TOP WIRELESS EXPERT SAYS:
MICROSOFT LEADS WAY TO 120 MILLION 'WIRELESS DATA' USERS
~ North America to have more users than Europe ~
Technology Innovator Interviews with Andrew Seybold
Pioneer and Leading Expert in Wireless Communications
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Companies Discussed in this Article• Microsoft [NASDAQ - MSFT]
• Ericsson [NASDAQ - ERICY]
• Qualcomm [NASDAQ - QCOM]
• AT&T [NYSE - T]
• Nokia [NYSE - NOKA]
• General Magic [NASDAQ - GMGC]
• Research in Motion [Toronto - RIM]
• Infowave Software [Vancouver - IWM] Andrew Seybold is considered one of the top U.S. wireless experts and consults a number of companies. Mr. Seybold publishes "Outlook on Communications and Computing" and has been frequently quoted by the Wall Street Journal and trade magazines on key developments in the communications and computer industries. His book "Using Wireless Communications in Business" (Van Nostrand, Reinhold: 1994) is the seminal work in this field. Mr. Seybold helped found the Portable Computer and Communications Association, served as its first president and is a permanent board member. Some of the most important corporations in the computer and telecom industry are listed among its members.
When the Microsoft [NASDAQ - MSFT] and British Telecom was followed by several other pairings between the computer and telecommunications industry, during the recent CTIA Wireless Conference in New Orleans, it was marked as a "red-letter" week in the evolution of the wireless industry. For the first time, it appears that the world is on the brink of a major convergence between the computer and telecommunications industry that is to result in a powerful and expanded use of the Internet: wireless data communications.
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STOCKHOUSE: What is the big deal that occurred with the wireless industry at the recent New Orleans CTIA?
Andrew Seybold: The CTIA cellular show in New Orleans has historically been a "voice show" for the carriers who run the voice networks and the companies who supply voice phones. This year, there was a big component of data. The realization has set in the wireless industry that data can be a real important revenue stream in addition to voice. The reason this has happened, this year, is because the computer industry, primarily led by Microsoft, has now decided that wireless data can play an important part in providing access to people's email and (access) to their information stores in the corporate databases. The fact that Microsoft said they're interested in "data" has got the telecommunications industry to taking a better look at this.
SH: How long is it going to take transmission speeds to reach high-speed levels?
Andrew Seybold: Wireless data transmission is three generations behind. If you listen to the industry hype, they're saying by the year 2002 or 2003, they will have wireless data speeds at ISDN levels or above. My belief is we're five to seven years away. Today, the networks are providing data speeds in the 8K to 14K range, which is two to three generations behind the dial-up modem. Having said that, what wireless data is about today is convenience. One of the runaway products is the Research in Motion "Blackberry" product. The two-way device sits on my belt and lets me send and receive emails as if I were sitting at my desk. It runs on a network with a data speed of 8K/second, but when I'm receiving email, it comes to me faster than I can read it.
SH: You say that only 2% of the public are using wireless data?
" If you figure by the year 2002, there are going to be 600 million wireless phones in the world..." Andrew Seybold: The way I came at that is I said that the wireline industry, the typical public switched telephone network, data and voice is about 50-50 mixed today. That includes fax and Internet access. In the wireless industry, only 2% of the wireless infrastructure today is being used for data. Now, if you look through history, wireline didn't just happen 50-50. It started out 98% voice and 2% data. Over a period of time it's grown to 50-50. So now you look at wireless, which is 98% voice and 2% data - the same trend is going to happen here.
SH: How long until we get to the 50-50 stage?
Andrew Seybold: I'm not sure it will ever get to the 50-50 level in wireless. There aren't nearly as many people who have a requirement for data as there are voice. I mean, you would never have data capability for a phone that was in your glove compartment just in case you had an emergency, for example. But it could get to 30-70, easily - it could do that in the next 3 to 4 years. Thirty percent of all wireless communications would be data.
SH:What's holding growth back that much?
Andrew Seybold: If you bought a wireless phone, you would get a phone number. You start calling people and you can talk to anybody who has a phone, wired or wireless. Wireless data is not that simple. You need special software, a special hand-held device. You need to have it enabled in the network. More importantly, the network then has to be connected to where my data is. A lot of times that's protected by a firewall. It's protected by security because corporate IT managers don't want to extend their corporate data to a wireless network.
SH: So the biggest problem is security?
Andrew Seybold: Correct, security. One of the reasons that the Blackberry device is a breakthrough product, is they have solved that problem for their product with some very sophisticated data encryption and compression stuff that sits behind the corporate firewall on a user's desktop or on a server. And Microsoft's WirelessKnowledge and Microsoft's BT (British Telecom) deal - those plays are about providing secure access to corporations so that they can then extend their communications links via wireless. This is just now starting to happen.
SH: What else needs to be accomplished in this area for broader acceptance of wireless data?
Andrew Seybold: There shouldn't be anything that stands in the way, but there is some public education needed. There are some changes to software that are needed to make wireless data more acceptable to the end-user population.
SH: What kind of software?
Andrew Seybold: If today you surfed the web, and went to the American Airlines' web page - if you turned graphics off, which you have to do in wireless data - the American Airlines site becomes totally useless to you. You can't see anything. You can't do anything. So the education is that these sites have to be written so that they function in both a graphics environment and a textual environment.
SH: Will wireless data eventually get to graphics?
Andrew Seybold: According to the telecommunications industry, we'll get there by the year 2000, 2003. My belief is that we'll get there, but it's going to be three or four years behind that.
SH: What's next step for wireless data?
Andrew Seybold: The next step is what WirelessKnowledge is doing, which is connecting to the backend corporate stuff, not just for e-mail. Blackberry is about wireless e-mail on your belt. WirelessKnowledge is about not only email, but calendar, phone book, databases, and personal files. WirelessKnowledge is a joint venture held by Qualcomm and Microsoft.
SH: What do you need next, technologically speaking, that still isn't available?
Andrew Seybold: What I need are calendar updates and book updates. The next thing I need is what I call "smart connection" to the Internet. The industry is still hung up on the fact that they want me to go "browse" the Internet. It has to change into what we call "active content." What we need is smart Internet connectivity. I think that's the next big thing.
SH: Are there are any companies that might pioneer such developments?
Andrew Seybold: There are several companies. I think RIM is looking at it. You have another company in Canada called Infowave (Infowave's Office Enabler) that's looking at some kind of this stuff - I've played with their technology and it sounded robust. And it works!
SH: How does Infowave's Office Enabler stack up as a solution?
Andrew Seybold: Infowave offers a software solution is for individual corporations. Infowave has a "single corporation to wireless network" wireless solution, whereas the Qualcomm/Microsoft joint venture, WirelessKnowledge, is trying to do a multi-corporation to wireless solution. If you have a corporate IT manager who wants to enable his workforce with wireless, then Infowave offers the solution for him. A corporation that wants to control all of their own wireless productivity tools would look at Infowave's solution and think it's pretty robust and might well consider it.
SH: With the market as fragmented as it is, (the CEO of Infowave) McIntosh said he'd be happy with 1%. Is that possible?
Andrew Seybold: The potential market for Infowave is huge. I think medium-sized businesses rather than large corporations would accept it first. I think Infowave has got a lot of very smart people. They understand the problems (in this industry) and have come up with some good solutions.
SH: How much growth will the industry see by 2002?
Andrew Seybold: If you figure by the year 2002, there are going to be 600 million wireless phones in the world - that's the number that Ericsson, Nokia and Motorola all seem to agree on - then 10% of them would have some need for wireless data. That's 60 million users. I think it'll be higher than 10%.
SH: Isn't that a high number by 2002?
Andrew Seybold: No, I think it will be that high. I think it could actually be higher, but I'm trying to be conservative with my estimate. It could easily be 15 or 20%. But I think it's gonna take longer to get some of these pieces in place. When we have a market is when somebody can go into a store, buy a product, turn it on, and get to their own e-mail without having to have a systems integrator do things, or have an Infowave do things to get us on the network. We're a long way from being there.
SH: Is the Infowave "systems integration" a step in right direction?
Andrew Seybold: It is an absolute step in the right direction. Somebody has to put all these pieces and parts together, and that's what the wireless community just hasn't realized until now.
SH: Who is it going to take to pull all of this together?
Andrew Seybold: It's going to take Microsoft. I think Microsoft's basic philosophy is: If they enable the entire industry, then they can be more successful than everybody else. I made this statement at a CTIA conference four years ago, "We will have wireless data when Bill Gates says we will have wireless data." It was my belief that it takes somebody like Microsoft to express an interest. They have expressed an interest. They're working hard. I think that's good for everybody.
SH: When will we start seeing advertisements for wireless data?
Andrew Seybold: I think in 1999 you're going to see those ads. I think it'll start with Blackberry. Then there are some things that I'm working on with clients that are going to come to pass in 2nd and 3rd quarter that I can't talk about. But I think you're going to see some ads that indicate that we've come a long way.
SH: Which companies should the long-term investor be investing in to capitalize upon growth in this industry?
Andrew Seybold: The safe ones are Nokia, Ericsson, Lucent, Motorola - the top layer, the blue chip. They're going to be real important. Companies like Research in Motion and Infowave long-term probably won't be around, they're probably going to be acquired by somebody.
SH: Which markets benefit most from wireless data?
Andrew Seybold: The only people making money today in the wireless industry are the computer consultants and the folks who write newsletters like myself. That's going to change in 1999 and 2000. I think a company like WirelessKnowledge is going to do an IPO and go public. I think a company like General Magic (will benefit), which does back-end services where they combine both voice and data.
SH: How do you work with these companies?
Andrew Seybold: I work with these companies on their next generation product. I work with them on putting alliances together. I do not own a single piece of high-tech stock. It's my company that's had this vision for years and putting it all together. There's not one company - not even a Microsoft or AT&T - that can put all this stuff together. It's a matter partnering with the right players.
SH: Do you think the Europeans are going to beat the North Americans in providing "wireless data" infrastructure first?
Andrew Seybold: I'm going to hedge my bet here. The Europeans are much more advanced when it comes to wireless technology because they have a single network based on the GSM technology. It's easier for Europeans to just select the network and put services together. But, I don't believe they're connecting to the right services. I think we're still going to end up with more real users than they will.
SH: Thank you, Mr. Seybold |
