Crunchpad manufacturer renames product JooJoo, promises launch this Friday at $499

A year and a half ago, TechCrunch editor Michael Arrington set out to build and sell a “dead-simple Web tablet for $200.”

His reasoning: There’s a giant hole in the market for a computer bigger than an iPhone, smaller than an iMac, and meant to be used in a relaxed position and location, rather than typed at full-speed at a desk or on a handset.

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Moreover, Arrington’s coverage of startups and gadget makers convinced him that, despite his zero experience as a gadget maker, he could design a tablet, hire a company to build it, and then sell it through deals with big-box retailers and online stores.

The computer, named the Crunchpad, was scheduled to ship in time for Black Friday / Cyber Monday shoppers two weeks ago. It would have been a great tale of how a journalist proved his own claims for the new rules of entrepreneurialism.

But at the last minute, Arrington posted on TechCrunch a claim that the production contractor, Fusion Garage — a 12 person company set up in Silicon Valley in February — had told him without warning that they and their investors had decided to sell the product themselves. Arrington, according to email he posted from Fusion Garage CEO Chandrasekar Rathakrishnan, would be pushed aside into a marketing / evangelism role.

The Crunchpad was dead, he said. Since Fusion Garage and Arrington’s Crunchpad business co-owned the intellectual property for the device, the gadget would surely never ship to customers.

This morning, Rathakrishnan held a video conference to tell his side of the story. (Smart move, appearing in person onscreen rather than as a distant voice on a phone call.) Describing himself as “an inventor” rather than a businessman, he said, “I’m not the person I have been portrayed as in the blogosphere.”

After a long background story about how and why he partnered with Arrington on the Crunchpad (“I guess I had him at hello”), Rathakrishnan got down and dirty: “Unfortunately, Michael was unable to deliver. Michael was completely unable to deliver.”

Rathakrishnan also criticized Arrington’s Internet-celebrity approach to talking up the Crunchpad before its launch. “Publishing pictures of an unfinished product on a blog … is not a recipe for success,” he said. In Rathakrishnan’s version of the story, Arrington spent his time blowing hot air about what he was going to do, while Fusion Garage did all the work to finish the design and build the product.

Enough gossip, let’s skip to the product: It’s been renamed JooJoo — the URL is thejoojoo.com. It’ll cost $499, it works over Wi-Fi only, and Rathakrishnan says the formal launch will be this week. He’s giving a video demo right now: “It has the graphic power to deliver full HD video on the go.” It will also have built-in e-book capabilities, he said.

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JooJoo is based around a 12.1″ touchscreen, the hardest part to build reliably according to Arrington’s past posts. Rathakrishnan’s top selling point, though, is that JooJoo “gets you onto the Internet faster” by booting in 9 seconds, “the fastest bootup sequence out there.”

“We don’t boot to an operating system,” he said. “We boot directly to the Internet.”  The operating system under the hood is a Unix variant.

Pre-orders will be available beginning this Friday, December 11th.

Fusion Garage will also announce a new round of funding, on top of the $3 million the company has already raised from unnamed investors.

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For now, JooJoo is one of those “it remains to be seen” stories. Will Arrington stop Fusion Garage? Will the two parties reconcile in the interest of making some money and not ending as the Internet’s latest FAIL tale? And if so, will enough customers spend five hundred bucks on one? Or will Apple debut its rumored tablet Mac and eat everyone’s lunch? For at least the rest of this week, JooJoo speculation and rumor-mongering will be a news beat all to itself.

UPDATE: Mike Arrington responded on Twitter on Monday afternoon: “There aren’t any more CrunchPad posts coming from us. It’s all in the lawyers hands now.”