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bouldernews.com
SpectraLink stakes growth on technology
The company's latest wireless phone system uses computer
networks
By Kris Hudson
Camera Business Writer
SpectraLink Corp., the fast-growing provider of wireless phone systems for the
workplace, plans to speed its growth and enter international markets with a new product
based on Internet technology.
Since 1990, the Boulder company has produced wireless phone systems designed to
allow employees to receive and make calls from anywhere within their employers'
buildings or campuses.
The main selling point: Mobile employees, such as retail clerks, production supervisors
and nurses, can use SpectraLink's wireless phones to catch all of their calls while
moving around their work site. The handsets operate through the client company's
internal telephone system, so they cannot be used like cellular phones away from the
company's grounds.
Earlier this year, SpectraLink took its wireless concept a step further. The company's
new wireless phone system, Net Link, uses Internet protocol (IP) technology, a process
of transmitting data in chunks rather than a continuous stream. And the addition of IP, in
turn, allows the system to transmit voice calls over customers' wireless computer
systems — also known as wireless local area networks, or wireless LANs.
The market for wireless LANs is growing rapidly, as companies opt for wireless
computer systems that allow employees to log into the systems from laptops or other
"untethered" personal devices. SpectraLink executives predict Net Link's market will
expand along with that of wireless LANs.
What's more, basing Net Link on IP technology has given the product global potential.
Net Link conforms to international standards for transmitting voice and data over
wireless LANs. Thus, it can be sold to customers abroad, whereas SpectraLink's earlier
products are based on digital, 900 megahertz technology standardized only in North
America.
In the end, SpectraLink executives see Net Link eventually accounting for most of the
company's revenue. As well, they say Net Link will push SpectraLink's annual revenue
growth beyond its lofty 20 percent to 30 percent gains of recent years.
"There will be a rapid explosion of wireless LAN installations and applications over the
next five years," SpectraLink marketing director Thomas Ohlsson said. "The fact is that
wireless (technology) empowers new untethered applications. Net Link is a natural fit
there because it will seamlessly integrate the wireless LAN ... with the company's
telephone system."
Founded in 1990 by its chief executive, Bruce Holland, and vice president of
engineering, Gary Bliss, SpectraLink has regularly ranked among the fastest growing
high-tech companies in Boulder County and Colorado.
SpectraLink's 1998 revenue of $35.1 million marked a 26.3 percent increase from its
1997 revenue, which itself showed a 29.3 percent improvement from the 1996 figure.
Today, SpectraLink's client base is using 4,700 of its wireless systems, representing a
total of 120,000 handsets.
SpectraLink's stock (Nasdaq: SLNK) has fared well this year, for the most part. It has
risen from about $2.50 a year ago, peaking near $7 in August. It hovered around $5 last
week.
On Thursday, SpectraLink was ranked as Colorado's 30th fastest growing high-tech
firm in the 1999 edition of Deloitte & Touche's Colorado Technology Fast 50 awards.
The company's five-year revenue growth rate, the main determinant of the rankings, was
324 percent.
SpectraLink employs 220 workers, including 175 in Boulder. Depending on the success
of Net Link, those numbers will grow as SpectraLink becomes a global operation.
"We're going to become 24-hours-a-day, seven-days-a-week," SpectraLink vice
president of marketing Michael Cronin said. "You can't serve the international
community on Mountain Standard Time. So you'll see an expansion of the organization."
But first, Net Link, which debuted in May, will have to realize its potential. According to
telecom consulting firm Phillips Group/InfoTech, SpectraLink owns 26.4 percent of the
market for multiple-cell workplace wireless telephone systems, ranking it with
heavyweights Lucent Technologies (33.8 percent market share), Nortel (16 percent)
and Ericcson (7.1 percent).
Yet SpectraLink's market position was gained with its digital wireless systems. Cashing
in on the growth of wireless LANs will be another matter.
According to market research firm Frost & Sullivan, wireless LANs were a $305 million
global industry last year. Frost & Sullivan sees the global wireless LAN market growing
at an average annual rate of 27.1 percent, reaching $1.6 billion in 2005.
Industry analysts say the predicted growth for the wireless LAN market has risen
recently after certain hurdles — such as international standards and technical
development problems — were cleared. One analyst said wireless LANs can still be
considered expensive compared to traditional systems, but that will change. And when
it does, the market will expand further.
"Over time, we're going to see the cost reduce," said John Armstrong, a chief
networking analyst for Dataquest. "Although, I think it will be a while before we see
wireless compete with wireline technologies."
SpectraLink has already cleared a big technological hurdle with Net Link.
Many companies have struggled to find ways to successfully transmit voice calls in an IP
format like that used by Net Link. Through IP, voice calls are broken into chunks — often
called "packets" — and the packets are transmitted individually to their destination,
where they must be reassembled into a coherent transmission. While complicated, IP
transmission is thought to be more cost-effective than traditional methods.
SpectraLink has solved the problem of transmitting and assembling IP packets with its
SpectraLink Voice Priority (SVP) technology. VSP, a software-based technology,
assigns a higher priority to packets of voice transmissions than packets of data
transmissions, and therefore transmits the voice packets more quickly. VSP also
reassembles the packets in their proper order at their destination.
Ultimately, SpectraLink executives expect to push Net Link into the market with the help
of companies that make equipment for wireless LANs. SpectraLink has already
partnered with five major companies in that field.
That effort has some Wall Street firms predicting more fast-paced growth for
SpectraLink. Janco Partners, a Denver-based investment firm that specializes in
tracking telecom markets, rates SpectraLink's stock a "buy." Janco analyst Roger Metz
expects revenue growth of at least 18.5 percent from SpectraLink this year.
"Net Link is certainly the future of SpectraLink," Metz said. "With their previous 900
megahertz products, they were able to jump to the forefront of the industry and capture
market share. They should be able to do the same with Net Link because they have
strategic alliances with most of the largest players in the wireless networking market."
October 10, 1999 |
