OTA Update Platforms
DIY Investor,
<< One thing that I thought was odd was that Bitfone did a PR this summer indicating that they had a meeting to discuss forming a common standard. There are already standards bodies that are addressing these issues. I saw that announcement as a weak ploy to steer the direction from a path that Bitfone was not on and INSG may have been on (getting back to my previous comment on defacto standard). >>
I don't consider that a weak ploy. Its a necessary ploy. Bitfone was very active in the SyncML Initiative which merged into OMA.
OMA has 14 Application and Service Enabler Specification Release Programs in process and OTA Repair falls into 3 of them:
- OMA Client Provisioning
- OMA Device Management
- OMA Download
I consider OMA to be an exceptionally important initiative that will help overcome barriers to wireless data technology adoption by creating a common open architectural framework application development.
The downside of OMA for investors is that it makes it rather challenging for any individual company's technology to become a de facto industry standard.
E-mail newsletter from Insignia just arrived while I was typing this. I haven't drilled down but this blurb stands out:
Insignia contributes proposal to OMA DM standards group As part of the recent OMA (Open Mobile Alliance) meeting in Berlin, Insignia contributed a proposal for integrating with SyncML/DM servers and is part of the ongoing effort to forge new standards in this area. This effort will enable interoperability between Insignia's server software and future OMA SyncML infrastructure.
As for Bitfone, I haven't yet determined how many employees they have, particularly in development. I suspect I can find out. My curiosity is aroused.
I suspect that Bitfone will be demonstrating in conjunction with Nokia at the Nokia Mobile Internet Conference that will take place the 29th and 30th of October in Nice, France.
I also suspect Gemplus and IBM may be playing in this space. Gemplus has a pretty powerful OTA Provisioning Download Delivery Platform. It's being used by Hutchinson Whampoa's '3' net in the UK, and IBM partners closely with Gemplus.
Meantime I just culled two dated but interesting articles on Insignia competition, one on DoOnGo and one on Bitfone:
>> DoOnGo Signs Asia-Pacific Customers for OTA cell Updates, Seeks European VC
Christopher Rose
the451
March 6, 2003
doongo.com
Cell phone over-the-air (OTA) software provisioning company DoOnGo recently added Sharp and China Unicom to its customer list, and now is seeking venture capitalists with experience in the European carrier market to help drive expansion in that region. It will need that experience – arch rival Bitfone has just announced a C-round investment from Orange Ventures and already has Nokia Venture Partners on board.
Back in Asia, DoOnGo has just completed a still-unannounced second round of funding that saw existing investors Mitsui Venture Capital and Nippon Venture Capital Corporation return to the table, and one or more new Japanese investors bought in. The new investors will be named in a couple of weeks.
Impact Assessment
* The Message
DoOnGo produces software that enables cell phone manufacturers and operators to seamlessly transmit software upgrades, new features and bug fixes to groups of users and individual users. It's delta-based system keeps transmission sizes down.
* Competitive Landscape
Its two direct competitors are Bitphone and Insignia, and neither has announced customers. However, Bitfone has a bigger war chest than DoOnGo – its recently announced investment from Orange Ventures (of an undisclosed amount) adds to the $29m it has already raised. The combination of Nokia and Orange as investors means Bitfone has to be taken seriously.
* The451 Assessment
DoOnGo has proved that it can gain traction in the Asia-Pacific region, and is clearly leading the pack right now. It still has to prove that it can tackle the European operator market, though, where Bitfone's Nokia and Orange investments make it a force to be reckoned with.
Products
DoOnGo has two products designed to update handsets with new system or application software. The company's first product, DeltaRewrite, was designed to let the device manufacturer issue upgrades and bug fixes at the point of sale or kiosk. It was this product that originally attracted NEC. DoOnGo subsequently introduced the DeltaUpgrade package, which allows full OTA control of software upgrades.
At the mobile device end, both products rely on a piece of sub-50K embedded client software. The server software sits at both the device manufacturer and carrier datacenter, or can be offered on an ASP hosted basis. The software updates themselves are usually pushed to the operator's testing server by the phone manufacturer using the New Software Component Distributor. Once the software has been validated and tested, it can be sent out to the user from the Upgrade Manager server. There is a good deal of flexibility in this process – the software can be distributed to the whole user base, a group or an individual. Moreover, the operator can control whether the update is mandatory, whether the user needs to acknowledge it or whether installation should be user-initiated.
The products can manage the whole software stack, and DoOnGo makes much of the fact that the phone is still usable while the software update is progressing. This includes elements such as the OS, protocol stacks and even the DoOnGo client itself. If the power fails on the phone mid-install, the company claims that the phone will always be left in a usable state.
But many of the company's 22 applied-for patents concern the 'delta' approach. When a software component needs to be updated, the device manufacturer runs the new code through an offline tool dubbed the Differential Engine that generates byte-level delta files containing only the differences between the new and existing software release. In production environments, a delta file might be only 3-5% of the size of the actual software, according to the company. And since it's the delta file that is transmitted to the handset, the savings in bandwidth and transmission time are considerable.
Pricing for the client software is less than $1 per handset. The pricing of implementing the deployment system at the carrier end is as flexible as you would imagine, ranging from royalty fees per handset to lump sum payments.
Customers
The company says its software is currently deployed in 20 million handsets in Japan – 8% of the country's total. It signed its first customer, NEC, in August 2001, followed by Matsushita/Panasonic, and last month Sharp became the third handset company to agree to embed DoOnGo's client software into its handsets.
More importantly, the company scored its first public carrier deal last month: China Unicom. The duo has agreed to jointly push the DoOnGo technology to manufacturers hoping to get their handsets on the Unicom network. According to DoOnGo CEO Stephen Artim, that list encompasses about 19 manufacturers, including the top five international manufacturers. The deal gives the company potential access to roughly 30 million subscribers.
Artim says the company has also signed a Japanese operator that will be going public shortly, and expects to announce a deal with a European mobile operator in the next couple of months. A deal with a SIM manufacturer is also on the cards. Selling to both operators and handset manufacturers requires a degree of politically sensitivity in a market where the balance of power between those camps is in flux.
Strategy
The company has a two-pronged strategy to sell to both handset manufacturers and operators. The staples are the abilities to deal with bug fixes, distribute new features and 'future-proof' handsets in the face of changing standards. The latter is going to be particularly attractive to European operators as they cope with the wrinkles in the current 3G codex and radio interface implementations. As with its competitors, the company quotes a total cost of $15-20 for a manufacturer to recall a single phone.
It is the mass market of mid- to high-end handsets, rather than the very top-of-the-range smartphones, that DoOnGo is particularly interested in. Not only are volume shipments high, but operators are increasingly attempting to differentiate themselves by producing innovative multimedia interfaces, new gizmos and heavier software layers to their phones. The company started out tackling the Japanese market, partly because of its contacts in the region, but mainly because of the prevalence of software-heavy phones. It is now in discussions with tier-one European carriers.
Funding
The company has now completed two rounds, totaling $15m. Mitsui Venture Capital and Nippon Venture Capital Corporation are the named participants, but the recent round also included another participant that has yet to be named. It's believed that the company, which has 95 staff, has spent about $10m to date. Artim says he is looking for an additional funding partner to bolster the European expansion, and was busy networking at the 3GSM Congress. Deep knowledge of the European carrier market and good contacts there are prerequisites in a partner, he says – which is not surprising, given Bitfone's roster of investors.
Competition
DoOnGo has two direct competitors: Bitfone and Insignia. Neither has publicly announced customers, giving DoOnGo a lead. But DoOnGo's public success to date has been in Asia-Pacific, and given Bifone's relationship with Nokia Venture Parners and Orange Ventures, cracking Europe could prove a challenge. Bitfone did not reveal how much Orange Venture's February investment was worth, but it builds on the $29m raised from Nokia Venture Partners, St. Paul Venture Capital, 3i, Nexit Ventures, CIR Ventures and others.
In terms of core technology, DoOnGo's delta-based approach to upgrades sets it apart, and will be attractive to the operators looking to minimize strain on their infrastructure.
On the face of it, Qualcomm's BREW Distribution System (BDS) has the potential to pose a threat. As the name implies, the system lets operators manage the distribution of applications and includes facilities to handle pricing and so on. While it is highly configurable, the Qualcomm system is limited to updating applications within the BREW 'sandbox,' and can't manipulate low-level system software and drivers and the like. Consequently, while BDS somewhat erodes the benefits of the offerings from DoOnGo and competitors in the application space, it doesn't threaten to displace them. As an illustration, China Unicom has signed up for both technologies.
SWOT Analysis
Strengths - Unlike its direct competitors, it has announced customers and 20 million installed devices. Its novel delta-based approach minimizes update size.
Opportunities - As handsets become increasingly software-heavy, handset manufacturers and operators will want tools to handle OTA updates. Operators want to minimize the risk of rolling out untested 3G firmware.
Weaknesses - DoOnGo's public success is so far limited to the Asia-Pacific region. The company still has to demonstrate that it can crack the Europe and US markets.
Threats - Although Bitfone does not have announced customers, it is well connected already in the European market. <<
>> Bitfone: Silicon Valley Transplant Thrives in Laguna Niguel
Max Donner
OC Metro
ocmetro.com
Going south has been a move in the right direction for Bitfone. The hi-tech firm relocated from Mountain View in Silicon Valley to Laguna Niguel when it merged with erstwhile competitor Digital Transit in Dana Point two years ago.
"I find Silicon Valley to be somewhat depressing these days," says Bitfone founder and CEO Gene Wang. "The whole NASDAQ crash has taken the wind out of companies there. Orange County is more vibrant and diverse. There are a lot of good developers here because there are a lot of great companies here." That's good for Bitfone, which develops programs for repairing and upgrading cellular telephones over wireless networks, bypassing "brick and mortar" retail stores and customer service centers.
The Bitfone team made the most of its move by consolidating its operations just up the road from the Ritz Carlton Hotel on a spectacular site with a commanding view of the coastline and Pacific Ocean. The resort-style setting, shared with a 24 Hour Fitness health club and near Laguna's sandy beaches, is an excellent home base for a high energy start-up that is becoming one of Orange County's fastest growing companies.
"We want to be a great big company," says Wang, who estimates the size of the global market for Bitfone's technology could reach $8 billion. The company already counts some of the world's largest multinationals as its customers, including AT&T, Motorola and Nokia. Wang, who calls himself a serial entrepreneur, has already taken one start-up public and sold another to blue chip Agilent Technologies.
Searching for talented employees is a top priority. Wang says, "I'm very pleased with the team spirit and positive attitude. Because we haven't been through downsizing like some other companies, morale is high and confidence is up." Bitfone is actively recruiting mobile communications engineers as well as account managers and office staff. "We're looking for people who can hit the ground running," says Wang, who also points out that Bitfone is expanding internationally, as well as in Orange County.
Bitfone's international ambitions have made Wang himself a world traveler. He recently returned from the GSM World Congress in France and is on his way to Japan this month. An engineer, Wang has made preparing for international business events into a science. "We prepare our demonstrations well in advance with our engineering team. We also try to have major announcements to highlight."
Wang has this advice for entrepreneurs building new companies: "Start-ups are more like marathons than like sprints, so you have to pace yourself to the finish line. The important thing is being effective and working on the right things."
Bitfone is now pacing itself to become a major player in one of the world's largest markets. There are 700 million mobile phones in use worldwide. Bitfone technology can service all those being manufactured and designed today because it operates with multiple standards - either CDMA (code division multiple access), GSM (global standard for mobile) or Japan's PDC standard. Over the long run, says Wang, "We see Bitfone being included in every mobile phone in every standard."
How has Bitfone succeeded in popularizing a service that much larger companies have not yet developed to its full potential? Wang observed the success of Microsoft and his former employer, Symantec, in using online network transmission to distribute software updates and to debug software programs. "The advantage of being in a start-up is that we can move very fast. It's an important advantage to maintain as we grow," says Wang. He is convinced that Bitfone has an additional advantage over large companies, which can be stretched thin with internal communication requirements while a start-up is able to focus on communicating with customers.
Because of its technology lead, Bitfone can offer a price performance improvement 10 times greater than previous versions of wireless updates. This gives the company a competitive edge in the marketplace. Bitfone sees its primary benefits as the ability to reduce warranty, recall, and customer service costs. Customers are reporting reduced software- related product recalls, phone replacements and retail center servicing, which translates directly to increased profits. Bitfone promises its customers to fix software problems "down to the metal." Wang estimates that total customer savings is currently about $100 million a year.
Wang sees even greater long-term potential for Bitfone's flagship product, branded "mProve." The company's boosters are looking at its over-the-air technology to fix defects in a range of products which, like cellular phones, depend on embedded computer chips. One of the largest potential customers is the automobile industry, where product design cycles of several years and usage periods of 10 to 20 years result in embedded electronics becoming quickly out of date. And anyone who has ever waited at a dealership for warranty work will find the alternative of an automatic over-the-air upgrade to be a valuable timesaver. mProve technology may also support homeland defense efforts by enabling first responders to quickly get state-of-the art technology out to communication devices in the field.
Investors have already taken notice. While last year was one of the most challenging in decades for growth companies to seek new financing, Bitfone succeeded in raising more than $30 million in new equity investments from Orange Ventures, St. Paul Venture Capital, 3i, Nexit Ventures, CIR Ventures, and Nokia Venture Partners.
Mike Dolbec, a partner at Orange Ventures, says, "Bitfone is at the forefront of the device management market with unmatched technical expertise and an experienced management team." Nokia is now Bitfone's largest investor and Kari-Pekka Wilska, president of Nokia's North American subsidiary, has joined Bitfone's advisory board.
In addition to a highly qualified board of advisers, Bitfone has recruited an experienced senior management team. Carlton Peyton, formerly a vice president at a Qualcomm subsidiary and at Samsung Telecommunications America, signed on last month as senior vice president of sales. Engineering Senior Vice President Harri Okkonen has more than two decades of experience in the communications and information technology industries and adds a global perspective from his early career in his native country, Finland. Former LinkAir CFO and Goldman Sachs financial analyst Hang Xu now rounds out Bitfone's senior management team as chief financial officer.
The path to the top slot at Bitfone has been a steady climb for founder Wang. After he graduated from UC Berkeley in the 1970s and worked near Boston as a programmer and manager for a large office equipment manufacturer, Wang enrolled at Harvard Business School in 1983. Instead of getting an MBA, Wang got an offer he couldn't refuse to join a high profile start-up called Golden Hill Computer. He then spent the next 10 years advancing through the corporate ranks at Borland and Symantec, reaching the position of executive vice president before returning to the entrepreneurial community in 1996. Wang then headed Computer Motion in Santa Barbara, followed by Photo Access in Palo Alto, the pioneer of one-click printing from digital cameras.
Building a company has demanded long hours at work, so Wang chose to live just a few minutes from the office and keep a promise to his wife to be home for dinner with his family. He starts many days going surfing with his daughter at the beach near Bitfone's office. Wang recommends playing hard as well as working hard. Under his leadership, Bitfone has rented a basketball court for intramural games and discounts health club memberships for its employees.
Hard work is paying off for Bitfone and its backers. Its success is providing an example to other early-stage companies seeking an Orange County base for their entrepreneurial team. Gene Wang offers encouragement, saying, "This is the best time to be an entrepreneur. There are so many opportunities. It's exhilarating."
Max Donner is a writer specializing in technology. <<
I'll repost this on the Insignia Board which is probably a more suitable forum for discussing Insignia than here. The size of Insignia, their lack of profitability in their corporate history, the position of the technology they are developing in the TALC, all contribute to the fact that this company, while very interesting, is probably not a Gorilla or King LTB&H portfolio candidate at this time. Any regulars here that are interested can link over to the Insignia board.
<< I also could lose big with INSG, however, my shares were acquired at low prices. Its a gamble that I think is worth it. >>
If you picked a good entry point, that's healthy. Good luck with your investment.
- Eric - |
