Cannot set certain IP address values

System does not allow certain IP addresses to be set.
Hardware tested:
Model: Digi Connect ME (from the device web page)
MAC 00:40:9D:71:F6:27 (from the device web page)
The same MAC value is also on the label
P/N: DC-ME-0T-S (From the P/O)
Label: PN(1P): 50000878-01
Default IP: 169.254.147.216 (factory default)

Tested with an Ethernet crossover cable directly to a PC running Win XP. No hub or other network connections.

IP address changing experiments:
All following tests use Digi Device Discovery, then connect via the web interface to the device.
Always disable DHCP, force the use of a fixed IP.

(Change only the last 2 octants)
Change the IP to 169.254.132.120 - this WORKS

(Change the last 3 octants)
Change the IP to 169.96.132.20 - this FAILS. Digi
Device Discovery cannot find the device.

Restore to factory defaults. this WORKS. Digi Device
Discovery finds the device at 169.254.147.216

(Change only the 2nd octant)
Change the IP to 169.96.147.216 this FAILS. Digi Device Discovery cannot find the device.

Restore to factory defaults. this WORKS. Digi Device
Discovery finds the device at 169.254.147.216

This mess started when we tried to change the entire IP address to a private value. All 4 octants were changed. At that point Digi Device discovery failed to find the device. The device was restored to factory defaults and so recovered. These experiments seem to suggest that the first 2 octants cannot be changed from 169.254 to any other values.

We do not understand this limitation and there does not seem to be anything in the docs which explains this or identifies it as a restriction. Please advise.

Digi Connect ME by default will look for a DHCP server in network to get an IP address from.

In your case as you have connected directly to your PC/laptop Connect ME cannot find a DHCP server and it assigns auto ip to itself, which is 169.254.147.216.

And when you manually change all the octets, which is something like:
10.80.1.x or 192.168.2.x etc, you need to set the same range IP to your laptop/pc to make Device Discovery find the module.

This is not a limitation of Digi Connect ME , this is how it behaves. This is expected.

What you need to do is either connect Digi Connect ME and your laptop/pc to a network where DHCP server is available or assign static IPs both PC/laptop and Digi Connect ME.

Digi discovery uses ADDP protocol to find devices in network.
http://www.digi.com/wiki/developer/index.php/Advanced_Device_Discovery_Protocol_(ADDP)
and it uses UDP broadcasts.

UDP broadcasts are usually blocked from one subnet to another and is the reason for device discovery not finding your device when it was set private IP and laptop/pc was assigned in another range.

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Thank you for the clarification. We suspected as much but were uncertain on how to proceed. We are old to electronics but new to Ethernet and the Digi product. This gives us the direction we needed. The learning experience continues…