Tunnel vision

Mar 19, 2001 12:00 PM, Lynnette Luna

Business plans will come and go as scores of companies try to find the right recipe for targeting the wireless Internet market. In an industry characterized by name changes and refocused ideas, GoAmerica, a wireless Internet service provider, prides itself on following nearly the same business plan as it did years before the Internet became the hottest sector in wireless.

  Aaron Dobrinsky, GoAmerica CEO and chairman, and President Joe Korb founded GoAmerica in 1996, initially targeting the limousine and trucking industry with wireless data connectivity solutions. Today, the nationwide solutions provider allows consumers and businesses to access the Internet, e-mail and corporate Intranets through a variety of mobile devices and wireless data networks.

“We have not changed our business plan or vision, partly because we spent a good amount of time and energy studying the market and market potential prior to embarking on our mission,” Dobrinsky says. “Of course, we made minor adjustments along the way, but we are proud of the foresight and perseverance that has brought us to where we are now.”

Dobrinsky and Korb each brought complementary skills to the business.

Dobrinsky built the business in his basement while working as an executive vice president at Mineral Trading, an industry that screamed for logistical support from the wireless industry. Korb spent four years with RAM Mobile Data, now known as BellSouth Wireless Data, in various capacities, including senior vice president of product management and business development.

“There was technology chasing customers, but no solution set to grab onto,” Korb says. “That’s what drove us to this business opportunity.”

While GoAmerica’s founders studied the possibility of connecting the Internet with the wireless world early, it had to wait for the rest of the industry to change. Corporations didn’t move to IP backbones until 1997 and 1998. Then there was a minor distraction called the Y2K bug that shifted the focus of many corporations away from any extra projects.

Everybody untether

Today, virtually every corporation is looking at how to wirelessly access company-specific applications such as e-mail, contacts and schedules. A recent survey conducted by financial firm WitSoundView of attendees of the Gartner Symposium, a conference for Fortune 1000 IT managers, found that only 1% of corporations extensively use wireless networks to access information.

“The awareness has now taken hold,” says Korb. “We spent most of our time educating people on the technology. Even in the early days, our subscribers were measured in the hundreds, but we built infrastructure that could take thousands. We knew significant growth would come.”

Morgan Stanley Dean Witter officials note that GoAmerica is in the right place at the right time, targeting both the horizontal market—namely mobile professionals—and offering a solution for businesses that want their employees or customers to have wireless links to critical data. “This ability to capture potential audiences with its service suite, network center and technical capabilities puts GoAmerica in a wireless data leadership position, in our view,” the firm notes in a recent report on the company.

The company is confident enough in its business plan to expand it internationally. Last week, GoAmerica launched initiatives to extend its platform throughout Canada, South Africa and the Asia/Pacific region.

It’s who you know

GoAmerica’s business strategy depends on the relationships it forms with software applications developers, systems integrators, content providers, carriers and device makers. Because the wireless industry is fragmented with multiple standards, devices and operating platforms, partnering with multiple companies gives end users the ubiquity of the Internet they are used to on landline connections, note analysts. The company’s Go.Web portal allows users to access any Web site available today.

“As we focus on the enterprise market, we need to approach it from every angle,” says Dobrinsky. “We are partnering with hardware manufacturers like Dell, Compaq and Sony; the database and enterprise software companies like Microsoft, Oracle and Lotus; the applications providers like Siebel Systems; and integrators like EDS.”

Analysts were particularly pleased with GoAmerica’s plan to team with Siebel to wirelessly enable existing Siebel e-business applications, including sales, field service and financial services. The move lays the groundwork for subscriber growth through Siebel’s embedded customer base.

“It’s a significant win for both companies,” Korb says. “It takes a brand-name company and existing applications and simply extends that reach of that to the mobile work force,” he says. “We can make joint sales calls, run seminar series and leverage their brand name in the industry.”

GoAmerica’s relationship with EDS is structured in a way that makes the company a strategic partner and a client. EDS has chosen GoAmerica as the wireless component when seeking complete solutions for clients looking to increase productivity and efficiency of mobile workers.

Richard Brown, chairman and CEO of EDS, mentioned in his keynote at last November’s Comdex in Las Vegas that EDS also has been “eating its own dog food” since it has begun to roll out the GoAmerica wireless solutions within its own organization.

Sony recently chose GoAmerica to provide wireless access for the CLIE hand-held device and Vaio laptops, while Microsoft has announced that GoAmerica will provide the wireless connectivity for Microsoft’s soon-to-be-released Airstream product. The offering will allow end users to access Microsoft Outlook and other office applications wirelessly without having to sync the information.

When it comes to adoption of the wireless Internet, Korb says the field service market is the largest single market, ranging from service representatives to the financial services industry. GoAmerica itself offers sales force automation, service and dispatch services, financial services and an application called law-on-the-go, which gives lawyers access to the lexis.com legal research site.

Last August, GoAmerica purchased a company called Hotpaper.com, a Web-based infrastructure company that developed automatic creations and delivery of business documents. The technology will allow end users to create customized Microsoft Word and Adobe PDF documents from wireless devices and transmit them via fax or e-mail.

“The insurance industry is a huge industry and slow to adopt technology,” says Korb. “If we can provide services where a person has access to form elements, that is a tremendous productivity tool in an industry where paper is the dominant force.”

Cooling off

Analysts note that investing in GoAmerica during the last 10 months has been a disappointing experience. Like that of its peers, GoAmerica’s stock has plummeted significantly, falling 43.4%. A flood of wireless Internet-related companies entered the market early last year, embraced by venture capitalists and the public market. Now they are getting the cold shoulder.

The poor performance of the public stock market in general has contributed to this downfall, but Perry Walter, senior vice president with Robinson-Humphrey, notes that the space has not recovered as well as other technology sectors. He attributes this to confusion over who the players are and what markets they are attacking, perceived lack of differentiation, and the feeling that it’s still too early to know who the winners in the space will be.

GoAmerica was able to get to the public market before this rocky period, raising $160 million primarily to set up an intricate customer support center. The company has hit Wall Street’s expectations for the last four quarters running.

 “That’s what we look at: long-term growth and keeping consistent with our business plan…. We have low capex spending and proceeds that will become profitable,” says Korb. “We’re one of the few publicly traded companies with a fully funded business plan. That makes us the partner of choice for many companies.” Analysts were happy with the company’s fourth-quarter results, which exceeded Wall Street estimates, and all five analysts who cover GoAmerica rate the stock as either a “buy” or “strong buy.”

But their advice wasn’t enough to boost GoAmerica’s sagging stock. GoAmerica posted a lower-than-anticipated net loss, dropping $19.4 million, or 37¢ per share, on sales of $6.1 million, which increased 389% from the previous year. Wall Street expected a loss of 40¢ a share in the fourth quarter.

GoAmerica ended the year with 47,632 subscribers, adding 17,200 customers in the fourth quarter, compared with 5869 additions in the fourth quarter of 1999. Fifty percent of the company’s net additions were corporate accounts.

Dobrinsky estimates the company will reach between 68,000 and 70,000 customers this quarter and expects to support more than 300,000 customers by the end of 2001. Dobrinsky says GoAmerica is on track to reach profitability by the second half of fiscal 2002.  

The challenge remains

GoAmerica still is considered a young company that must demonstrate its ability to manage rapid growth and delicate partnerships, say analysts. Its strategy also most certainly rests on the widespread adoption of wireless data solutions and services by businesses and consumers. But although initial results are positive, this has yet to be proved.

Another threat is traditional wireless carriers. As operators migrate to higher-speed data networks such as 1XRTT and general packet radio service, it remains to be seen how they will offer services—whether they plan to compete heavily with companies like GoAmerica and its consumer market counterpart Omnisky, or embrace these companies as partners.

Already, one of GoAmerica’s partners, wireless data carrier Metricom, has hit funding problems and has enough money to operate only to the second half of the year. Analysts are worried Metricom will begin to hit strong competition from mobile operators rolling out higher-speed data networks with bigger footprints. Metricom, although it has strong reseller partners like WorldCom, has 15 operational markets and plans to severely scale back future launches to save money.

“Our model is to work with all major carriers in order to provide our customers with the best options in terms of wireless data connectivity,” says Dobrinsky. “We have always partnered with carriers, and they view us as a revenue-generator for them. I believe that these relationships will grow stronger.”

“Carriers have spent billions on acquiring spectrum,” says Korb. “They need to sell that.”

GoAmerica, which operates on AT&T Wireless’ CDPD network, has the carrier’s largest revenue provider on the data side for two years running, notes Korb. In Canada, GoAmerica and Rogers Cantel sell GoAmerica services on a co-branded basis.

However, GoAmerica’s strategy is to build  brand awareness, which may ultimately conflict with its partner carriers as they also work to leverage their own brand names.