724 Solutions enters the wireless telco space with new secure mobile software

Toronto-based 724 Solutions Inc. is touting the benefits of transactional-based revenue over traditional per-minute sources as it introduces a new line of products aimed at wireless service providers. Company executives are arguing that, unlike the traditional model of charging for minutes used or per kilobit of data downloaded, a new transaction-based revenue model will allow carriers to charge for such things as alert notification and m-commerce applications. With a history of managing secure transactions over mobile networks, it was a natural step to move into this market, explains 724 chair Greg Wolfond. While the base technology applies to financial institutions in enabling bill payment and stock trading, for example, it is also relevant to the wireless carrier market. "In the carrier space, where you want to do things like top up your mobile account, buy goods and services, and get alerts, it’s the same kind of technology that applies to both spaces quite well," Wolfond tells Report on Wireless. Emerging wireless data services and applications have only begun to scratch the surface and revenue gained from these services is currently minimal. Carriers are looking for other methods of gaining revenue from data. 724’s technology makes it possible, for example, to charge for downloading ring tones and notifications of when certain airfares are less than a particular price, Wolfond explains. While some carriers already charge for alerts on sports scores and news, the real benefit from 724 Solutions’ technology is its ability to allow consumers to go to the next level in terms of acting on the alert. Wolfond explains that an alert can notify the user of someone’s birthday, but also enable that person to click a button and pay for flowers to send them, for example. Key to getting its products into the hands of the carriers is working with the infrastructure OEMs. The company recently signed agreements with Nortel Networks Corp., Brampton ON, and Asian-based Aspire Communications, which will help sell 724 Solutions’ products to carriers around the world. Wolfond says existing agreements with other major OEMs, including Nokia, Ericsson and Motorola, will also go a long way in expanding the company’s customer base. Sound business management key to surviving downturnLike the vast majority of telecommunications firms, 724 has also been hit by the downturn in the economy and the collapse of capital markets. Earlier this month, it laid off 350 staff and implemented cost reduction measures. The program, expected to be complete in Q4, will save the company about $65 million annually. Although the company posted a loss of nearly $390 million in Q3 due to writedowns, it reported a big increase in top line growth. Revenue in the latest quarter grew to approximately US$10 million, up from US$6.1 million in Q3 2000. The company says it is still in a stable position going forward and has more than $100 million in cash reserves in the bank. Wolfond is confident the company will remain strong, despite heading into an unknown economic future. "The whole point is to make sure that the balance sheet is strong enough that we’re able to focus on the things that we do really, really well and ride through this very tough market," he says. "We’re doing all the things we have to, to move the business forward and at the same time, we’re managing cash reserves and managing the balance sheet."

724 Solutions enters the wireless telco space with new secure mobile software

News | October 30, 2001

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