In January 2003, Gerbsman Partners expanded its "International Business Model" to focus on and to develop "Domain Expertise" in the worldwide Wireless and Technology market.
For the past seven months Gerbsman Partners has implemented a substantial market research program led by Patric Carlsson (formerly of Institute for the Future and Telia Business Innovation), Gunnar Ostergren (formerly of Ericsson, Cap Gemini and Icon Media Lab), and Jason Gerbsman (formerly of Collaborate and representing Gerbsman Partners in Israel). Over this period, Gerbsman Partners identified a significant need for the transfer of proven overseas wireless and other technologies and services into the US marketplace and has focused on building expertise in this area. As such, Gerbsman Partners' objectives are:
- To serve as a catalyst in bridging the 16 to 18 month gap between the European and Israeli wireless and complimentary technologies, and the more slowly developing US marketplace;
- To assist US investors and their portfolio companies in acquisition, licensing and distribution of European and Israeli technologies, and;
- To assist US investors and their portfolio companies in establishing distribution channels for their products and services in Europe.
Our marketing, research and focus include organizing meetings and establishing relationships with leading Manufacturers, Service Providers, Developers and Equity Investors. We participated in the Cebit, CTIA and Mobile GDC conferences, and have organized numerous visits to Israel. As a result, Gerbsman Partners has built significant Domain Expertise in this area. Patric Carlsson, a member of Gerbsman Partners' Board of Intellectual Capital, has written three "White Papers" that summarize our findings and conclusions. These "White Papers" discuss three important areas of opportunities in the US marketplace:
- Premium SMS
- Wireless Entertainment
In conjunction with our core practice of maximizing enterprise value for under-valued, under-capitalized and under-performing companies, it is Gerbsman Partners' objective:
- To assist in identifying valuable and leading edge wireless and other technology products from targeted companies in Europe and Israel.
- To establish profitable relationships for M&A
- To promote partnerships and licensing opportunities
- To facilitate IP transfer
- To identify funding/expansion capital
- To provide access to leading Premium SMS, WiFi and Wireless Entertainment companies
Recognizing the trend in European and Asian markets, messaging has been a viable business for years. What is new is the US market finally coming to life and its potential, so far generating small but visible revenues.
- Early successes such as "American Idol" and "Nashville Star" have generated millions of messages. Although not functioning with Premium SMS ability, Carriers enjoy this new revenue and feel there is enough evidence to continue supporting the service in the future.
- Carriers are now preparing to launch Premium SMS - the ability to add "Premium" charges on top of basic messaging fees involving specific service requests. Predicted rates fall anywhere from 25 cents and up. Logically there is a "ceiling" of how much carriers can charge for these services through the phone bill, but expectations are that prices below the 5-10 dollar range will be accepted, with more valuable transactions making use of "e-wallet" type applications to clear purchase through credit or debit accounts.
- As the US market continues to grow, new applications start to enter this market. Examples like "American Idol" and its SMS voting offering, as well as opt-in lists, have provided examples for the pioneers in this market - and they are taking advantage of the free knowledge. Looking ahead, options for the market may include stagnation, or development into a prosperous revenue channel previously unexplored.
Our intention with the white paper is to provide insight into the current market and to identify possible front-running companies. We would also like to present a sense of the timing issues surrounding Premium SMS. This white paper will help navigate the terms and tendencies.
As wireless entertainment enters its second phase in United States, exciting things are to be found on the horizon. Carriers' continued support and efforts to promote mobile entertainment have meant real revenues for several companies. In the face of network upgrades to 2.5/3G, the increase in the mobile phone's accommodation of more complex graphics and faster downloads, and the billing systems which revenue share agreements are establishing, we have come to see a rapidly expanding market. As expected, large media and content companies such as Sony, Disney and others, have begun to invest in wireless content. Start-ups have shown an ability to tap into carrier revenues and have managed to gain their share - the US is ready to embrace wireless entertainment a big way. Key indicators show that the US consumer is buying games online. Analysts predict a "booming" market that is forecasted to grow ten-fold over three years.
- Sprint PCS reports having sold more that 10 million ring tones and screen savers over the last 11 months.
- Verizon Wireless reports selling about 2 million BREW applications a month.
- The Themis Group expects wireless game revenues to reach a total of $660 million in North America by 2006.
The evident growth and early stages of the US wireless entertainment market do provide an excellent opportunity for entry and significant gain in early market share, with lower levels of investment.
WiFi in the United States
WiFi has been widely publicized for quite some time. Intel and the venture capital community have provided significant funding for startups, developing various sorts of technology, services and applications. It is only natural to compare this to previous investment cycles, such as the dot-com era, and to wonder if WiFi will be any different.
The cliché says that "only the strong survive," and with a market as overheated as ours in the United States, few new opportunities remain unexploited. With a developed infrastructure in place, the market eagerly awaits the next new development. Some believe cross-provider roaming is next, others say streaming content to hotspots or wireless related services.
Key observations for the US market includes:
- Hot spot markets are getting crowded and significant fall out is likely to occur. With average projected revenues of $15k per hotspot per year, the vast majority of current business models are not sustainable.
- Security and VPN are two key technologies that must be in place in order for enterprise to fully embrace WiFi in their IT budgets.
- With an extensive infrastructure in place, value added services at the end user level might serve as the revenue generating "extra" layer that WISP's need to survive.
Looking ahead, there are significant challenges for the WiFi industry as a whole. Leading providers of content and various services suitable for the wireless lifestyle, etc are the ones that will boost the usage of the WiFi infrastructure. Service and network providers will have to find partners to differentiate their offerings. Gerbsman Partners expertise is well positioned to identify and support activities of this nature.
About Gerbsman Partners
As a result of Gerbsman Partners' 23 years of maximizing enterprise value and specific domain expertise in technology related intellectual property, we have developed an established, proven and responsive distribution channel for our clients. Our channel reaches International and US institutional investors, venture capital funds, investment bankers, executives, lawyers and accountants, as well as leveraging Gerbsman Partners' direct relationships with major wireless and technology companies.
Gerbsman Partners, supported by its International Board of Intellectual Capital, has been involved in over $1 billion of transactions worldwide and has assisted in M&A, restructuring, licensing, partnership and capital formation for numerous companies and their Intellectual Property.
Our international business and technical team, which includes European and Israeli based sales and technical personnel, looks forward to earning the right to be a resource to you.
The complete "White Papers" can be found at:
- Premium SMS
- Wireless Entertainment