So why are we holding our MobileBeat conference tomorrow?
Focused on investors and entrepreneurs (developers), we’re asking the big question: Is now the time to go mobile? And if the answer is yes, what do you have to keep in mind?
As part of the answer, we should take a look at which companies have succeeded so far. What are the biggest hits, from an investor’s perspective?
The answer: Over the past decade, most money has been made on investments in companies building the back-end infrastructure of the wireless networks, but even here the returns have been mixed. An almost negligible sum, meanwhile, has been made from investing in mobile applications that run on phones. With the rise of the mobile browser (think 3G iPhone), however, and better networks to allow quick browsing, people are likely to surf the mobile web more. Open platforms are helping people find a way around the stagnant operators, too. That’s what suggests the types of success we see in the future might change.
To be sure, the iPhone 3G has raised the hype decibels — and it’s just not certain how investors will fare by investing in applications. We’ve got a venture capitalist panel starting at 11am where we’ll chew through these questions, how things like GPS are changing the game, and how apps (if they can become platforms) may become huge hits. We’ve got leading investors, such as Rick Segal from the Blackberry Partners Fund, Richard Wong, from Accel, Shawn Carolan, of Menlo Ventures — and even Rupert Young, of AT&T, who says the company has made few investments so far, but that’s about to change.
So, beyond the iPhone 3G hype, where has the cold hard cash been made?
First, we looked at the top 10 IPOs from 2000-2008 (source: VentureOne). The reality: Only 10 companies went public. Industry watchers will also note that Vonage Telecommunications, one of the companies on the list, had a disastrous enough IPO that shareholders revolted with a class action lawsuit.
Notably, half of the 10 did their IPOs in early 2000 during the Internet boom. After a nearly four-year nuclear winter, Atheros Communications got through the gates and raised $126MM in 2004 with its IPO. Only four of the 10 had billion dollar values at time of going public.
There are few household names on this list, unless of course you’re a fan of the cheesy MetroPCS and Vonage commercials.
A more diverse and interesting picture emerges once we focus on the top acquisitions in the 2000-2008 period (source: VentureOne). While no wireless communications equipment company had IPOs, almost half the acquisition dollars were spent on such equipment manufacturers. Navini Networks, a wireless broadband manufacturer is one example; it was sold to Cisco Systems for $330 million dollars in December 2007.
The most eye-opening trend is the emergence of Nokia as the biggest investor over the last 18 months. The phone giant has bought Trolltech, Navteq and Enpocket. Missing from the list (I don’t know why), are Nokia’s recent acquisition of Plazes, a location technology company, operating system platform, Symbian, this year, and Germany’s Gate5, in 2006.
We’ve pasted the entire list of acquisitions below (provided by Thomson and the National Venture Capital Association). Note how only one company reached an acquisition price of $500 million: Danger, bought by Microsoft in April. Danger is an example of the “device-platform” trend we referred to earlier this week. Apple and RIM have shown how much value there is in such platforms, if you manage your partnerships correctly.
In fact, RIM, which has grown organically over the years, is probably the biggest success of a mobile company around. It is valued at $64 billion. It fell outside of the data table below, because it was never acquired. Another device-platform company, Good Technology, was sold to Motorola, however that company was a classic case of not appreciating the importance of carrier relationships (investors tell us they could never get management to take the issue seriously). It abandoned its device, and focused on messaging, retrospectively perhaps a mistake. See the chart below for breakdown of investments in the mobile industry, according to segment.
A few other large acquisitions aren’t included in the list below (not sure why, perhaps because NVCA didn’t consider them venture deals) but are worth mentioning: Qualcomm bought Flarion in 2005 for a little more than $800 million. Flarion is considered a 4G technology (OFDM). Investors included Cisco, T-Mobile, Bessemer, SunBridge partners, Nassau Capital, Pequot Capital and NVP and SK Telecom. It had raised at least $45 million. Qualcomm also acquired Snaptrack, a San Jose, Calif. wireless positioning (GPS) technology in 2000 for $1 billion. It had patents, which were attractive to Qualcomm’s patent strategy. By the way, this was at the very height of the bubble. Snaptrack was run by Steve Poizner and backed by TI Ventures, owned by Texas Instruments and H&Q.
Also missing is Vodafone’s acquisition of mobile social network Zyb. Except for Symbian, these were relatively small acquisitions, however.
Here are a few of the other big exits worth mentioning:
- M-cube, a messaging company, acquired for $300 million by Verisign
- Jamster, an SMS company, acquired for $390 million by Verisign
- Third Screen Media acquired by AOL
- ScreenTonic acquired by Microsoft
- Mobile365, messaging company, acquired by Sybase for $425 million
- WilderThan, a music ringtone company, acquired by Real Networks for $350 million
- Qpass bought by Amdocs for $275M
Finally, what kinds of companies within the mobile space are venture capitalists investing in? Here is a chart on wireless related financing trends provided to us by Rutberg and Co.
In the graph above, “carrier application” refers to companies that are based around selling their service “on deck” — that is, directly available on the carriers’ devices. JumpTap (mobile search and advertising) and Loopt (mobile social networking) are examples of on deck carrier applications. Companies bucketed under “carrier” are usually mobile network operators (MVNOs) such as kid-focused carrier Kajeet. “Consumer applications” are offered direct to wireless consumers without carrier intervention. MeetMoi, a mobile dating service we referred to as “Twitter for sex” and Qik, which recently launched a public beta are examples of the same.
Few of these companies have real revenue. Companies selling ringtones and wallpaper, such as Playphone, Thumbplay and ad network companies such as Admob are examples.
Look at the carrier and carrier application bars above: Capital influx into these companies has dropped precipitously between 2006 and 2008. Some of these developments have played out prominently in the news as MVNOs like Helio have run into serious headwinds while others such as ESPN Mobile have been forced to exit the business altogether. By the same token, VC money is increasingly pouring into direct consumer applications. While this isn’t necessarily a sign of a weakening of the carrier choke-hold, it certainly tells us that VCs are increasingly funding pure consumer wireless plays that completely bypass carriers.
All in all, the data tells us that while most of the previous exits have been hardware companies and services providers, VCs are betting the future on applications that serve the consumer directly. Will we ever see the mobile version of Google or Amazon, products that enjoy widespread usage and strong mindshare? Come to MobileBeat and find out for yourself.
VC-Backed Acquisitions in Mobile from 1970-2008. (Source:NVCA and Thomson.)
|Effective Date||Target Name||Acquiror Name||Deal Value (USD Mil)||Percent Acquired||Form||Financing Received (USD Mil)|
|04/15/2008||Danger, Inc. (AKA: Danger Research, Inc.)||Microsoft Corp||500.00||100.00||AA||143.84|
|06/04/2002||Celiant Corporation (FKA: FS Corporation)||Andrew Corp.||470.10||100.00||AA||50.00|
|03/24/2005||Airespace, Inc. (FKA: Black Storm Networks)||Cisco Systems, Inc.||450.00||100.00||AA||57.50|
|11/08/2006||Mobile 365, Inc. (FKA: InphoMatch, Inc.)||Sybase, Inc.||425.00||100.00||AA||23.60|
|05/05/1994||Transit Communications Corp.||Dial Page, Inc. (FKA: Dial Page Holdings, L.P.)||383.20||100.00||M||3.95|
|04/29/1994||PowerFone Holdings, Inc.||Nextel Communications, Inc. (FKA: Fleet Call, Inc.)||372.00||100.00||M||40.50|
|04/22/2008||PlantCML||EADS North America||350.00||100.00||AA||–|
|07/17/2007||MCT Corporation||TeliaSonera AB||300.00||100.00||M||7.92|
|05/31/2006||Qpass, Inc. (FKA: Prosenium Corporation)||Amdocs, Ltd.||275.00||100.00||M||101.60|
|07/22/1993||Dispatch Communications, Inc.||Fleet Call||270.80||100.00||AA||63.06|
|07/01/1998||Atlantic Cellular Company, L.P.||Rural Cellular Corp||256.00||100.00||AA||117.10|
|05/01/2006||m-Qube, Inc. (FKA: Proteus Mobile, Inc.)||VeriSign, Inc.||250.00||100.00||AA||42.40|
|12/16/2004||Spatial Wireless, Inc. (AKA: Spatial Communications)||Alcatel, Inc.||250.00||100.00||M||57.88|
|03/30/2001||Southwest PCS||Alamosa Holdings, Inc. (FKA: Alamosa PCS Holdings, Inc.)||212.60||100.00||M||20.00|
|01/13/2000||UniSite, Inc.||American Tower Corporation (AKA: American Tower Systems)||198.10||100.00||AA||44.09|
|05/06/2003||Winphoria Networks, Inc. (FKA: Convexant, Inc.)||Motorola, Inc.||180.00||100.00||AA||53.00|
|12/03/2007||LGC Wireless, Inc.||ADC Telecommunications Inc||169.00||100.00||AA||77.50|
|06/10/1999||Priority Call Management, Inc.||LHS Group, Inc.||166.10||100.00||M||10.00|
|02/07/1996||Powertel PCS Partners, L.P.||Powertel, Inc. (FKA:InterCel, Inc.)||160.10||100.00||M||12.00|
|12/04/1997||Celcore, Inc.||DSC Communications Corp. (FKA: Digital Switch Corp.)||145.00||100.00||M||22.69|
|04/29/2006||SyChip, Inc.||Murata Manufacturing Co., Ltd.||135.10||100.00||M||55.00|
|03/31/2000||WAVTrace, Inc. (FKA:American Wireless Corporation)||Harris Corporation||134.00||80.00||AA||72.72|
|04/12/2004||Vytek Corporation (FKA: Vytek Wireless, Inc.)||California Amplifier, Inc.||123.00||100.00||M||43.85|
|05/14/2007||IPWireless, Inc.||NextWave Wireless Inc||100.00||100.00||AA||170.89|
|07/13/2001||Avogadro, Inc.||Openwave Systems Inc||99.00||100.00||AA||7.50|
|10/05/2006||Highland Cellular, LLC (DBA: Cellular One, Inc.)||American Cellular Corp||95.00||100.00||AA||8.00|
|02/26/2007||Cushcraft Corporation||Laird Group PLC||89.80||100.00||AA||2.18|
|07/05/2000||National Telemanagement Corporation||Illuminet Holdings, Inc.||87.80||100.00||AA||–|
|10/25/1995||Network USA, Inc. (AKA: Florida Network USA)||A+ Communications||72.20||100.00||M||5.92|
|09/15/2005||Commnet Wireless, LLC||Atlantic Tele-Network Inc||59.00||95.00||AA||3.30|
|02/13/2008||Twistbox Entertainment, Inc.||Mandalay Media Inc||56.20||100.00||M||12.75|
|11/30/2006||inCode Wireless (FKA: inCode Telecom Group, Inc.)||VeriSign, Inc.||52.00||–||AA||18.85|
|06/09/2004||GoBeam, Inc. (FKA: Infraswitch, Inc.)||Covad Communications Company||48.00||100.00||AA||43.93|
|05/28/2008||M:Metrics, Inc.||Comscore Inc||44.30||100.00||AA||17.00|
|06/01/2007||IXI Mobile, Inc.||Israel Technology Acquisition||41.70||100.00||M||85.29|
|07/29/1997||BizTel Communications||Teleport Communications Group||41.50||50.10||M||–|
|01/19/2001||XYPoint (F.K.A. Sentinel Communications)||TeleCommunication Systems, Inc.||28.90||100.00||M||36.03|
|12/28/1999||WaveSpan Corporation||Proxim, Inc.||22.00||100.00||M||18.63|
|11/15/2003||Paradigm Wireless Systems, Inc.||REMEC, Inc.||21.00||100.00||M||6.70|
|01/24/2005||Figure 8 Wireless, Inc.||Chipcon Group ASA||20.00||100.00||M||4.10|
|09/24/2001||AirFlash.com||Webraska Mobile Technologies SA||20.00||100.00||M||21.60|
|06/08/2001||Wireless, Inc.||InterWAVE Communications, Inc.||17.40||100.00||M||33.11|
|10/14/2002||Envoy Networks, Inc.||Texas Instruments, Inc.||15.00||100.00||AA||7.00|
|02/21/2007||GO Networks, Inc.||NextWave Wireless Inc||13.30||100.00||M||22.56|
|07/30/2003||Tantivy Communications, Inc. (FKA: H.Q. Wireless, Inc.)||InterDigital Commun Corp||10.00||100.00||AA||71.77|
|03/01/2002||Altawave, Inc.||Lightbridge, Inc.(FKA:Credit Technologies, Inc.)||10.00||100.00||AA||5.30|
|04/04/2007||SmartLink Radio Networks, Inc.||CalAmp Corporate (FKA: California Amplifiers, Inc.)||8.10||100.00||AA||27.00|
|02/09/2007||Ecutel Systems, Inc.||Smith Micro Software Inc||8.00||100.00||AA||16.00|
|09/03/2002||ViaFone, Inc.||Extended Systems, Inc.||7.80||100.00||M||34.25|
|03/31/1997||PCS One||D&E Communications||7.30||100.00||M||22.00|
|12/21/2001||Pacific Wireless Technologies, Inc.||Nextel Communications, Inc. (FKA: Fleet Call, Inc.)||4.60||100.00||AA||–|
|09/12/2002||Xemod, Inc.||Sirenza Microdevices, Inc. (FKA:Stanford Microdevice, Inc.)||4.50||100.00||AA||18.59|
|11/24/2000||MessageClick (FKA: .comfax )||Verso Technologies Inc||4.00||100.00||AA||17.06|
|09/30/2002||GBase Communications||InterWAVE Communications, Inc.||3.10||100.00||AA||–|
|07/04/2003||HiddenMind Technology, Inc.||Infowave Software, Inc.||2.90||100.00||M||41.70|
|05/07/2002||Unimobile, Inc. (FKA: Gray Cell, Inc.)||Electronics for Imaging, Inc||2.50||100.00||AA||16.70|
|05/10/2001||Pocket.com, Inc. (FKA: PocketScience, Inc.)||PocketMail Pty Ltd.||2.50||100.00||AA||22.63|
|01/08/2002||Fujant Technologies, Inc.||Celiant Corporation (FKA: FS Corporation)||1.50||100.00||AA||23.82|
|03/24/2006||Ensemble Communications, Inc.||Wi-LAN Inc||1.00||100.00||AA||148.48|
|03/07/2007||Aster Wireless, Inc.||Arkados Group Inc||0.30||100.00||AA||0.35|
|06/10/2008||MusicGremlin, Inc.||SanDisk Corp||–||100.00||AA||5.50|
|06/04/2008||SnapVine, Inc.||WhitePages.com Inc||–||100.00||AA||20.00|
|05/23/2008||Asurion Corporation||New Customer Service Cos Inc||–||100.00||M||1,153.53|
|05/19/2008||Kizoom, Ltd.||Cityspace Ltd||–||100.00||AA||2.15|
|12/24/2007||Open Interface North America, Inc.||QUALCOMM Inc||–||100.00||AA||9.64|
|10/08/2007||Cognio, Inc. (FKA: Aryya Communications, Inc.)||Cisco Systems Inc||–||100.00||AA||30.59|
|09/17/2007||FitSense Technology, Inc||Fitlinxx Inc||–||100.00||AA||–|
|07/19/2007||Southeast Towers, LLC||Diamond Communications||–||100.00||AA||20.00|
|03/20/2007||InnerWireless, Inc. (FKA: E-tron Technologies, Inc.)||PanGo Networks Inc||–||100.00||M||86.62|
|11/06/2006||Mobilitec, Inc.||Lucent Technologies, Inc.||–||100.00||AA||28.68|
|10/03/2006||SoloMio Corporation||Openwave Systems, Inc. (FKA:Phone.com)||–||100.00||M||26.50|
|09/05/2006||Millennial Net, Inc.||PHC Holding GmbH||–||100.00||AA||21.20|
|08/28/2006||Xpedion Design Systems, Inc.||Agilent Technologies Inc||–||100.00||AA||30.00|
|05/02/2006||Broadbeam Corporation (FKA: Nettech Systems, Inc.)||MobileAware Ltd||–||100.00||AA||40.85|
|04/20/2006||Oplayo Oy (FKA: AVS Technologies)||Investor Group||–||100.00||AA||12.95|
|03/10/2006||Ascendent Telecommunications, Inc. (FKA: Travelers Telecom)||Research In Motion Limited||–||100.00||AA||19.89|
|02/15/2006||TCP Communications, Inc.||Global Tower Partners||–||100.00||AA||18.10|
|12/31/2005||TeleCorp WCS, Inc.||Undisclosed Corporate Investor||–||100.00||AA||0.09|
|08/08/2005||Wildseed Inc. (FKA: GITWiT, Inc.)||America Online Inc||–||100.00||AA||–|
|08/03/2005||M7 Networks, Inc.||Motricity, Inc. (FKA: PowerByHand, Inc.)||–||100.00||AA||28.25|
|08/01/2005||AirZip, Inc.||Willow Technologies Ltd||–||100.00||AA||10.00|
|07/27/2005||Integral Access, Inc.||Telco Systems Inc||–||100.00||AA||108.61|
|07/11/2005||JP Mobile, Inc. (FKA: JP Systems, Inc.)||Good Technology Inc||–||100.00||AA||52.50|
|04/20/2005||Chasma Interactive Publishing||Kayak Interactive Corporation (FKA: JamSession Corp.)||–||100.00||AA||–|
|03/29/2005||Expand Beyond Corporation (FKA: PocketDBA Systems)||Semotus Solutions Inc||–||100.00||AA||14.86|
|03/14/2005||ProQuent Systems (FKA: Avian Communications)||Bytemobile, Inc.||–||100.00||M||53.70|
|01/06/2005||JTECH Communications, Inc.||Micros Systems Inc||–||100.00||AA||12.00|
|08/10/2004||MobileWay, Inc.||InphoMatch, Inc.||–||100.00||M||103.00|
|03/19/2004||Signal One, LLC||AAT Communications Corporation||–||100.00||AA||0.50|
|01/30/2004||WaterCove Networks, Inc.||Alcatel, Inc.||–||100.00||AA||70.00|
|11/17/2003||XtremeSpectrum, Inc.||Motorola Inc||–||100.00||AA||38.60|
|10/31/2003||Mobilian, Inc.||Intel Corporation||–||100.00||AA||51.41|
|10/22/2003||Adjungo Networks (FKA:Commagine, Inc.)||Flash Networks, Inc.||–||100.00||AA||4.00|
|06/04/2003||ViAir, Inc.||Visto Corporation (FKA: RoamPage)||–||100.00||M||22.60|
|05/16/2003||Avesair, Inc||InPhonic, Inc.||–||100.00||AA||17.20|
|03/31/2003||Enuvis, Inc.||SiRF Technology Incorporated.||–||100.00||AA||14.76|
|03/10/2003||iConverse, Inc.||InfoClarus, Inc.||–||100.00||M||27.53|
|01/31/2003||Systemonic AG||Koninklijke Philips Electronics||–||100.00||AA||39.80|
|12/23/2002||AGEA Corporation, Inc.||Avalon Digital Marketing Systems, Inc.||–||100.00||AA||12.85|
|11/01/2002||Gabriel Electronics, Inc.||TriPoint Global Communications||–||100.00||AA||5.41|
|08/08/2002||United Messaging, Inc.||Agilera, Inc.||–||100.00||AA||106.50|
|07/15/2002||Harmonix Corporation||TeraBeam Corporation||–||100.00||AA||3.50|
|06/30/2002||Blue Wireless, Inc.||@Road (AKA: Vectorlink, Inc.)||–||100.00||AA||6.10|
|01/15/2002||Indicast Corporation||Oracle Systems Corporation||–||100.00||AA||0.50|
|12/31/2001||GiantBear, Inc.||InfoSpace, Inc. (FKA: InfoSpace.com, Inc.)||–||100.00||AA||25.00|
|11/13/2001||Mspect, Inc.||Telephia, Inc.||–||100.00||AA||9.00|
|09/25/2001||Broadband Gateways (FKA: Global Converging Technologies)||Uniden Corp of America||–||100.00||AA||24.79|
|08/01/2001||eVoice, Inc. (FKA: TalkStar.com, Inc.)||AOL Time Warner Inc||–||100.00||AA||67.40|
|06/21/2001||Sinia Corporation||FusionOne, Inc.||–||100.00||AA||3.00|
|06/06/2001||MiraWave, Inc.||Mobilygen Corp||–||100.00||AA||5.00|
|06/05/2001||Selfswitch SA||SetNet Corp||–||100.00||AA||1.15|
|05/15/2001||CI Wireless, Inc.||EMS Technologies, Inc.||–||100.00||AA||1.50|
|05/07/2001||Zeus Communication Systems, Inc. (AKA: Zeus Wireless, Inc.)||Young Designs, Inc.||–||100.00||M||18.54|
|04/19/2001||Capslock||Reach-U Solutions (FKA: Mgine, Inc.)||–||100.00||AA||6.03|
|02/16/2001||STPCS Joint Investment LLC||VoiceStream Wireless Corporation||–||100.00||AA||10.62|
|06/29/2000||Wynd Communications Corporation||GoAmerica, Inc.||–||100.00||AA||10.49|
|04/05/2000||Endgate Technology Corporation||TRW Miliwave||–||100.00||AA||273.88|
|12/01/1999||Tegic Communications, Inc. (AKA:T9 Text Input)||America Online Inc||–||100.00||AA||15.00|
|06/30/1999||E.L. Acquisition, Inc.||MCI WorldCom||–||100.00||AA||5.00|
|09/25/1998||Metapath Corporation||Metapath Software Int’l (FKA: Mobile Systems Int’l Holdings)||–||100.00||M||37.35|
|06/01/1990||CYCOMM Corporation||Sonatel Telecommunications||–||65.00||AM||8.58|
|08/08/1989||Communications Properties Associates||Communications Properties/Florida Ltd.||–||100.00||M||25.00|