$250 tankless water heater is a point of use unit. A normal whole house unit is quite more expensive than that. Your comparison is simply not an apple to apple.
Regarding to a new unproven technology product, that is what competitor said about Dysan Ball and Ipod. Eventually, the better product with better idea would have its place in the market.
And if that $250 tankless is a gas unit, you need to add in the $300, on average, that it will cost for the special venting required. I sell the vent, so I will actually lose sales when this takes off, and yet I support it. hmmm