One of our kids got this for their birthday this past holiday season. Ok, it's a little cute, but I think there is better/maybe cheaper technology out there. The basic premise is that you plug the dongle in, and the child can "IM" with a friend who has the same device. Both users have to be "logged in" to the "chat service" and it connects over the internet. Of course, they want you to recruit many users, but that's another story. We got it because one of our child's friends is moving many states away, and we thought this might be a novel way to stay in touch. Installing it did not exactly please me.
A quick note, we have a couple of desktop machines spread out about the house. One, the main desktop, has multiple accounts on it; and the kids' accounts are very limited in what they can do. There's another computer that is not as limited, but does not have as much connectivity.
I found that I could only install it on the "main" computer because the hardware support for older computers is dodgy at best. To install, you had to install the device (and drivers) as admin. That wasn't too bad, as I don't let the kids' accounts install anything. But, in order for my child's account to be able to use the dongle, I had to temporarily grant admin permissions to the child's account such that the install could finish. And, during installation, I had the choice of installing it for the admin, or all accounts. I suppose I could have hacked the install, but I didn't. And now, EVERY user gets an install script failure upon logging in. Finally, when the child sets up their account, it prompts for a username and password. My kids have security drilled into them, so the password was not really an issue. However, when you enter the password, it's in clear text. Same with the password confirm box. I wasn't too pleased with that. I should have sniffed the transmission of the username and password to see if it was passed to the server in clear text. However, said child was pitching a fit that it wasn't installed yet.
All in all, had I known more about the architecture before, I might not have purchased it. But, the kids have had fun with it. I suppose it will wear off quickly, as they approach more consumer grade technologies.