Wireless Routers, Lemons, 
and Bad Opinions

by

Ross M. Miller
Miller Risk Advisors
www.millerrisk.com
October 9, 2006

I got on the wireless Internet bandwagon early and suffered the slings and arrows of early adoption. I got my wireless network working with minimally adequate throughput and still have a nearly full head of hair. My first router was one of those big blue, ugly Linksys models—strictly 802.11b (the slow version) because they were still getting the kinks out of 802.11a and 802.11g was still on the drawing board. My wireless PCMCIA card was the top-of-the-line gold card from Orinoco (sail away, wireless network, sail away). The recent parade of laptop computers with built-in 802.11g wireless capability into my home led me to conclude that it was time for a new wireless router.

On and off over the past six months I had perused the various wireless router reviews. Such devices are complicated to begin with and are made all the more complicated by the slow dribbling out of preliminary versions of the new 802.11n standard. Furthermore, all the reviews are contradictory. One guy can get a solid signal through three solid brick walls while another has trouble going through a single wooden floor. Your mileage may vary, indeed.

I recently found myself in the Cambridge, Massachusetts Micro Center store (whenever I am within twenty miles of it, I find its gravitational pull irresistible) and was gazing at the merchandise. (Salespeople who approach me asking what I am looking for come to regret doing so. On any given day, I could end up buying virtually anything in the store, or nothing at all. Only rarely am I in a computer store looking to buy a specific item.) I was staring at the Netgear RangeMax routers, the relatively pricey Godzilla of wireless routers, when beneath them I saw a row of plain brown cardboard boxes that contained refurbished Netgear WGT624, the GEICO gecko of wireless routers.

The WGT624 is a small, cute thing with a single external antenna. On looks alone it beats not only my old Linksys router, but all of its equally ugly updated versions, hands down. I commandeered one of Micro Center's computers with an active Internet connection and did some quick follow-up research. (The salesman to whom this machine belonged kicked me off it when he realized what I was doing.) This router not only does 802.11g, but the double-speed "Super" version of that protocol, not that any of my machines speak that language.

The router was a mere $39.99 and I figured that I could always do something with it, so I bought it, took it home, and it has been working for almost a month without a problem. In combination with the various laptop computers it is great, in combination with the classic Orinoco card, it handily beats the flaky connection that I got with the old Linksys.

The Netgear WGT624 is a fascinating item. The reviews of it on Amazon.com and newegg.com are clustered at the two extremes—people either hate it or love it. Those who hate it fall into two camps. In the first camp are users who appear unable to get it working satisfactorily in the first place. In the second camp are users for whom it worked initially and then entered into a variety of failure modes, many of which are related to the router's alleged overheating. (The updated version of the router that I got supposedly has extra air holes to keep it cool.)

Those who love the WGT624 also fall into two camps. In the first camp are users who got lucky, plugged it in, and it just worked and has been working ever since. In the second camp are IT professionals who actively hunt this router out and buy vast quantities of refurbished or otherwise discounted units to install at their company's or client's sites. The WGT624 has a reasonable firewall built into it and several other "neat" features that give it some tech appeal. Its main negative is that it is not as "hackable" as the equivalent router from Linksys, which is a direct descendant of my old blue monstrosity.

Now, a new WGT624 lists for $79.99, but is generally available from discount retailers for $59.99. So, unless one catches the occasional "fire sale" for the refurbished model, one only saves $20 relative to a virginal one. (Netgear rebates are attached to the retailers, not the units, so at a retailer who offers the rebate deal, the new router goes for $49.99 and the refurbished one for $29.99.) Despite the profusion of MIT types throughout the store (and me, the barely distinguishable hybrid Caltech/Harvard type), Micro Center is reasonably classy place that does not carry much in the way of refurbished goods. So, what makes the Netgear WGT624 so special?

This is where lemons come in. In general, refurbished items are goods that have either been returned by the initial buyer during the store's return period or have been sent in for repair. For a typical product, this makes them "damaged goods." In the case of automobiles, new cars that show up on the used market too soon after they are purchased are marked as "lemons." In some cases, the value of a car can drop 30% the moment that its first buyer drives it off the lot. The major exceptions are specialty cars that are in scarce supply. They are frequently bought to be "flipped." Also, some cars have such stellar reputations that true lemons are rare.

The WGT624 router fits into neither of these two categories. They are massively plentiful—if you find one in a store you are likely to find another one hundred just like it in a big pile—and they reputation is anything but stellar. What the WGT624 has going for it, and the reason that such a large market for the refurbished units exists is legion of buyers who cannot get it to work out of the box, return it in disgust, and write scathingly negative reviews of it. In defense of these buyers, I must say in fairness that any novice user will need a fair bit of good luck to get this router to work at anything like its full potential. I have not called Netgear for support, nor would I ever think of doing so, but the reports from those who have are disheartening to say the least. Hence, it is more likely that the original purchaser of the WGT624 and not the unit itself was the lemon.

In one of my more notable prior incarnations as an experimental economist, I not only studied the lemons phenomenon on live human subjects, but I was the first person on this planet to conduct such an experiment. (My distinguished collaborators on the project were my mentor and frequent dining buddy, Charles Plott, along with Federal Trade Commission economists Michael Lynch and Russell Porter.) We were able to generate the lemons phenomenon in the laboratory without a lot of difficulty and then we explored "institutions" that could keep lemons from souring the market. What we discovered was that any mechanism that allowed buyers to communicate with each other about their experiences was enough to put anyone who sold a lemon out of business. (Sellers could distinguish a good product from a lemon, so that sellers of lemons were effectively perpetrating what is technically known among theoretical economists as a "rip-off.") Because "big brother" (in the form of me, Charlie, and the FTC) was there, buyers were forced to tell the truth about their purchasing experience.)

Perhaps, in some small way, the results of this research has helped stay the regulatory hand of the FTC, especially now that the Internet allows information about products to be made available around the world instantaneously, so that sellers of lemons are punished almost as quickly as they were in the laboratory. One thing that we as experimenters had underestimated was just how easily reputation-reporting systems could be corrupted.

Consider Amazon. Not only do sellers of products have shills, often on their payrolls, there to sing the praises of an unworthy item, they also bash their competitors' products. Product bashing is most obvious when the bad reviews come early in a product's life and are then followed by a stream of positive reviews and no further negative ones. For computer items, the most suspicious reviews are those that claim that installing the product's software munches one's computer, either requiring that the operating systems be reinstalled or, in extreme cases, "bricking" it. Paid or unpaid product assassins can be clever; they know that a one-star rating is more likely to be bounced by the system, and so they always assign at least two stars to their hatchet jobs. On heavily censored sites (compusa.com springs to mind), scathingly negative five-star ratings can manage to slip by the censors.

As for the Netgear WGT624, the negative reviews relating to sudden death by overheating are so abundant that one has to believe that there was something to them. I hope that the added air holes do the trick. If not, the vertical mounting stands make it into a neat piece of modern sculpture—and a real bargain at twice the price.