8/99 RedHerring nice article. "Why Iridium's woes don't signal the end of the mobile satellite services business" by Brian Taptich
[Received the dead-tree version a couple days ago and not posted on the web yet. RedHerring has been one schizo mag these days. Picked G* in 1998 and 1999 as a Top 10 company for stock appreciation. But, RedHerring also had a braindead pick of Iridium as one of the top 50 public companies in 4/99. Forgive any typos, djane]
Excerpts:
Doomed by a combination of mismanaged partnerships, bad timing, and the technical complexity of its product, the company stands on the brink of financial ruin.
The industry consensus is that Iridium's problems don't suggest that the marketplace will reject all global PCS, the narrowband voice and limited data services that the company sells. Rather, it seems that Iridium's problems are unique, and that is competitors -- though they may lack Iridium's innovative spirit -- have had the luxury of learning from its mistakes.
Analysts are debating whether Iridium will even survive to see next year.
"Now the onetime technology darling inspires only pity in its competitors. 'Iridium has done a fantastic job on most fronts, and we want it to be successful, both to validate the market and to educate the marketplace,' laments Reid Stephenson, vice president of marketing for Globalstar. 'We are very disappointed by Iridium's difficulties.'"
Article discusses that G* and Ico are much more terrestrially based, services should cost less than 50% of Iridium, handsets easier to design with agreements with a number of manufacturers, handset prices drastically lower than Iridium.
In addition, Globalstar and ICO have signed agreements with service providers that guarantee a minimum number of sales representatives dedicated to delivering a minimum number of subscribers committed to using a minimum number of minutes of service.
Although Iridium's fate is not yet sealed, analysts continue to be very optimistic about the global PCS market opportunity. "Mobile satellite services will carve out a permanent niche in wireless communications," says John Coates, satellite service analyst at the investment bank Salomon Smith Barney. "Being second or third to market is an advantage in this space because both Globalstar and ICO can avoid Iridium's pitfalls." |
