ClearWorks - Like Having AT&T, SBC, TCI and AOL in One Bundled Digital Services Package
Nation's first completely intelligent communities are being built; The first contract estimated to bring ClearWorks $36 million in revenues
HOUSTON--(BUSINESS WIRE)--March 9, 1999-- ClearWorks
Technologies, Inc. (OTC BB:CLWK - news) announced today that it has signed a contract to provide bundled digital services to 1,200 homes in the new Canyon Gate at Northpointe subdivision in Houston. This is the first time an all-digital and intelligent community is being
built anywhere in America. Some of the builders include Centex Homes (NYSE:CTX - news) and Pulte Homes (NYSE:PHM - news). The first houses have already been completed.
According to the U.S. Commerce Department's estimates, 1.6 million new homes were started in 1998 in the U.S. alone. The lifetime value of this first contract is estimated at $36 million, but represents just a
fraction of ClearWorks' estimated $60 billion annual market potential.
ClearWorks acts in conjunction with developers to build a fiber-optics network into new subdivisions and then pre-wires every house in the neighborhood for a full complement of bundled digital services.
''Residents in ClearWorks-wired neighborhoods are getting Internet connections at a bi-directional speed of up to 100 megabits per second, which is 2,000 times faster than with a 56k modem dial-up connection. They get digital telephone service with all the add-ons like voice mail, caller ID, etc. They also get digital cable TV with absolutely no channel limitations, on-demand video rentals, closed-circuit security capabilities, a community Intranet and much more, all from one company,'' says Michael McClere, CEO of ClearWorks Technologies, Inc.
According to a Forrester Research (Nasdaq:FORR - news) study released last September, the telecommunications industry has not necessarily been in sync with consumers' buying patterns. ''For bundling to work, service providers need to build packages that reflect consumers' price sensitivity. 64% of consumers state that price is the most important criterion for selecting a service provider,'' Forrester material states. That's why ClearWorks is pricing its services very aggressively, at least 50% lower than if purchased separately from individual service providers. This will give ClearWorks and the participating builders an additional competitive advantage.
To make the homes even more appealing, ClearWorks works closely with IBM (NYSE:IBM - news). In addition to its bundled digital services package, ClearWorks is also providing IBM Home Director technology already built in. It allows homeowners to access and manage their home's lighting, heating and air-conditioning as well as monitor security systems through their TV. Homes are being wired by ClearWorks as they are built to ensure that every home in the community gets wired with the right voice, computer and video wiring. The additional cost to homeowners represents less than 0.5% of the home's price.
ClearWorks sees its future as very promising. All of its research and development costs are already behind it. By being the first to develop this type of proprietary technology and bring it to the marketplace, the company should quickly gain a very strong competitive advantage that may take a very long time to overcome. The company's goal is to own the brand when it comes to bundled digital services.
''Our goal is to become a household name like America Online (NYSE:AOL - news), AT&T (NYSE:T - news), TCI (Nasdaq:TCOMA - news) or SBC Communications (NYSE:SBC - news). When you think of bundled digital services in the future, you'll think of us,'' says McClere.
ClearWorks is better positioned than companies like AOL or AT&T because ClearWorks customers are fiber-optics based. The company's agreements with developers enable it to have a steady, predictable cash flow for well into the future. However, ClearWorks still plans to ensure that the content and service it provides are flawless, because a better product at a very low cost will ensure a high level of satisfaction and continued growth. Due to a very predictable cash flow, the company should also find it easy to finance rapid growth. By partnering with specialized companies such as fiber-optic cable anufacturersm or installers, ClearWorks can further reduce its need for capital. ClearWorks aims at rapidly expanding its operations nationwide.
The initial response to ClearWorks' services has been tremendous. According to Al Brende at Land Tejas Development, the development company behind the Canyon Gate at Northpointe subdivision, ''The
addition of ClearWorks' bundled services to our homes has helped us exceed our new home sales goals by 450 percent within the first few months. This was exceptional, because in January Houston's new home
sales dipped 11% compared to 1998.'
ClearWorks utilizes technology from major vendors such as Cisco Systems (Nasdaq:CSCO - news), Netscape (Nasdaq:NSCP - news) and General Instruments (NYSE:GIC - news).
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