Farallon Computing

» see netopia.com as it lived, on the wayback machine

~ the obituary ~

Almost nothing Farallon made in its first decade would have been of any use in a Turkish house, because almost nothing in a Turkish house was a Macintosh. The Mac here was a machine you bought one at a time because your job required it, and it lived in a design studio or a print shop. Two or three of them in a home wired together over spare telephone cable was not a scenario anyone in this country was selling into. That scenario was Farallon's entire early business.

The company was founded in Berkeley in 1986 by Reese Jones, who had co-founded the Berkeley Macintosh Users Group two years earlier. BMUG built a kit that let AppleTalk run over plain telephone wire rather than over Apple's own cable, and Farallon turned that kit into a product called PhoneNet. It worked on the Cat-3 already inside the walls of most buildings, and later on structured cabling, which meant an office could network its Macs without pulling anything new.

What followed was a decade of small hardware that solved specific Macintosh problems. The StarController arrived in 1988 as a bridge between LocalTalk and Ethernet that plugged into a normal wiring closet. EtherWave was a dongle that took power off the Apple Desktop Bus and looked something like a manta ray, letting machines with no expansion slots reach an Ethernet network and daisy-chain off one switch port. MacRecorder was the first audio capture hardware for the Mac and eventually went to Macromedia. Timbuktu, which Farallon did not write but did make famous, let you watch and drive somebody else's screen from your own.

~ the case file ~

~ phone wire ~

PhoneNet is the part worth stopping on. AppleTalk was designed to run on LocalTalk cable, which Apple sold and which somebody had to lay. Farallon worked out that the same signaling survived on the unused pairs in ordinary four-wire telephone cable, terminated in RJ-11. Buildings were full of that cable and almost none of it was carrying anything.

The commercial effect was that a small office could get a Mac network for the price of a few adapters and some cable off a spool. The odd part is who worked it out. A volunteer user group in Berkeley found the cheap way to do Apple networking while Apple in Cupertino was still selling the expensive one, and the company that grew out of that user group kept finding the other cheap ways for another fifteen years.

~ the name change ~

By the mid-nineties that reputation had become the problem. Apple was in visible trouble and its share was falling, and a company whose name was shorthand for Macintosh networking found that carriers would not take its calls. Farallon Computing became Farallon Communications in 1996, and in November 1997 it renamed itself Netopia, taking the name of its own line of small-office ISDN routers. The trade report at the time said the change was made to end all association with Apple Computer. The Mac products kept the Farallon badge.

In 1998 the Mac half was spun back out as a separate company, and in June 2000 Proxim bought it for around $14 million. Proxim then agreed in January 2001 to buy Netopia as well, at roughly $223 million in stock, which would have reassembled the two halves. Intel killed the HomeRF wireless standard that March and took Proxim's core bet with it. The two sides walked away in the same month without either one paying a termination fee, and Netopia booked a $2.6 million charge for the attempt.

~ the accounting ~

The last serious damage was self-inflicted. In 2004 Netopia restated its results going back to the quarter ended 30 June 2002, over revenue recognition on two software license deals with a single reseller. It missed the filing deadline for the June 2004 quarter, and a Nasdaq listing panel removed the stock from the National Market with the open of business on 20 October 2004. An SEC investigation into the disclosures followed and was eventually settled.

~ what motorola got ~

Netopia recovered enough to be worth buying. Its gateways were carrier equipment by then. AT&T shipped them in the United States and eircom shipped them in Ireland, with a string of other European operators in between. That is a decent business and a completely anonymous one, since the router in the customer's hallway carries the phone company's name on the sticker.

Motorola completed the purchase on 6 February 2007 at about $208 million on a fully diluted basis, $183 million of it net cash. Timbuktu Pro went across with everything else, which is how a remote control program written for the Macintosh in the 1980s ended up owned by a company making set-top boxes. That was twenty-one years after a Berkeley user group first worked out what the spare pairs in a phone cable were good for.

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