08.07.2008 — Xperinet has gone out of business. The maker of movie servers informed dealers today that the company's board of directors "has voted to discontinue operations effective immediately, pending filing of bankruptcy proceedings." (Read the entire letter.)

Company CEO John Cox had warned reps on August 1 that Xperinet "is presently undertaking a significant restructuring due to weakness in the US economy. Slow US sales have placed considerable pressure on the company, and we are having to retrench, and focus on engineering before we can resume sales and marketing efforts. …" (Read the entire letter.)

Just today, Xperinet announced it was shuttering operations for good "unless the company is able to secure a further investment of $400,000 or find a buyer in the next few days…."

According to Cox's letter to dealers:

This decision was driven largely by certain economic factors resulting from the downturn in the US housing market. Reduced investment in housing resulted in a marked reduction in revenues for Xperinet, as with many CEDIA manufacturers. Secondly, the soft market caused numerous dealers to default on their credit terms, dramatically increasing our bad debt experience. These events came on the heels of a major development effort that drained the company of cash.

What Went Wrong?

Xperinet was one of the earlier providers of movie servers, starting in 2005.

Its Linux-based MIRV servers start with an enterprise-class RAID drive with hot-swap drive bays and 1.2 TB to 4.5 TB of storage (expandable).

Client devices distribute the content to remote locations throughout the home.

The thing that seems to have hampered Xperinet is the software. One of the company's most promising new extender products, Tarpon, failed to ship because the software never was completed.

"We have about 100 Tarpons on the shelf," says Marc Wishnow, VP of Future Information Technology (FIT) Inc., which has manufactured Xperinet product since fall of 2006. "Xperinet also has about 100 Tarpons."

He says that Tarpon was "about half the size of a piece of paper, and maybe one-inch high. Everything was integrated on one board. It was a great concept but it never came to fruition. Here we are eight months later and it still has no software."

Xperinet also never got its Blu-ray product to work properly. The company announced support of the format in August, 2007.

According to Hugh Hart of mid-Atlantic rep firm AVR Marketing, Xperinet initially tried to incorporate Blu-ray into its Linux servers. Unfortunately, he says, "it took incredibly long to verify the code, so they decided to get out of Linux and moved to the Windows platform just for the Blu-ray burner."

As a stop-gap measure, Xperinet started offering in April 2008 servers pre-loaded with Blu-ray content.

The idea was nice, says Hart, "but our dealers said, 'What if you want to put your own Blu-rays on it?'"