WIRELESS RESTORATION

Our economy has returned to a model in which sustained profits and growth drive investors, not just hype. Once a market rebound occurs, a wireless rebound will follow, with early indications pointing to the first half of 2003. The evidence is that wireless will be a big growth market for the next 15 to 20 years, but business model questions are thwarting earlier sector enthusiasm.

There are many IPO candidates with great ideas waiting for a resurgence in the wireless sector. Successful companies will be the ones that address four requirements for wireless: networks, devices, prices and applications. These components are the foundation for the sector's growth, but they require large amounts of capital.

Networks mean coverage — an expensive commodity. Coverage also means QOS, reliability and provisioning that matches the market. Declining growth rates have made technologies that reduce operator costs or customer churn the hottest items for IPO consideration. Carriers are trying to get more profit out of a market that has penetrated 60% of American households.

Devices for the wireless world have a long way to go. Device makers and their carrier customers must focus on improving the user experience. This means finding solutions for battery life, screen size and display visibility, computing power, low market price and a large enough market to provide cost-effective manufacturing.

Prices for wireless services and devices must be competitive with wireline, which has been commoditized over the years. Wireless operators will have to lose money to acquire and build subscriber bases, then come up with programs, services and products that will keep customers long enough to recoup the initial investment. A subscription business requires investment until market share and stability is attained, but this state is followed by profitability.

Applications are in growing demand on consumer and corporate fronts. Developers face obstacles such as security, cost and ease of use. Still, with demand on the upswing, it is reasonable to expect that these issues will be resolved because wireless data applications are critical in helping carriers combat falling revenue per subscriber.

When these four elements are considered, opportunities in the wireless sector are boundless. With savvy entrepreneurs on the scene developing and building better networks and devices, superior applications and more pure technology, the wireless landscape will be offering a wealth of opportunities for IPO investors.

If operators want increased revenues, they must go back to doing business the old-fashioned way: They are going to have to be smart and work hard for their money.

DOSSIER BILL HIPP

Occupation: Co-founder of 2M Invest and managing director of its U.S. subsidiary; former president and CEO of BlueKite (formerly RadioMail)

Place of residence: Half Moon Bay, Calif.

Current reading: “The Experience of Place” by Tony Hiss

Favorite Web site: www.webbyawards.com

Next project: Building senior advisory groups for young companies in wireless, software and digital media