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San Francisco, January 2005
Gerbsman Partners - Wireless Market Update

Over the last 3 years, Gerbsman Partners has continued to expand its domain expertise and research, as well as refining its opinions regarding the wireless market with specific regard to the areas of WiFi, Entertainment, and Messaging/Mobile Games.

During this time, our observations have predicted actual market evolutions. WiFi has continued its reformation in desperate search of profitability and purpose, Entertainment is making inroads to software integrators and network providers alike with value added services, and finally, Premium SMS and Mobile Gaming are growing rapidly.

Gerbsman Partners expertise in the worldwide wireless technology market enables us to assist our clients in understanding, navigating and executing business opportunities in these areas.

Below you find a summary of our latest White Paper. For the complete White Paper, click here or go to www.gerbsmanpartners.com/wp_january_2005.pdf.

The team looks forward to continuing to earn the right to be a resource for you and your company and to assist in maximizing enterprise value.

Best regards,
Steven Gerbsman

WIRELESS MARKET UPDATE / Mergers and Acquisitions take center stage

With the high frequency of recent mergers among mobile operators, the entire business world has taken notice. As Sprint, Cingular and Verizon all battle for the top spot, Alltel’s acquisition of Western Wireless provides indication of an active M&A market among tier-2 and tier-3 providers.

Software and Systems integrators serving telecoms are also involved in this M&A trend as exemplified by BEA’s recent telecom acquisition and other major deals between leading US mobile content and messaging companies in 2004. Interestingly, these have been mostly foreign investments and acquisitions with Scandinavian and Asian investors approaching Mobilss, Proteus, and Ztango. The merger of Mobileway and Inphospace, which created Mobile365, is typical to the current trend.

WiFi companies like Wayport and Boingo seem to be surviving, but most WiFi business models and expectations changed during 2004. Where Cisco now seems to be buying its innovations and M&A investors are seeing an opening market, this trend will continue in the industry at large, where WiMAX and Mesh networks remain attractive technologies, along with VoIP and its continued “melding” with WiFi.

PREMIUM SMS AND MOBILE ENTERTAINMENT ARE MELDING INTO A SINGLE MARKET!

The US media industry can now quantify results when mixing Premium SMS with reality TV, Content distribution and Social networks. Mobile entertainment will grow rapidly in 2005. A White Paper outlining this opportunity can be found on our web site. Click here to view it now.

WIFI AND VALUE-ADDED SERVICES BECOME THE FOCUS

Large become larger: Cisco, BEA, and Oracle all have telecom customers. The continued focus on finding the right mix of services and technologies when selling to ever growing mobile operators is placing WiFi low on the revenue expectation list but high on the loyalty growth list. With the hardware “pool” of providers for the Service Integrators and Technology providers peaking, and with few ground breaking technologies on the horizon, focus is starting to shift toward the TIVOs and the MSFT and HP’s of the world. Home networking and gadget add-on strategies including WiFi, remote access applications, smart phones, and/or PDAs will continue to drive startup activities in the home networking and office-networking segments. Devices are increasingly focused on ubiquity, supporting the most relevant standards, and VoIP is taking strides toward wireless. Some network element technologies will score big, where others will struggle to support this strategy.

The wireless landscape in the United States is under tremendous pressure to change. On one side, regional operators merge into larger entities, and large nationwide networks are acquiring competitors. On the other side, MVNO initiatives like Virgin and ESPN, and niche networks like MetroPCS and Cricket continue to emerge. The traditional regional strategies are quickly being replaced by tailored “culture-based” national sub-segment services. Virgin Mobile targets the youth market, ESPN targets sports, MetroPCS and Cricket assist the financially disadvantaged with Pre-paid unlimited services. While these newer initiatives may seem to compete in a regional sense (MetroPCS) knowing your customer and fulfilling the need can create quick and solid subscriber growth.

In summary, the landscape of hardware and technology for wireless is transforming into a service and relationship-for-revenue market. WiFi technologies are incorporated in mobile PCs, home media entertainment, and cell phones providing yet another feasible channel for value-added service layers. Mobile TV, Streaming programming and TIVO might indicate one market direction, while premium SMS and its instant revenue business model and broad adoption could very well indicate another. Not knowing which market model will dominate, Gerbsman Partners looks forward to providing continued assistance in maximizing value for our clients and is available for consultation at your convenience.

For the complete White Paper, click here or go to
www.gerbsmanpartners.com/wp_january_2005.pdf.

For additional information, please visit our web site at www.gerbsmanpartners.com or contact:

Steven R. Gerbsman
Principal
+1 415 456 0628
steve@gerbsmanpartners.com

Gunnar Ostergren
Wireless/Technology Strategist
+1 415 205 5700
gunnar@gerbsmanpartners.com

Motti Abramovitz
Israeli Strategic Business Partner
+972 54 774 762
motti@gerbsmanpartners.com

 

Gerbsman Partners
211 Laurel Grove Avenue, Kentfield, CA 94904
Phone: +1.415.456.0628, Fax: +1.415.459.2278
Email: Steve@GerbsmanPartners.com
Web: www.gerbsmanpartners.com
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