Longtime wireless modem maker Sierra Wireless announced a significant new business direction with the unveiling of its Voq phone-a device that marks the entrance of a new smart-phone player and another Microsoft Corp. backer.
Investors seemed cheered by the bold move, sending Sierra’s stock up almost 9 percent to $18.01 per share.
Fresh from its $20 million acquisition of fellow modem maker AirPrime-which put the company at the top of the wireless modem market-Sierra unveiled its first mobile phone, the Voq. The device uses Microsoft Corp.’s Smartphone operating system and an Intel Corp. processor. The innovative device operates over GSM/GPRS networks and is scheduled to be available in global markets in the first half of next year. Sierra said electronics manufacturer Flextronics International Ltd. will build the device.
Sierra said the Voq will sell with a range of new software, including new ways to store, navigate and retrieve information and new e-mail support for Microsoft Exchange, Lotus Notes and Novell Groupwise. But perhaps the most notable aspect of the device is its keypad; the phone features a standard 10-key mobile-phone keypad that flips open to reveal a tiny QWERTY keyboard.
“Voq leverages our own expertise in enterprise wireless data and our existing channels and relationships,” said David Sutcliffe, Sierra’s chairman and chief executive officer. “Busy professionals and corporate users need a wireless solution that can deliver compelling voice and data functionality in a single, pocketable device. We are investing in expanding our product line to meet these needs and are doing so with a continued business focus on growth and profitability.”
Sierra’s move is significant on several fronts. First, the company is expanding its modem business, an operation that has been profitable for four straight quarters but generated only $600,000 in net earnings in the most recent quarter. Further, with its new Voq device, Sierra is entering a highly competitive market-one that many in the industry expect to see phenomenal growth but one that has also claimed a number of failures. Sierra enjoys a variety of notable carrier partnerships, but the market for smart phones is still untested.
Apart from Sierra, the move also further solidifies Microsoft’s position in the mobile-phone business. The software giant has made significant inroads in the OS market for personal digital assistants, but has enjoyed relatively little success in the mobile-phone industry-until recently. Samsung Electronics Co. Ltd. plans to sell a phone using Microsoft’s Smartphone software, as does Motorola Inc. The addition of Sierra could boost Microsoft’s standing.
