In2a: Signals from Yokne’am

You might have come across In2a (Internet2Anywhere) in the shredded heap of the Yokne’am industrial zone had the company not done what many companies now have to do – and quickly. In2a left its Internet positioning and is doing something the world really needs. The company managed to navigate its business model ship out of the stormy cyberspace waters to the promising cellular Internet sea.

In2a, formerly named Netgong, was founded in 1997 by chairman Gideon Lefeber and Dan Katz. At first, the start-up developed notification and alert products and has now converted these to cellular Internet.

Vice president of business development Yoram Katz explains why cellular signaling is needed. “You can’t stand in the middle of the street and start keying in URLs, it’s impossible. Air time will be expensive in the future and users will not be able to be constantly online.”

”Globes”: But the cost of air time is getting cheaper.

Katz: “It’s getting cheaper, but it’s still expensive. In cellular, they did not make the mistake they made with the Internet in giving everything for free or half-free, which is why the whole thing collapsed. People will pay a fixed rate for Internet connection, not air time, which means that it will not be worth people’s while to be online a great deal.”

In2a’s cellular phone signaling product falls under the category of added value services, the company says, and it therefore plans to charge for it. Signaling services can be used in a range of cellular Internet applications:

• shares and foreign currency can be bought and sold;

• airline tickets and holiday packages can be purchased;

• news can be obtained;

• cellular companies can offer new services (which sounds to me like a polite definition of advertising);

• reminders can be sent for anniversaries and birthdays, with gift offers (a sort of push merchandising);

• participation in betting and gambling (for example, horse races or other sports events);

• location-based services can be offered.

Signaling is not a field that is unique to an Israeli company. Sonera of Finland, for example, provides SMS signaling services. However, Katz says that this is not such a big deal. An SMS message may reach you very quickly, but it can also get delayed (from minutes to hours) if the network is very busy.

In contrast, In2a’s signaling is immediate (it is also patent pending), arriving at the speed of a telephone ring and enabling an immediate response to the information contained in the signaling. Instead of telephoning your broker or keying into many screens until you actually bid in a public auction or acquire a share, instructions can be given at the push of a button. Katz says, “It’s important for cellular Internet providers to have these options in addition to the signaling. Otherwise, the communications bypasses them and they are left without any of the large pie known as cellular Internet.”

In2a is shortly launching a pilot product with one of Israel’s cellular operators.

Who are your competitors?

”Nokia announced that a one-click application is needed. The fact that Nokia made such an announcement is important. However its solution won’t hold water. Phone.com also has something, but I haven’t seen anyone with a solution similar to ours. They are all based on SMS.”

In2a is still working on its business model, together with suppliers. Katz says that that interim results show that “we’ll probably make a minimum charge, the user will receive the service for $3-4 a month and we’ll take a premium on the signaling, with some sort of minimum for each user buying the service.” The company estimates a 5% penetration rate among the 2 million surfers connected to providers with Internet capabilities, which means $1.2 million revenues next year, $14 million in the following year and $30 million in 2003. “This is the plan, at least,” Katz says cautiously.

You seem like a company with a nice application, but not one that will march forward and be ready for an IPO one day.

”We have many innovations. We don’t require software for the handset, but we’re able to insert it and we have a patent for the application signaling capability. There’s a big advantage in inserting software into the handset. A way can be found, for example, for a secretary to automatically update your meetings schedule and databases.”

It sounds as though it will create overload on the handset and harm the limited memory resources. You also did not answer my previous question.

”In another two years, the cellular will no doubt be an organizer as well as a telephone. We want to be experts in signaling services, which will give us a foot in the door of the wireless market. We’ll make contact with wireless phone manufacturers and we’ll have real estate inside the telephone, although it will take some time. ”

To date, the company has raised $6 million in two financing rounds, not from ordinary investors, but from Citigroup, ING Barings as well as private investors. The company is currently raising $5-10 million. “However, as you know, it isn’t easy today,” Katz says with a sigh.

Published by Israel's Business Arena on 25 December, 2000