METRICOM in FORBES
(cross-post from yahoo, by: parisian_romance (38/M/Paris, France) 8/4/00 6:30 am Msg: 81354 of 81403 )
Metricom's Hot Air
By Kathleen Cholewka
It's like watching an old dog do new tricks.
Metricom (nasdaq: MCOM), founded in 1985, has recently rolled out its high-speed mobile Internet service in San Diego and Atlanta.
End users attach a Metricom modem to the back of their laptops and access e-mail, Web sites and corporate networks at speeds up to 128 kilobits per second, about five times faster than most dial-up modems and ten times faster than today's wireless Web services.
Metricom's data service, called Ricochet, was originally marketed to college kids. And it has been available for the past four years. Now the service has morphed into a competitive strategy tool for mobile professionals.
The company, which received the endorsement of WorldCom (nasdaq: WCOM) and Paul Allen, co-founder of Microsoft (nasdaq: MSFT)--WorldCom owns 38% of Metricom and Allen owns 49%--is building out its network into 21 new markets, including Chicago, Houston, New York and Seattle. By the end of 2001, Metricom, whose market cap is $1 billion, claims it will be able to offer service to more than 100 million business users and consumers.
Metricom, well aware of its lack of brand-name recognition, launched a sexy advertising campaign last month, complete with James Bond-esque spies as its stars.
The company is certainly out ahead of the competition with its high-speed data service. "We believe that we have many years before anyone even has a hope of doing that," says Tim Dreisbach, Metricom chief executive. "Our advantage is we're real today, because we've built a data-optimized network."
But no matter how good things look, the company has a long road ahead of it. For example, although the company has been selling wireless data services for the past four years, it has only garnered about 30,000 customers. Dreisbach blames the lack of a national network and absence of a marketing department. What's more, building its network has already taken a toll on Metricom, contributing to the company's loss of $76 million for the first six months of 2000.
In addition, the competition is tough. Sprint PCS (nyse: PCS), AT&T Wireless (nyse: AWE) and Verizon Communications (nyse: VZ) are going gangbusters with their wireless Web services offering Internet content via their wireless handsets, including e-mail and info from stock quotes to local movie listings.
And, contrary to trends in the industry about converging voice and data services onto one network or accessing it from one device, Ricochet does not offer voice service.
Even Ricochet's Dreisbach, who touts data service as its main strength, knows the importance of voice. His company will "most likely" feature voice eventually. "The key is to first have data but at some point in the future, sometime over the next three years, we'd clearly like to do that," he says.
Another trick for Metricom to turn is its third generation, or 3G, wireless technology strategy. 3G is wireless technology that will let today's wireless carriers deliver high bandwidth services on their networks. And as these wireless service providers build and sell 3G services, the question remains: What will Metricom offer?
It's possible as the likes of Sprint and AT&T ramp up their 3G networks, Metricom could be smooshed into a niche play. "Metricom has an interesting service, a relatively low-cost mobile wireless data play," says Riyad Said, analyst at Arlington, Va.-based investment services firm Friedman, Billings, Ramsey. "But the issue is as other networks upgrade their networks to provide faster connections, it could render Metricom as a niche product."
In response to that concern, Dreisbach is optimistic. Instead of upgrading their systems, he recommends that his competition surrender. "There is an opportunity for one of those carriers to partner with us to take advantage of our data-optimized network," he says.
Indeed, it could be about four years until 3G networks gets started in the U.S.
Still, to remain ahead of the competition, Metricom will have to roll out its network and market its services quickly. "It's a matter of execution," says Iain Gillott, analyst at Framingham, Mass.-based International Data Corp. "The issue is they have to get it out there and get it used."
(end, link: forbes.com |
