In the gold rush days of the late 1990s, getting on the Internet was a hot topic. Many companies (many of which no longer exist) created computers for the home Internet market, many with built-in dial-up connectivity and contracts for that connectivity. The AtHome company made such an Internet appliance. Taken out of the box, connected to a phone line, and provided with initial start-up, it “phoned home” (made the connection to an Internet service provider).

But, the days of the Internet appliance were short lived.

Consumers wanted more than just Internet access—they wanted to be able to have and share files, photos, and materials with others. The basic AtHome Internet Appliance did not have any storage and was useful only for connecting to the Internet (by phone modem) and browsing the Internet.

The stock price dropped and sales dropped; even with prices that were comparable to giving away the device, consumers were no longer interested as 2001 came to an end.

When faced with such a situation, what does a company do? The company faced a real challenge—go out of business or reorganize. In this case AtHome, which had expertise in hardware and telecommunications, restructured into a security company. With September 11, 2001, bringing calls for better security, AtHome scrambled to create a hardware device that would sit between the Internet connection and a business network. To keep their stock listed on the New York Stock Exchange, AtHome did a 15-to-1 reverse stock split and changed their name to indicate a new focus. Having been burned by consumers’

whims, they set their sights on capturing major corporate business. It took two long years before their device started to be noticed—and just paying the employees almost ate up the available funds before sales of the new device started to kick in. The reorganized company is now recognized as a leader in the intrusion-prevention field.

A company that falls from consumer favor cannot always restructure itself to become successful in an alternative area. In this case, there was success from failure.

Questions

1. When should a company that has lost in the consumer marketplace re-create itself for the corporate market?

2. How might a systems analyst for the AtHome company learn to change with the times and adapt to the new environment?