Last week SXIP announced an appliance that supports the SXIP protocol. Kim Cameron is highlighting a debate between Craig Burton (who calls the idea "insane") and Marc Canter (who calls the idea "brilliant"). Quite a spectrum.
I have a lot of respect for both Craig and Marc. My personal view is that appliances work best when your target market is operations folks and your configuration looks similar to a router or firewall. Also, as Craig points out, I think that people have to perceive what you're doing to be sufficiently complex that they don't want to deal with installing it.
The opposite side of the complexity coin is that by releasing an appliance, you'll convince some people that your product is too complex for them to install themselves. Kim points out that he's already talked to people who now think you have to have an appliance to use SXIP--not the reaction SXIP was hoping to provoke, I'm sure.
Update: Chuck Mortimore, of SXIP, tried leaving a comment, but my comment spam filtering appears to be too aggressive. He wanted to weigh in with his blog notes about the appliance and to also correct a misperception of mine: "Sxip Access [the appliance] doesn't support the SXIP Protocol, but rather, it's an Identity Management platform for On-Demand applications like SalesForce.com Part of our enterprise Idm buisiness." Thanks for the update Chuck.