Remember the dream called Nokia 9000? It was a smart phone, because, in addition to being mobile, it contained Internet surfing capabilities. The fact that it weighed the equivalent of a crate full of books, and you needed to take out a mortgage to pay for it were just two of the indications that it was before its time.
Retroactively found to be a prototype, the idea made clear to all market makers and players that there was tremendous potential here, but the cellular operators' infrastructure would not be capable of enabling fast surfing which would justify the investment.
Giant cellular equipment manufacturers and many start-ups have worked for several years on the speed of cellular Internet surfing. It is called increasing the bandwidth. The cellular race fits in perfectly alongside bandwidth in computer access via copper, electricity, cables and satellites.
Israeli start-up Speedwise believes it has found a solution. Not just any solution, but one that is fast, relatively cheap and ready for launching. The company developed software which significantly speeds up cellular operators' traffic - up to four times the currently existing speed, and in the not-too-distant future, up to eight times this speed. It is not necessary to replace infrastructure or add boxes. All that is required is the installation of a server with software. Data can then be transmitted at speeds over 400% faster than existing speeds (9.6 Kbps), which comes very close to home surfing speed (56 Kbps).
However, cellular operators are not the only target market for the software. ISPs can also speed up their subscribers' surfing speed. Sites wishing to offer accelerated surfing can also use the product and manufacturers of cellular infrastructure equipment are potential customers too, as they can incorporate Speedwise's technology. Speedwise aims at becoming no less than the standard for accelerated Internet browsing.
Despite all this technology and business vision, you will not find prestigious venture capital investors in Speedwise either from Israel or overseas. Investors in the start-up are: the Gap fund (owned by Gap Technologies, a subsidiary of Gap Development, which is listed on the Tel Aviv stock exchange and has 15% of share capital, with a further 10% option); Sahar Development and Investments, an Italian investment fund, and two private investors (altogether holding 15%). The remaining shares are held by Menachem Reinschmidt, one of Speedwise's founders, through his holding company, Linkware.
The price of Speedwise's system starts at $80,000 for a thousand mobile subscribers, reaching $480,000 for 100,000 subscribers. Reinschmidt says that according to calculations cellular operators made, the investment will be recovered within only six months. The start-up also offers a partnership option, whereby it will install the servers for free in exchange for percentages of profit.
The software is not the most inexpensive, but the alternative is much costlier. Speedwise says cellular infrastructure replacement could easily reach 100% of the cost of existing infrastructure, totaling hundreds of millions of dollars even in Israel. The time element is also of importance: the equipment for widening bandwidth will not be available in the near future. "Only in 2005 are the new generation infrastructures expected to be integrated," says Alon Liberman, chairman of the board of directors and a Gap fund manager.
What will the company be doing in 2005? Liberman: "The technology is relevant even when broadband infrastructure is deployed, although in a different way. Even the most advanced modems suffer from traffic congestion." Speedwise is already working on the next generation, which in effect converts existing site "html" displays to vector displays. This is done with the help of sophisticated algorithms, enabling particularly heavy data to be downloaded very quickly - up to twenty times current speed.
Another big advantage is that this enables "flat" images to be converted into seemingly three-dimensional images. Moreover, the company plans to develop another product to do the same with video.
To achieve these far-reaching goals, Speedwise has three employees with PhDs in mathematics working with software engineers with experience in developing infrastructures for the Internet. Altogether, the start-up has a staff of fifteen.
Similar to most start-ups that have recently come my way, here too the company claims it has no competitors. One competitor is Israeli company eXalink, which developed a WAP (Wireless Application Protocol) router enabling Internet-based services to be provided on all mobile handsets. Others are Phone.com, which has similar software but which Speedwise claims requires installation at the user end; and another Israel company Net2Wireless, whose chairman is former ECI general manager David Rubner.
In contrast to the latest fashion which says, "I'm not seeking to set up a company and then sell it, I want to go all the way through with it," Speedwise's entrepreneurs openly talk of acquisition. Who would show an interest? Lieberman: "The mobile phone handset companies like Samsung, Nokia and Ericsson will probably make us an offer difficult to refuse."
Founded: July 1999
Product: Software to widen bandwidth in cellular and landline communications infrastructures
Market: wireless network operators, ISPs, large sites.
Investors: Gap (15%, with a further 10% option), Sa'ar, Italian fund and private investors (15%), Menachem Reinschmidt, through Linkware (60%).
Published by Israel's Business Arena on 14 February, 2000