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Yes, that's absolutely an issue. And, it would even be OK, for me, to have that be the default, as long as they provide some other means of dealing with the device. WiFi isn't hard, at all. So give me a local web UI, and a way to store things locally or remotely using some standard protocol. That's dead simple to implement, and routers and printers have been doing it for a couple decades. Simply making the device usa…
There are plenty of cameras like what you're describing on the market today. Modern incarnations of the Panasonic Petcam. Search 'WiFi IP camera'. You just don't hear about them because they aren't hyped to high hell like Dropcam.
And, yeah, hype has a lot to do with it. How have products like Dropcam and Nest generated so much buzz? I guess people genuinely prefer them, and consider the user experience worth the price (both in terms of money and in terms of privacy and choice).