common as PCs and cell

phones within 10 or 15 years.

One of the first robo sapiens on the market will be Honda’s Asimo, a

1.2-meter-tall android that resembles a child astronaut. It strides confidently,

climbs stairs, and negotiates corners. It can turn out the lights, and to show

off, walk a figure eight or compete with Sony’s SDR bots on the dance floor.

The hitch is that Asimo currently is blind, deaf, and dumb–and must be

remotely controlled. This fall, for an undisclosed fee, Honda will start renting

Asimo to companies and museums for use as a visitor’s guide.

Personable

Sony has already proved that mechanical companions are a promising market.

Now, sales of entertainment robots, it believes, are primed to explode. These

include electronic critters like the $1,500 Aibo, which can learn tricks and

respond to voice commands. The latest model looks like a lion cub. Over the next

five years, an expanding menagerie of mechanical pets from Sony and others could

whet consumer demand. And then, around mid-decade, Sony’s acrobots should hit

the market–probably at prices comparable to a high-end PC. Come the 2010s,

predicts Toshi Doi, head of Sony’s Digital Creatures Lab, each of Japan’s 46

million households will have two or three robots, including a humanoid.

Researchers everywhere are equally fascinated by the potential of home robots

and cyber-companions. Ironically, some European and North American labs are

counting on biological approaches to help produce mechanical beings–a tack

called evolutionary robotics. The basic idea is to raise a machine like a child,

letting it learn from its own experiences and sensory impressions, rather than

feeding it canned software written by humans.

MIT’s Cog and Kismet are probably the most famous of the self-educated

bots. Cog is the brainchild of Rodney Brooks, head of MIT’s AI Lab. This

humanoid torso has been learning to interact with its surroundings and with

people since its "birth" in 1993. Cog has mentally progressed to the

crawling-infant stage–although its legs have yet to be attached. Cog’s face

is less expressive than Kismet’s, but even so, it can be engaging. Its camera

eyes track moving people, and it establishes eye contact with people facing it.

No matter how personable Cog may seem, fulfilling Brooks’s dream of a robot

with human-level intelligence remains on the distant horizon. Still, many

experts believe truly smart robots are inevitable, given the ever-growing power

of computer chips.

Frustration

There are a lots of BEAM proponents in Europe–and many researchers there

also share Japan’s view of the near-term need for personal robots. For

example, Germany’s Fraunhofer Institute has developed Care-O-Bot, to help

elderly and infirm people maintain independent lifestyles. It can guide and

support people who are unsteady on their feet, run errands around the house, and

operate home electronics.

In the US, though, getting the funds to turn robot research into a going

business has been a problem, laments Joseph Engelberger. Widely hailed as the

father of the industrial robot, Engelberger co-founded Unimation. 40 years ago

and created the factory-robot industry from scratch. After cashing out in 1983,

he founded HelpMate Robotics to build service robots. His flagship: wheeled

cabinets that scurry around hospitals, distributing medicines and patient

records. But Engelberger always had his eyes on domestic robots because the

market potential is clearly far bigger.

In 1997, HelpMate built a two-armed, wheeled prototype for NASA to evaluate

as a helpmate in space. Engelberger intended to adapt it for home use, since its

touch-sensitive hands and two arms could make beds and prepare meals for

seniors. But it was not to be. He couldn’t raise the $5 million he needed to

bring it to market, and financial problems forced him to sell the company in

1999. This lack of interest in robotics puzzles the Japanese. Many reckon it’s

because Hollywood often depicts robots as monsters, whereas the Japanese view

them as helpers.

As a result, Japan has amassed a formidable stockpile of robotics knowhow,

producing twice as many as the rest of the world combined.

Furthermore, Japan has an army of young, savvy robotics experts. Close to

half of its 4,500 registered robot engineers are focused on AI or related

disciplines aimed at enhancing robot intelligence.

Song and dance

Shoestring budgets at Waseda University and other academic labs nourished

Japan’s early robot dreams. Now, well-heeled Japanese corporations are

transforming research into commercial products. Backed by ample resources,

corporate engineers are now busily refining sensors and rewriting algorithms to

create more sophisticated machines.

As margins dwindle on consumer electronics and industrial equipment, Japan’s

manufacturers are desperately seeking new genres of products. Smart robots that

combine a virtuoso entertainer, flawless social secretary, compliant

maid-butler, patient listener, and multimedia communications system could be

just the ticket. Such companions could record the passing years and regale

people with intricately detailed multimedia stories of family triumphs and

personal exploits. Anything that owners forget, their cyber-companions would

remember.

The chief blemish on Japan’s bullish outlook is that buyers might expect

too much from the first crop of bots. Early androids may not have enough finesse

to poke around inside packed refrigerators, and people might be wise not to

trust them to iron shirts. "Just because robots can sing and dance doesn’t

mean they’ll soon do everything," cautions Shigeo Hirose, a robotics

professor at Tokyo Institute of Technology. Aibo the robo pet has proved they

don’t have to. Robots can ease their way into our lives, step by mechanical

step.

Irene M Kunii and Otis Port–BusinessWeek