Lessons Learned from the Recently Departed
By Bryan Morgan, Thu Aug 16 00:00:00 GMT 2001
Hindsight is 20/20, but realizing the mistakes made thus far can help us avoid more in the future.
It's mid-2001, the party's over, and the hangover has hit the technology industry. While a latecomer to the party, the wireless industry managed to liven things up just a bit towards the end before getting smacked on the downturn.
Unlike those-easy-to-ridicule online grocery/fashion financial sinkholes, however, even the failed wireless companies can lay claim to business plans that targeted millions of potential customers using a combination of cutting-edge software and hardware technologies.
While every industry will have the occasional Boo.com to use for an easy laugh, many wireless companies learned the hard way that, to gain the huge rewards offered by wireless data and mobile commerce, it's necessary to simultaneously gauge market demands, network rollouts, technology acceptance rates. Once all that is done, you must still execute on the plan to stay in the game, something much easier said than done. Let's take a look at a few of the once-promising companies that are no longer with us, pausing to extract lessons learned for the future.
Let's begin our excursion down memory lane with a look at Amazon.com - one of what I'll call the "checkbox" companies.
I checkbox companies just that because, as opposed to producing meaningful revenues for their parent corporation, you almost get the feeling at times that these companies have offered forth mobile initiatives simply to check a box on a list of portal must-haves.
A Wall Street Journal article in May reported that Amazon Anywhere generated approximately $1M in revenues in FY2000, compared with $2.8B by the parent company.
Observation: While these services are no doubt useful to a handful of users around the globe, most are difficult to use and don't contain enough personalization features...something essential for mobile users. Lessons learned: Companies successful on one medium won't necessarily be successful on another. User satisfaction, ease of use, and timing are still very important when building a business.
Earlier this year, Finnish company WapIT closed its doors to the chagrin of many WAP and open source developers worldwide. WapIT had been the custodian of the Kannel open source WAP gateway project and a provider of wireless development services since 1998.
While the Kannel project can be viewed as a success, its parent organization was not so lucky after closing its doors in the spring of 2001.
Observation: It's very difficult to build a company by giving away your core product through open source licensing. Many seek to offset this loss through training, professional services, or hardware sales, but very few have succeeded. Lessons learned: Ironically, Kannel lives on (currently being hosted by 3G Labs) proving the value of open source software. If there are interested developers and an end market for a product, shutting down a company can simply mark the end of a beginning.
Not as fortunate as the companies listed above was San Francisco-based Scout Electromedia, developer of the err...infamous Modo device and Modo.net service.
This company may well be remembered best for shutting down mere days after actually launching their first service offering, proving once and for all that a lengthy runway is always a good thing.
The Modo device featured some cutting-edge features, including a pre-GPRS always-on connection and a very slick hardware design but that was not enough. Scout Electromedia shut its doors in October 2000.
Observation: Modo.net launched in New York City in late September only to shut down in mid-October. For a while, you could buy the devices on eBay (if you're really into phased-out geek hardware) but that revenue stream has also sadly dried up. Lessons learned: Hardware platforms are very expensive to develop and produce. So are metropolitan area wireless networks. Combining the two with under $20M in funding is a virtual impossibility.
In early July 2001, Metricom filed for bankruptcy, marking the end of the road (until their assets are acquired by another company) for the company who hoped to bring broadband wireless to the masses.
Metricom's 128kbps wireless service is currently available in Atlanta, Baltimore, Dallas, Denver, Detroit, Houston, Los Angeles, Philadelphia, Minneapolis-St. Paul, New York City, Phoenix, San Diego, and San Francisco and supports both laptop and Windows CE devices.
While the company's users often raved about the service, in terms of sheer numbers they were too few in number to keep the service moving forward. The company lost over $340M while generating only $12M in revenues during this latest fiscal year.
Observations: The number of highly mobile, power users simply wasn't large enough to sustain the required network buildout for the Ricochet service. Throw in other technologies such as CDPD, SMS, WAP, and Wireless LANs and the technological competition was too stiff. Lessons learned: It takes large number of users to sustain the buildout costs for a wireless network. If the users don't show up in droves, you're in trouble.
Recently, Psion PLC announced that they are getting out of the mobile PDA/palmtop business, choosing instead to focus on other, more successful internal business units.
This comes after Psion has seen sales of its once-popular handhelds slip as mobile users have opted, instead, for pen-based computers running the Palm OS and Microsoft's Windows CE OS. Psion has since indicated that they plan to market a Bluetooth-enabled handheld computer for consumers but will be shifting their corporate focus to the education and corporate markets.
Observation: As we all know, "best" does not always equal "best-seller". The Psion platform has had an excellent reputation for years and still sports a devoted user base. Unfortunately, this wasn't enough to overcome the Palm/WinCE insurgency. Lessons learned: It's tough to compete with two companies who, when combined, control over 90% of a market. While Psion's platform had its advocates, perhaps their product line would have fared better if the Palm OS were offered to users.
Learning by doing
Looking to the future, what steps need to be taken to ensure your company survives and thrives?
The mobile Internet is sure to create its share of huge winners and losers so it seems clear that strong decision-making and market awareness are two attributes of paramount importance. Developing a good device or service that the end users don't want (or aren't ready to pay for) is a recipe for long-term disaster.
Obviously, all is not gloom-and-doom as there are dozens of mobile computing companies doing very well at the current time. The trend, however, is towards consolidation among similar companies and long-term corporate strategies are favored over companies built for the short-term flip.
Bryan Morgan was the founder of WirelessDevNet.com (The Wireless Developer Network) and is currently an independent writer and software developer. He is a columnist for Wireless Internet magazine and is also a regular contributor to WirelessWeek.com and InformIT.com.