Friday, February 22, 2008

Meraki makes another business blunder

Its interesting to note that it is possible for businesses to completely alienate a large majority of their customer base in only a year. Keep in mind, this is not an easy task. Most businesses can't do it without eliminating product lines or making significant changes to pricing structures.

Well, remarkably, Meraki has done a 180 in less than a year by doing a variation on both of these themes. First, who is Meraki?

Meraki Networks
Meraki Networks is a privately held, well funded start-up business based out of Silicon Valley's Mountain View, California. Meraki, as most of the user base and the press has referred to them in the past, started from a team of graduate students at the Massachusetts Institute of Technology (MIT). There, they created a project that they called Roofnet to solve the problem of extending the campus network to graduate student apartments off-campus to allow for easier use of the campus facilities. Roofnet entailed a series of devices ranging from personal computers to, later, small Wi-Fi routers to "mesh" and extend the access using commonly available Wi-Fi technology. The project evolved as several of the graduate students took individual portions of the project under their wing as the focus of their dissertations. The project got noticed and, rumor has it, the group was courted by Google and other venture capitalists (VCs) to start a company around the idea of extending the global Internet to "the next billion people" around the world.

Meraki polished up the hardware and software and got a product out the door at a low price of only $50 per unit. With such an altruistic goal, many would-be network operators were adopted the very low cost devices as the foundation of the networks that they were pitching to various goals including Municipal Wi-Fi projects and coverage for low-income housing. Things were looking quite good from the outside.

Meraki: The First Change
Unfortunately, in hindsight, things apparently weren't looking rosy enough from inside the Meraki headquarters. In October 2007, Meraki decided to change their business model. The instituted a three-tier pricing structure and apportioned the developed feature set across the three tiers. Worse, the company initiated an advertising program that was forced on the lower tier. The community of network operators was outraged. The best analogy of the situation that came from the discussions is discovering one day that if you buy any new Ford, you'll get most of the same features you did last year for the same price, but you'll also get advertisements shown in a little head-up display on your windshield.

As one might expect, several folks decided to remove themselves from the Meraki customer base.

The Splinter Groups Form

When Meraki announced the change, many network operators took stock of the situation and decided that based upon the facts, Meraki's work could be rebuilt from the pieces of Open Source software available in the community. Several groups formed around the world to begin to address each of the milestones that needed to be achieved. After only 3 months, (February 2008) many of the milestones had been achieved and networks were beginning to be deployed on the new combination of firmware and management servers.

Meraki Responds
After just a few months, Meraki responded by updating their End User License Agreement (EULA). The EULA, found here, includes the new section 3.5 entitled Restrictions on Use which states:
3.5 Restrictions on Use. Meraki Hardware may only be used with Meraki Software. Customer agrees not to (i) disassemble or attempt to reverse engineer the Meraki Hardware, (ii) remove or erase the Meraki Software from the Meraki Hardware, or otherwise try to disable or alter the Meraki Software functionality; or (iii) load any other software onto the Meraki Hardware.
This addition allows the Meraki to prevent any changes to the Meraki hardware or firmware (software) on any new hardware purchases. Unfortunately, this puts a stop to any of the development efforts to extend the Meraki hardware.

Goodbye Meraki
This means one thing: unfortunately, Meraki simply cannot be used as a platform for a WISP unless you (and your customers) are willing to accept advertisements at the top of every web page or are building a service that is outside the focus that Meraki started with, to bring the Internet to the next billion people.

I'll be posting here later with some other options. There are a few hardware options listed on the freethenet wiki, however, I'm exploring a few others that aren't listed there that should work with the new firmware that has been developed between the efforts of, FreeTheNet-CA/VONIC,, OpenSourceMesh, and SussexNetShare. My ultimate goal is a completely open source solution for creating a Wireless Open Mesh Network by April 1st. Let's work together to make that goal achievable everywhere!


At 1:14 AM, Anonymous Matthew Hall said...

What a great rundown on the history of Meraki - thanks for putting these changes into perspective.

It is fantastic to see such a strng open source offering starting to appear too, this is something the Free Australia Wireless project will be tracking closely I imagine!

At 10:48 AM, Anonymous Anonymous said...

Never understood their business model about giving away access points for free all over SF. Show me the 10X as a Venture Capitalist.

Now that the firmware can be swapped out quite easily on their hardware, they really look doomed.

BTW, I have yet to receive my free access point in SF. Are Meraki's investors waking up to a recession.

At 1:26 PM, Blogger Andrew 'Mickey Knox' Gearhart said...

@matthew hall: Thanks for the +1. We're hoping to have some solid stuff compiled together soon. There are some strong offerings coming from the top two corners of the Earth.

@anonymous: There's not really a clear business model for the SF network except the advertising that is likely to run across the network. Seems that the expense of deploying their "test network" in SF is being distributed across thousands of nodes that are being sold above the "standard" level around the world. I have no idea why anybody would choose Meraki for an organization that can even be organized beyond a basic set of bylaws.

At 4:36 PM, Anonymous Anonymous said...

Happy April 1st! So, where are we with that full open source solution?

At 1:09 PM, Anonymous Anonymous said...

Its too bad that they got $$ oer their eyes - and hearts... they could have continued with the movement and made plenty - now they are "just another vendor" selling propriatary solutions...

I bought 3 some years ago to play with - and it was fun playing with it and watching the development track - but when they went to triple the price, force ads and no longer allow any form of open-ness to their code - it was heartbreaking...

I am looking at alternatives - we are just a non-profit community group of geeks - I am the local city library treasurer and a real estate broker - former ET in the Navy that just wants to see my small city with plenty of underserved neighbors get free and low-cost access to the net...

I bought lots of gear - canopy, strix (not bad devices - very expensive though), meraki, microtik - even bought a ton of old wrt54GS's back in the day I insalled dd-wrt to - by the way - dd-wrt is one of my fav's... good support..

If you all have any ideas on what I can do now - let me know... open-mesh has one for $49 but I dont see much going on there that is readily visible.. looks like another meraki setup...

I want to give out about 100 of these devices ovder the next 6 months - then link up dsl and t1s wherever I can get them - but I found that the meraki was too slow anyhow with any reasonable amount of traffic...

what are your thoughts?


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