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Boxee and Walmart Put Disappointment Under the Tree

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"Lots of people are bringing those back," a helpful Walmart employee told me the day before Thanksgiving, pointing to the Boxee TV I held in my hand. "Don't know why they're selling it here, since it only works in a few cities."

Boxee TV launched in late October, with Walmart as its exclusive retail partner, at a retail price of $99. It is capable of tuning over-the-air (OTA) content as well as basic, unencrypted or unscrambled cable television programming, via an RF interface on the back of the diminutive Boxee TV.

The company again teamed with D-Link, which offered the Boxee Box, a product that has now been deprecated -- the company mentioned it would cease developing for Boxee Box a few months ago, much to the chagrin of vocal customers who feel some advertised features of Boxee Box never made it out of beta -- and now all development is focused squarely on Boxee TV.

For the company to avoid disappointing customers again, it would make sense to have the most important features -- the USP, or unique selling proposition -- ready to go at product launch. Yet, the two primary features still aren't available, almost a month after launch: live television pause and cloud- or network-based DVR (nDVR).

Those two features, which the company touts as part and parcel of the "Boxee Rebellion" on its packaging, are not ready for widespread use. In fact, the nDVR functionality that Boxee calls unlimited DVR is only available in beta in eight cities in the United States: Atlanta, Chicago, Dallas/Fort Worth, Houston, Los Angeles, New York City, Philadelphia, and Washington D.C.

Boxee TV 1This makes the Boxee Rebellion only a scattered rebellion at best, fought house to house in major urban areas during the critical holiday season.

To make matters worse, there's a mismatch in the Boxee-Walmart retail strategy. Walmart has a limited presence in many of those urban markets, so the company faces a major hurdle, selling the product in mostly rural areas that form the basis of Walmart's market penetration strategy, but not offering the nDVR service in those areas.

When I asked the Walmart employee to explain her comment that the product "only works in a few cities" she pointed out that customers in my local market see the packaging offering Boxee's nDVR, which it calls unlimited DVR, and assume the product works in the city in which they purchase the Boxee TV.

Boxee initially priced the service $15 per month, then announced in early November that it was dropping the price of unlimited DVR to $10 per month and making it free for three months of beta in the eight markets noted above.

"As we begin service in these markets," Boxee states on its blog, "we assume there's going to a few growing pains so we're marking the service as beta, but most users should have full functionality (and it will be free during this period)."

Boxee TV 2The Boxee TV packaging says nothing about unlimited DVR being in beta, but I bought it anyway to test out. Setup is fairly straightforward, and the unit auto-updates and links to a Boxee TV account that the consumer sets up. Attempts to pause live television result in a warning message on the screen stating that live television pause isn't possible yet.

That "yet" will drive a lot of product returns. When I purchased my unit to test, I was looking forward to at least one of the two major features being available. Plus, the Boxee TV unit I had in my hands was the only one left in the store, so I reasoned Boxee must have fixed all the issues I'd heard about over the month since launch. Or at least that's what I told myself as I walked out of the store. 

While Walmart may be happy that its Vudu on-demand movie streaming service is included as an app on Boxee TV, one suspect the world's largest retailer will be less impressed if the number of returns begin to mount across Walmart's core demographic of small cities and rural areas.

Boxee may sense this, as a line on its blog post announcing Boxee TV hints at not buying the unit for the holiday season.

"Since this DVR is based in the cloud, as soon as it's available in your city, you'll be able to start using it right away, whether you buy your Boxee TV [now] or nine months from now," the blog post states.

Boxee has always been known as ambitious, a thought that crossed my mind as I returned the Boxee TV unit two days later. Yet ambition needs to be tempered when a product isn't truly ready.

Somehow, though, I don't think Boxee sees it this way. I went back to the blog post while writing this article, and found the closing line ironic:

"Boxee TV is easily the most ambitious set top box on the market," the blog post states. "Pick one up and see for yourself just how powerful No Limits can be."

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