USWE - US Wireless Data (formerly USWDA) Message Board

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Microcap & Penny Stocks : USWE - US Wireless Data (formerly USWDA)

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To: Lee Allgood who wrote (73)	9/23/1997 11:39:00 AM
From: Rob S.	of 370

It doesn't make much sense for Lucent or a telecom to spend six to twelve months in a product development cycle to replicate what USWDA offers today at a reasonable price. The telecoms win in the arrangement in two ways; 1] They gain an immediate competitive advantage over other wireless services by offering a "Merchant Business" package solution. The "no-brainer" enabler product can help them to gain cellular business. 2] They are able to utilize idle capacity that will largely otherwise go down as a waste of $2 billion investment in infrastructure. How many telco managers want to have it on their resumes that they spent part of $2 billion and then didn't find good uses for the capacity? USWDA will make their revenues on a small slice of the credit card transaction fees that merchants pay on every transaction. They don't make money on the Enabler devices that are given to merchants for them to use for free. The large telcos would probably face anti-trust scrutiny if they tried to enter the credit card business directly. While USWDA looks to grow to become a $100 million+ revenue company within a 2-4 years, that is peanuts for Lucent and the major telcos considering the administrative difficulties and margin constraints. USWDA will be setting the standards for wireless credit card transactions that is likely to become pervasive. This should create a standard that new entries will find difficult to compete against. While USWD and its telco agents can tell the merchant that the same service will work in every part of the country that any one of these comapnies operate, the new entry is likely to have limited coverage. Patent protection for USWD's technology is being looked into by patent attorneys and may offer more protection. USWD offers the telcos a win-win situtation that they cannot duplicate themselves and that would take several months to develop with another company. What if competitors enter the market? It may actualy be beneficial for competition to develop. Even though the sales pitch is to offer merchants faster transactions at slightly lower rates and at no cost to them for the equipment, some potential customers may not want to try the service due to inertia. Market psychologists have recognized that most people's decision process changes from being critical and questioning to determining which one to buy when they are faced with choices rather than a single choice for a new product.

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