Smart-phone company NeoPoint Inc. quietly closed its doors late last month, apparently exiting the industry it lit up only a few short years ago with its advanced phone/personal digital assistant offering.
While the company hadn’t yet filed as of Friday in the bankruptcy court that covers San Diego-where it relocated last year into a new 103,000-square-foot “technology center”-all signs point to a closure. The company’s phones remained unanswered last week, former company spokespeople had nothing to say and San Diego media echoed former employees with news of the shut down.
“I know that the employees have been informed that the company is out of business,” said Michael King, a senior research analyst with Gartner/Dataquest. King served as NeoPoint’s interactive marketing manager until September of last year.
NeoPoint was a company that burned fast and hot.
Back in February 1999, the company released its NeoPoint 1000, which featured PDA functions like address book, calendar and memo along with wireless e-mail and Internet-based services. The phone part of the device worked over CDMA 1900 MHz networks and featured text-input technology and voice-command capabilities.
It was a pretty advanced little phone for a relatively unknown company, and its only competitors at the time were Nokia Corp.’s Communicator and Qualcomm Inc.’s pdQ, both of which sold for more than $1,000. NeoPoint’s smart phone, on the other hand, cost only $300.
“They really defined the (smart-phone) category,” King said. “It forced everybody to wake up and compete. It was the first lower-priced, easy-to-use smart phone.”
The phone quickly became a sensation, winning best phone of the year from GQ Magazine and netting the company and its founder a variety of awards, including Frost & Sullivan’s Entrepreneurial Company Award and The Asian Business Association of San Diego’s Emerging Entrepreneur of the Year.
NeoPoint also managed to score some important business deals. Last year the company said it was in talks with America Online Inc. to develop AOL’s popular instant messaging program for the phone. It also worked with Lucent Technologies Inc. in data tests and Sprint PCS and Bell Mobility in Canada in distribution agreements. More than $50 million in financing from Transpac, Siemens AG and manufacturer LG Information & Communications Ltd. helped, too.
Things were going so well that the company filed for a $75 million initial public offering in January of last year. Industry observers agree that the company needed the IPO money to continue operations.
“It was a missed IPO opportunity,” King said.
NeoPoint knew the risks it was taking in the smart-phone market. In its SEC filings for the IPO, the company warned that it had not yet reached profitability and that the smart-phone market was a difficult one for a little player.
“Our future success depends significantly on our ability to increase revenues from sales of our SmartPhones,” the company said in its filings. “If wireless telephones are not widely adopted for mobile delivery of e-mail and other Internet-based services or for PDA functionality, or if mobile delivery of these services and information does not become widely accepted, our ability to sell our SmartPhones would be materially impaired.”
NeoPoint was significantly impaired because it jumped into the IPO market at an unfavorable time, and in July of last year, the company pulled its IPO request because the “terms that could be obtained in the public marketplace at this time are not sufficiently attractive to warrant proceeding with the public sale,” the company said in filings.
The failed IPO was perhaps the last straw. While the company managed to release additional phones, including ones with dual-mode and tri-mode support, it continued to face sluggish sales by mainly relying on a few carriers to do the selling. NeoPoint also ran into stalled business deals related to the AirTouch/Verizon Communications merger. Finally, the company sold its unprofitable myAladdin.com mobile Web site, which included location-based content aggregation and wireless information technology, to Leap Wireless International Inc.-the last official announcement the company ever made.
King said Dataquest sees smart phones catering more to a niche market of users rather than the mass market. Thus, successful companies will offer a range of products, with smart phones as a small part of that line.
“Smart phones will never be a mass market device,” King said. “They’re never going to get the kind of market penetration or ownership.”
