Mobile Sands

September 7, 2009

Innovative MiFi Drives Growth at Novatel

Filed under: 3G — Tags: , , , — AJ @ 2:12 am

Novatel’s MiFi “intelligent mobile hotspot” is a shining example of how innovation makes all the difference in a tough environment. Novatel’s core product – 3G data cards – has faced tremendous price competition, especially in the European market.  Novatel’s primary supplier, Qualcomm, is attacking Novatel’s embedded module business with its Gobi chipset. Companies comparable to Novatel have either seen sequential decline in revenue and margins (Belgium-based Option) or have resorted to mergers (Sierra & Wavecom) for growth.  Novatel probably had some insights on how users were struggling to make data cards work in “3G routers” and used these insights to create a fast-growing new product category.

According to Novatel’s Q2’09 earnings release, it has received over $100M of MiFi orders within two months of launch. As a result, it managed to grow revenue by 20% compared to Q1’09 and maintain at it approximately the same level as 12-months ago.  Further, despite losing a large embedded module customer to Qualcomm, Novatel is guiding higher for rest of the year.

Now that Novatel has created the “intelligent mobile hotspot” category, it has the difficult task of defending it. Huawei announced a MiFi-rival in February and demonstrated it at CommunicAsia in June. Clearwire offers a similar product for WiMAX. In another 6 months, there will be many other competitors on the market. Still Novatel has done several things right that may be important insights for people in similar markets:

1. It created a catchy name, “MiFi”, and convinced all its operator customers to use it.  As a result, Novatel now owns the name of the product category.
2. It launched the product in markets where it has stronger customer relationships and pricing (North American CDMA) but was prepared to quickly follow-up with products for the HSPA market.
3. It left headroom for new applications (internal or third-party) on its processor. The product ships with a few applications (like “Auto-VPN”) and there is potential for more in the future.

Novatel however needs to vigorously defend its product name. 3UK just launched Huawei’s mobile hotspot product and calls the service “MiFi”, insisting that 3UK owns the “MiFi” name in UK. I have no reason to doubt 3UK, but it looks like Novatel needs to  invest in trademarking MiFi in as many countries as possible.

Novatel’s has launched a developer program (prominiently displayed on its website) but this program will not bear fruit unless Novatel actively seeks out development partners that bring meaningful value to its target end-user base.  Apple, for instance, is rumored to had a “hundred-person” business development team targeted at the gaming industry before it launched iPhone. Novatel, of course, does not need a team like that that but it shouldn’t wait for the developers to show up on their own either.

Overall,  an interesting case study in creating innovative hardware products in the wireless business and defending them from fast followers.

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September 6, 2009

Watchphones!

Filed under: Uncategorized — AJ @ 5:16 pm

For the last few months, I have not paid much attention to handset hardware innovations, working under the assumption that it is all about software and applications. So I was taken by surprise this morning when I read that at least four companies – LG, Samsung, Hyundai and RIM – have announced plans to launch watchphones and there is at least one blog, www.thewatchphones.com, dedicated to this topic. And the first of these watchphones, LG’s GD910, hit the market last week.  See review on www.stuff.tv.

The idea of a “wrist telephone” has been around since the 1946 when it first appeared in the Dick Tracy comic strip. Here is a link to a 1973 Washington Post photograph that shows a mock-up of such a phone being discussed by a group of people.  Now, for 500 GBP and a two-year contract, you can finally have one! Watchphones with small displays and no QWERTY keyboards are the exactly the opposite of smartphones. I can’t imagine giving up my Blackberry, but once watchphones make it the sub-$100 range, I can imagine having one as a “second” phone;  for occasions when I want to stay in touch but do not want to carry my relatively bulky Blackberry in its holster.

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