Best of both worlds: Microsoft, McCaw veterans team to ignite wireless Internet

In nascent communications technology sectors, money is generally what it takes to make things happen. Add people with the right kind of market intelligence and business-building experience, and the stacks of cash are likely to take on even more value.

That's the idea behind Ignition, a holding company unveiled last week that intends to mentor the wireless Internet industry. The formation of the entity is significant because it has selected one of the most hyped sectors of telecom to target, and it has lined up a notable group of investors to provide financial backing. Perhaps most significant are the people involved: The founders of Ignition have spent their careers nurturing the wireless, Internet, PC and software industries, and in some cases, all of the above.

Some of Ignition's founders are responsible for the creation and marketing of products and services such as Microsoft Windows, Windows NT, Internet Explorer, Windows CE, Microsoft Office, the North American Cellular Network, cellular digital packet data and other wireless data formats. Brad Silverberg, Ignition's chairman and CEO, ran Microsoft's Windows business from 1990 to 1995 and then was charged with heading Microsoft's Internet business. Steve Hooper, an Ignition investor and board member, is a longtime associate of Craig McCaw, with executive experience at McCaw Cellular Communications, AT&T Wireless, Teledesic and Nextlink Communications.

"Throughout our careers, we have identified what the technological tidal waves would be and bet our futures on them," Silverberg said. "We saw the power of the wireless Internet as the next big thing, and we worked backwards from that premise to find the best vision for making this come true."

It is that depth of involvement in Internet development and wireless technology that industry analysts point to as one of the entity's most distinguishing factors.

"They should be in a position to see where opportunities exist as opposed to just having thousands of business plans dumped on their desks," said Elliott Hamilton, senior vice president of The Strategis Group and director of its global wireless information group. "They should know this industry 10 times better than anyone else."

Part of the approach Ignition landed on was to add intelligence to financing, which sets the entity apart from an expanding sea of VCs homing in on the wireless Internet space.

Ignition's initial $140 million cache comes from strategic investors such as Qualcomm, Softbank Venture Capital and Madrona Venture Group and from its founders and advisers. But the company is using its knowledge and experience in fostering innovation as its trump card. In addition to financial backing, Ignition will provide support in recruiting, standards representation, business development and marketing.

"We're in an era right now where capital is not the scarce resource," Silverberg said. "We are first and foremost company builders. To get the best deals, you need to provide depth, vision and partnerships. We have the ability to provide good guidance."

Given the global nature of the Internet, especially the higher take rate of wireless voice and data services outside the U.S., Ignition's focus also will be worldwide.

"Things are happening more rapidly in Europe and Japan than they are in this country - wireless penetration is further along and going at a significantly faster rate," Hooper said. "You will find us with partnerships and interests there."

Ignition's focus will be more on what rides on the network than on the network itself. In addition, the company plans to foster development of wireless applications geared toward mass audiences.

"We definitely will be investing more in services than in network upgrades. A lot of this will take place independently of network technology," said Cameron Myhrvold, a Microsoft alumnus and Ignition founder. "The new adopters for this technology aren't going to be the techno-geeks. It's going to be the consumer."

A large part of what makes wireless Internet applications more appealing to the consumer is likely to be location technology, according to Hamilton. "Location technologies will be the drivers of the most important applications," he said. "A lot of wireless Internet applications will be based on the network knowing where you are."

With the laser focus of an entity such as Ignition on a potentially lucrative but narrow market segment, there is a question of overlap and competition between the companies it supports. But the company's approach is to build complementary companies and to incubate ideas within Ignition where an opportunity may not exist already.

"There will be a bit of a challenge in trying to support multiple companies, and there could be a sense of competition to a certain degree," said Becky Diercks, director of wireless research at Cahners In-Stat. "But there are so many mobile data start-ups that it's important to provide the seed for them to grow, and they're really giving them everything they need to grow."

Ignition also faces challenges in fostering innovation in wireless Internet applications while mobile wireless networks still are in the early stages of higher-bandwidth migration. The company is operating under the notion that eventually, wireless end users will be less dependent than they are today on certain service providers.

"Things will be different three to five years from now, and we're going to be making bets on a world where things aren't carrier-specific and people aren't necessarily tied to a particular carrier," Hooper said.

Wireless Internet applications, meanwhile, need to be developed now, regardless of the current capabilities of the networks that support them, Diercks said." Most of these companies understand they have to work with today's networks to grow," she said. "Certainly their applications will be better once the networks are better, but they have to have something now."

Ignition is launching its business at a critical point of confluence between the wireless and Internet realms, and the caliber and reputations - not to mention financial prowess - of the people involved are important factors in the venture's chances for success. The wireless data world long has been one that promises much and delivers little, but Ignition's founders are confident that their involvement can help change that.

"Our objective is to work with small companies, build them, identify opportunities and build them into businesses," Silverberg said. "And change the world."