What does the cellular Internet market look like today? Aside from the devices that are slowly reaching the market, there are several strata, or markets, worthy of examination. One of them is mini-browsers, which are located within WAP-enabled cell phones. Here there is no little competition between Phone.com, the number one WAP company in the world, Nokia, Microsoft, and Ericsson. In the field of infrastructures, we again find Phone.com, as well as eXalink of Israel, Nokia, Motorola, and Microsoft (which is talking about WAP-compatible Exchange 2000). Comverse is also entering this field now.
At the same time, we have the content market for converting sites to WAP, such as CNN Mobile and Yahoo! Mobile.
There is also another niche between infrastructure and content - links between existing content, which has not been converted to WAP, and the infrastructure that uses WAP.
The Israel WAP Forum, which took place two weeks ago in Tel Aviv, put Israel on the world WAP map and WAP on the Israeli high tech map. Phone.com marketing vice president Ben Linder, who was a guest of honor at the conference, said he was stunned at the number of Israeli start-ups dealing with WAP and cellular Internet. There are apparently several dozens of them, even over a hundred. Over a thousand people were present at the conference itself, which is an amazing number.
Developments in this field in Israel and worldwide give rise to the obvious question: whither mobile communications? This article will not attempt to answer the question, but merely to hint at a possible answer, through a review of several Israeli companies dealing with different strata of mobile Internet.
Web sites: frontal confrontation
Two months ago, "Globes" interviewed PassCall general manager Nicky Pappo. He claimed, as he did in his lecture at the Israel WAP Forum, that the emperor has no clothes. "WAP is actually not suitable for Internet in its current form. Where content is concerned, it is a new language, called WML, where the Internet uses the HTML language. For example, WAP is not compatible with existing Internet security procedures, from end-user device to content. Everything is changing, without adaptation to what used to be. What's happening now is that the Internet, with its ten million web sites, is being put to one side, and the wheel is being reinvented.
"The second problem is that content providers will have to deal with many types of end-user devices. In Israel, for example, there are three cellular Internet standards. Cellular Internet without our solution is limited. In PassCall terms, the question of 'who will be king of cellular Internet' becomes irrelevant. We are saying that there is nothing new about wireless. For us, it's just another interface".
Pappo is very pretentious and confident, and Ben Linder of Phone.com doesn't like hearing that his company's assets, currently worth $12 billion, rest on a shaky foundation. The following is his response to PassCall's challenging message.
Ben Linder: "I don't agree with Pappo. I agree more with what mobideo is doing (see below). My general manager Alain Rossmann says, 'You can peer through a straw and read a book that way'. That's what PassCall is trying to do. They take a straw, in the form of a telephone, and use it to read a site designed for a giant PC screen. In our opinion, anyone designing a web site has to decide by himself how the content will appear on the telephone screen.
"I also don't agree with him that there are no sites. There are at least five WAP sites in the US with share trading, and thirty new sites, not to mention weather. There are also many others that are beginning to provide WML directly on the site".
"Globes": PassCall claims that the technology it has developed is absolutely unique, with no actual competitors.
"There is a slight problem with Israeli start-ups. They look through the Internet at what's going on overseas, but they don't invest much time or thought in seeing what is really happening in other markets. Sometimes they do things similar to what we've already seen in Germany, Japan, or the US. Israel has people with a lot of energy, who sometimes run too fast".
You are referring, of course, to PassCall. Isn't its technology unique?
"Of course not. There are several companies like it in the US. One of them is SpyGlass, which produced the first PC browser. It has a product, called Prism, which translates content both to Windows CE devices and to WAP. There are a few more. There is also an Israeli company doing something similar, but its outlook differs from that of PassCall".
That's pretty outspoken. Before giving Pappo the right of reply, we'll present Mobideo, which, in contrast to PassCall, constructs original sites for WAP, which it claims are the best alternative. The company gained exposure two to three weeks ago for the first time.
Mobideo was founded a short time ago as a subsidiary of A-Tech in order to focus on WAP applications. Amir Fishslevich, general manager of both A-Tech and Mobideo, says: "We not only convert existing sites, we also enter an organization's database and retrieve information. Our vision is online connectivity to a database, without connection to the existing site".
As with all the companies mentioned in this article, Mobideo is also in the process of raising capital. The company's name reflects the idea of mobility, as Fislevitz calls it.
As of now, Mobideo is working through the MIRS network, which is the only one in Israel with a commercially operative Internet service. The company's large customers include Tempo, Yellow Pages, and Tevel.
Mobideo set up a new WAP site for Yellow Pages. Since the Yellow Pages site has innumerable pages, Mobideo's system directly enters Yellow Pages's database. The system can be used to search selected categories important to the person who is on the go and wants to get details on taxis, restaurants, garages, and so forth through his cellular device.
What does Nicky Pappo of PassCall say about the battlefront opened against him by Phone.com and the challenge presented by a company like Mobideo? First of all, on Mobideo: "We can also interface with databases, and we intend to do so".
Now he comes to Phone.com and Ben Linder: "I expect to hear something like this from Phone.com, since our technology makes the content sector essentially negligible.
"We also use WAP, but the content comes from the regular Internet. There are other standards, which are not Phone.com. We also know how to communicate with WAP, and with both I-MOD and Samsung's HTML, without Phone.com".
What about the claim that your automatic translation is of inferior quality?
"It looks like Ben Linder doesn't really understand our technology and its originality. Our uniqueness is that the content provider can influence how the site appears on the telephone screen. It's not automatic. He can define how the final menus will appear".
Infrastructure: ours is better
In the course of his visit to the Israel WAP Forum, Linder attacked not only PassCall, but also eXalink of Israel, which competes directly with his company in the WAP infrastructure field. Here, too, we will present both sides.
eXalink has developed a unique WAP router, which enables Internet-based services to be provided to all types of cellular devices. The router converts protocols in real time, while providing data security and high-quality service, regardless of the operator's communication protocol.
eXalink, however, is attempting to enter a market in which Phone.com already has a monopoly and has installed systems with over 50 cellular operators around the world. eXalink is currently conducting trials with various operators in Europe and the US, some of which already have a Phone.com server installed.
Partner of Israel is also conducting WAP trials, and is using equipment from both Phone.com and eXalink. A source close to the company says that a few days were required to make Phone.com's server fully operational. The operating time of eXalink's equipment, on the other hand, is measured in hours.
Linder: "They are competing with a small part of our product. Our product has components that are not part of WAP, but are our own development, which eXalink doesn't have. Their product is newer and more complicated than ours. We have already sold to over 50 operators, and they have not yet sold their product. They have trials, but I have yet to see a customer using it commercially. In the WAP Gateway field, our more serious competitors are Nokia and Ericsson".
We asked eXalink CEO Rony Zarom to respond.
How do you plan to break Phone.com's domination?
Rony Zarom: "In the initial phase, Phone.com had great success, but that wasn't hard, since they were the only player. The second phase is now beginning, with new players, and Phone.com is no longer alone.
"Our product not only answers the WAP challenge, but also the challenge of bringing Internet to cellular infrastructure. We can identify any kind of protocol".
What about Mr. Linder's claim that hardware is more difficult to update?
"The hardware is not the most significant component of our product, but rather the operating system we use. We can easily update the software, since it is saved on hard disk and can be easily upgraded - far more easily than a Sun server. We can upgrade software in five minutes by remote control, without going to the customer's location".
Location: the vision that came true
It is said that the cellular locating application has the biggest revenue potential in the cellular Internet era. In Israel, CT Motion leads this field, although a reasonable assumption is that another ten start-ups are also in the field, and will surface when they find it convenient to do so.
The locating application exploits cellular system properties to track every open device in real time, through its communication with the system's control channel, and builds applications that can be put into practical application for various uses.
This is a sensitive field, since it gives rise to very significant questions concerning the existing conflict between technological innovation and our right to privacy. In the US, people look on the positive side. There the cellular companies will soon be required to utilise their tracking capability in order to add a distress and rescue call capability to the service, through the 911 emergency number.
CT Motion represents the positive side: the system not only tracks you and reports to your employer, but helps you. It should be noted that the tracking function can always be disabled. It is also possible to press the OFF button and turn the telephone off.
Microsoft and Phone.com are both showing a great interest. CT Motion appeared for the first time in public at the 1999 Geneva Telecom Exhibition. The man who unveiled it and put it on the map was its chairman, Shalom Manova, who invested in the company, both personally and through Kardan Communications International, which he heads.
At the Israel WAP Forum, CT Motion presented a new product: an application called Mobile Mate, which studies the cell phone user's habits and the locations he reaches and where he spends his time, and turns the cell phone into the user's personal assistant.
Another company with a pinpointing infrastructure like that of US Wireless is Ericsson, which set up Partner's infrastructure. Ericsson is currently trying to persuade Partner to buy its infrastructure. It can be assumed that US Wireless and Sigma One are making similar attempts.
Games: "Killer Application" Discovered
If the pinpointing application has already gained a place of honor in the awareness of those showing an interest (not as yet in that of users), the subject of games with multiple participants is as yet unknown. Two companies that have begun to deal in this area, which were founded only a few months ago, are Cellular Magic and CashU.
Cellular Magic appeared in public for the first time a few weeks ago at the WAP conference, when company general manager Guy Ben-Dov gave a lecture on cellular entertainment. The company has developed a system that facilitates the holding of multi-participant events among cell phone users through either WAP or SMS Internet surfing. The events are mostly games, but also real time auctions and various cultural activities.
In his lecture, Ben-Dov described the market, the target audience, the technology, and the content. He said that cellular operators are searching for means to increase their revenues, value-added services, and content, in order to increase the data communications component in the cellular user's profile. Ben Dov: "We contacted several cellular companies and offered them a multi-participant games system. We received good responses".
Where does the product currently stand?
Ben-Dov: "We are constructing it, and it will be ready for beta trials within two months. We are working simultaneously with several operators in Israel and overseas. In Israel, we have entered advanced negotiations with Partner for cooperation. Overseas, there are companies in Australia and Britain. Actually, we have already built a games portal, which is still confined to internal use".
Will the server operate only on GSM?
"No. It will operate with all the cellular technologies".
So why the special connection with Partner?
"We believe that Partner can help us the most to achieve a breakthrough".
Is this an investment by Partner?
"In the longer range. It is certainly not the focus of the negotiations".
Partner made an interesting announcement two weeks ago about founding a subsidiary to work opposite start-ups, in which it will invest $100 million.
"Yes, we know that. It wasn't anything new for us".
CashU was founded in November 1999 in order to develop a software server, which would constitute an infrastructure for interactive applications on the cellular network. On the face of it, the company is competing with Cellular Magic.
According to CashU general manager Amir Peleg, the infrastructure the company is building will work on any protocol: WAP, SMS, and IP; and with all the cellular technologies. It will also facilitate interaction between users of the various networks and cellular technologies.
The company finished its first capital raising round in February, raising $1.1 million. Participating in the round, which took place at a company value of $6 million after money, were the Israeli-US fund Argoquest and a private investor. The company is currently in the process of raising several million dollars in additional capital, at a much higher company value.
Published by Israel's Business Arena on March 30, 2000