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A funny thing happened to

Larry Ellison's

tired network computer mantra on its way to wherever it is that dead stump speeches go: It got Liberated in the form of one of the season's more attractive Internet IPOs.

With little fanfare, the

Network Computer

subsidiary of


(ORCL) - Get Oracle Corporation Report

last week changed its name to the catchy

Liberate Technologies

and filed to raise as much as $100 million in an initial public offering led by

Credit Suisse First Boston

. A software company that's aiming to supply the technology for the burgeoning "Internet appliance" market, Liberate has the look and feel of a real company that might actually make money one day. Bottom line: Whether or not the market for Internet IPOs stays afloat, this is one company that's likely to be a keeper.

That's not to say it isn't risky. Sure, Liberate has lost gobs of money -- $138.6 million since 1996, including a $58.1 million acquisition-related charge -- with promises to lose more. And yes, the company totally changed its strategy less than two years ago and will remain, even after the IPO, under the shadow of current controlling shareholder Oracle. Liberate faces competition as well, most notably from


(MSFT) - Get Microsoft Corporation Report

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, whose recent investment in would-be cable mogul


(T) - Get AT&T Inc. Report

demonstrates the Oracle arch-foe's interest in being the software supplier of choice for appliances.

But the company that emerged out of Ellison's dream that Internet users would stop buying Microsoft's software for their PCs and instead store all their data on a network has blossomed into a serious contender for the Internet's Next Big Thing: the race to connect consumers with the Internet through TVs, handheld devices, games and whatever other gadgets onto which a browser can be slapped.

As an added benefit, Liberate also has a real business, real investors (other than Oracle) and a real forthright approach to dealing with investors and the

Securities and Exchange Commission

. Consider:

Redwood Shores, Calif.-based Liberate had sales of $12.2 million for the nine months ended Feb. 28, about double the figure in the year-earlier period. But because the company uses an ultra-conservative revenue-recognition policy for its license, royalty and service agreements, it is building up a backlog of booked sales that dwarfs its annual recorded sales. As of a year ago, deferred revenue was $23.9 million; by the end of February the figure had grown to $28.9 million. Losses for the first three quarters were $21.9 million, caused by heavy R&D and marketing spending, but gross margins of 45% are worthy of a successful software company.

Just before filing to go public, Liberate raised $50 million from investors including




Cox Communications





. The money is nice, but the relationships are better. Together with

America Online


and the British cable TV provider


, these companies can be counted on to buy Liberate's software for use in their set-top boxes and other non-PC methods for connecting to the Internet. AOL already is a Liberate shareholder through its acquisition of


, which owned a chunk of


, the company Network Computer bought to jump-start its appliance initiative.

Sun Microsystems

(SUNW) - Get Sunworks Inc. Report

also is a key technology partner after signing a co-development agreement this month.

There's surprisingly little funny business in the Liberate registration statement, filed May 19 with the SEC. The company painstakingly details its acquisition-related charge, an obvious effort to give regulators what they want without having to be asked. Liberate paid back a $5 million loan to Oracle before the IPO so investors' money will go to building Liberate, not satisfying obligations to Oracle. More, Ellison didn't help himself to any shares of Liberate, although he is an unpaid board member. As the 23% owner of Oracle, Ellison will benefit plenty from Liberate's success, but he didn't go for the double dip others would have snatched in the same situation. Also, Liberate accounts for every significant payment it has made to Oracle, from legal fees to real estate expenses. That signifies it will be prepared to be an independent company when Oracle's ownership, currently at 59%, dips below a controlling stake.

The irony is that the company that was supposed to be Ellison's poster child for the network computer instead will be instrumental in spreading the Internet to non-PC devices. As Ellison surely knows, there's no penalty for being wrong, especially if making mistakes leads to the right answer.

Ellison might yet succeed in Liberating some of the consumer software market from Microsoft.

Adam Lashinsky's column appears Mondays, Wednesdays and Fridays. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. Lashinsky writes a monthly column for Fortune called the Wired Investor, and is a frequent commentator on public radio's Marketplace program. He welcomes your feedback at