 |
 |
|
|
 |
 |
 |
 |
 |
 |
 |
| Press Releases |
| Portfolio News |
| JGV in the News |
|
|
"Bettering BlackBerry: Israeli start-up Onset Technology will develop homeland security apps for Blackberry PDAs." from Globes by Ofer Levi May 31, 2005 Over the past couple of years, the BlackBerry, produced by Canada's Research in Motion Ltd. (RIM) (Nasdaq:RIMM; TSX:RIM) has become the object of desire for every US businessperson. In that time, RIM president and co-CEO Mike Lazaridis, the Canadian engineer who developed the device, has become a respected shareholder in the $14 billion company. The BlackBerry combines a wireless telephone with Internet access. Its secret to success lies in a number of features. First, it provides easy access to e-mail from anywhere in the world. Second, it is equipped with a tiny keyboard, with a key for each letter (in contrast to handsets and some devices by RIM's competitor PalmOne Inc. (Nasdaq:PLMO), which have three letters per key). Third, the BlackBerry's battery needs to be recharged only once a week. Together, these features make the BlackBerry almost addictive, resulting in the unflattering nickname "CrackBerry". The BlackBerry's popularity is seen in its exponential growth, from one million devices in February 2004, to three million today - 200% growth in 15 months. These figures naturally affect RIM's top line. After years of losses caused by heavy development costs, RIM posted a profit of $52 million on $595 million in revenue for 2004. Both top and bottom line figures for 2005 are expected to grow impressively. RIM's share is currently traded at $72 on Nasdaq, after fluctuating last year between a low of $45 to a high of $104 in November. Possible threats to RIM's impressive growth may come from the world's leading software companies. Last week, Microsoft (Nasdaq:MSFT) launched a new version of its operating system for handsets, which enables independent software vendors to run e-mail applications, and will compete against the BlackBerry, which is sold as a complete unit that includes the device and e-mail software. Nevertheless, even with the threat from Microsoft, RIM has room to grow. 700 million handsets were sold worldwide in 2004, of which only 20 million were Smartphones with e-mail features. Given the fact that there are billions e-mail users and handset owners in the world, the direction of companies in the industry is obvious. But there are obstacles on the way up, which will make or break these companies: price; device size; energy source; and a factor outside of their control, but which is just as important - data transmission speed. Mail from the office to the car The problem is that BlackBerry's operating system includes only e-mail, an appointment book, and a contact list (personal information management). There are already several small software companies in the world that have discovered this vacuum, and are supplying added value services for BlackBerry's operating system. One of these companies is Israeli start-up Onset Technology Ltd., founded in 1997 by president and CEO Gadi Mazor and Ron Maor, both veterans of Unit 8-200 (the IDF signal intelligence gathering unit). Onset initially developed software to identify files in unified message boxes, and products for routing and reformatting faxes. When Mazor and Maor realized that wireless was the major force driving unified messaging, they decided to develop programs that would give handset users access to enterprise networks. Most of Onset Technology's current work involves the BlackBerry. The company's METAmessage software provides access to an enterprise's network via a BlackBerry. The software enables users to see files on an office computer, print them, and check for errors. In order to reach the information on an enterprise's computer, Onset Technology's comprehensive solution includes software that sits on an enterprise's server linking it with requests coming from a user's device. In other words, communications between the user and enterprise are not conducted directly via a virtual private network (VPN), but via the enterprise's gateway. Onset Technology now has 45 employees, including 25 in Israel. Snce it was founded, the company has raised $17.5 million from Poalim Ventures, Catalyst Venture Partners, Challenge Fund - Etgar, Polar Electronic Communications, Intel Communications Fund, Hollinger Digital, Belgium's FLV Fund, and Taiwan's MAG Technology. Jerusalem Global Ventures (JGV) is the latest investor in the company. Onset Technologies reportedly has $3 million in revenue a year, and Mazor says sales are already enough to make the company profitable. Onset Technology has made no less than four acquisitions since it was founded. Although it paid only pennies for the four companies, this is quite unusual for a small start-up with $3 million in annual revenue. The most interesting acquisition was InfoClaris Legal Software for $38,000 in 2004. Mazor says investors injected $45 million into InfoClaris, including $10 million in the last nine months of the company's life. InfoClaris developed legal applications for end devices for enterprise networks. Post-September 11 Onset Technology has expanded its basic model for sales of enterprise access via the BlackBerry by developing several products mainly designed for the homeland security market. "In the aftermath of the September 11 terrorist attacks, we contacted the US government, and tried to work with US officials on the relevant functions for their handsets, which must work in emergencies. We discovered that during emergencies, every handset for security services must be able send 'Pin2Pin' messages, and be able to send mass messages from the emergency center to all users." Mazor explains how they overcame the problem of data transmission when wireless networks crash. "When an emergency occurs in a particular place, and handset use overloads cells, we discovered that it was possible to transmit only data over designated data channels." He says vertical solutions were expected to generate half of Onset Technology's revenue this year, up from a quarter in 2004. Onset Technology's basic application costs $7-30, and the vertical solution costs $100-300, depending on the scope of the application. The BlackBerry has become a hot item for many Israeli businesspeople, too, but unlike to their foreign brethren, this desire was unrequited until a few weeks ago. The reason for the long delay in the BlackBerry's arrival in Israel was apparently RIM's wish to initially focus on large markets, and to first sell the device to large US operations, such as Verizon Communications (NYSE:VZ), Sprint Corp. (NYSE:SDE), T-Mobile, and Orange. RIM also wanted to invest in the sale of user licenses for the software to telecommunications equipment makers, including Motorola (NYSE:MOT), Nokia (NYSE; LSE: HEX:NOK), and Samsung Electronics Co. Ltd. (KSE:5930), as a hedge against problems with wireless operators. Last month, Israel's three main wireless operators simultaneously announced that they would begin marketing BlackBerry. However, only Partner Communications Co. Ltd. (Nasdaq: PTNR; TASE:PTNR; LSE:PCCD) is the only operator actually doing so, at the rather high price of NIS 4,392 per device, payable over three years, as part of a package that does not include surfing rates. "Working with Partner is strategic for us, not only because of the money for applications sold through them, but also because of the direct access to the market for our development staff. We now have dozens of development employees working in Israel, whose access to the market until now was only with foreign markets," says Mazor. |
|
|
Back to Portfolio News |
|