For a new company looking to succeed in business, producing wireless handsets would seem to be one of the tougher markets to crack. Beyond the big three producers, Nokia, Motorola and Ericsson, are plenty of smaller, capable companies scavenging for leftovers of the handset market pie.
And while the large handset manufacturers race to introduce more advanced models, San Diego-based start-up Axesstel found a way to break into the handset market by producing models for wireless local loop carriers that the larger companies have left behind-a market that Allied Business Intelligence recently reported would number more than 100 million subscriber worldwide by the end of 2006.
Axesstel’s plan began after purchasing Samsung Electronics Co. Ltd.’s WLL handset technology for a “nominal” price. Axesstel was then able to quickly come to market with a WLL handset that carriers around the world have been demanding. The demand was so great and immediate, Axesstel quickly signed a $50 million deal with Brazilian operator Vesper to provide 150,000 1.9 GHz WLL handsets.
“[Vesper] launched their service in March and already have half a million customers,” said Ben Lee director of corporate communications for Axesstel. “They said they could have signed up more if they would have had more handsets.”
Lee noted that the Vesper deal has allowed Axesstel to produce positive cash flow after only four months of being in business.
“WLL is seen by handset manufacturers as a low rent sector, so not many companies are involved in it,” Lee added. “Most are focused on [third-generation] and wideband handsets. Those that are trying to get into the WLL handset market are waiting for contracts first before investing time and money.”
In addition to its contract in Brazil, Axesstel said it has been contacted by WLL carriers in Malaysia, India and Australia to supply handsets. Lee explained that even if Axesstel split the entire WLL handset market with its biggest competitors, Korean-based LGC Wireless Inc. and Hyundai Electronics Industries Co. Ltd., it would still be impossible for the company to fulfill all the demand for handsets from around the world.
Helping to fuel the developmental fire, Axesstel recently entered a royalty-bearing agreement with fellow San Diego-based company Qualcomm Inc. to license CDMA technology and patents to design and market WLL subscriber units and modem card products for cdmaOne, cdma2000 and 1xEV systems. As part of that deal, Qualcomm also made an undisclosed equity investment in Axesstel, an investment that Lee called “very flattering.” Axesstel also will produce wireless modem cards for Qualcomm in its Korean manufacturing facility.
Lee noted that even though Axesstel is still a small company with 20 employees that can barely keep up with current demands, it is already planning for the future, including the integration of 1XRTT technology into WLL handsets in preparation for Vesper’s planned network rollout next year. In addition, the company is developing a Web-enabled WLL device that includes a 5-inch screen with a built-in camera.
