Geotek Communications Inc. is a new kid on the block, not tied to any traditional distribution system and not bound by “this is the way we’ve always done it” thinking.
Unlike its two-way radio competitors, Geotek has no previous customer base – no analog customers to roll over onto its digital system. So the Montvale, N.J.-based company is building its distribution strategy accordingly.
“We are committed to indirect distribution only,” said Ken May, vice president of Geotek’s Southern region. “Our primary interest is in supporting the dealer.”
The company has turned on its new digital specialized mobile radio service in six major markets so far: Philadelphia, Washington D.C./Baltimore, Md., Boston, New York, Miami and Dallas. More networks are scheduled to be launched by year’s end.
Choosing not to have a direct sales force will save Geotek the cost of employee salaries and related expenses. Instead, Geotek plans to establish about 30 dealers and 100 representatives per market. Each dealer will be assigned two Geotek staff members, a Geotek sales account manager and a Geotek customer account manager.
May said Geotek chose to put its money into supporting these account managers and establishing a branch office in each market.
“We want to distance ourselves from a comparison with cellular,” said May. “Cellular is a commodity product. Our business is very different with a more sophisticated product that requires a high standard of attention.”
The customer will belong to the distributor. Geotek will bill the customer for airtime and pay distributors a residual.
“The contract is signed with the dealer. The distributor always maintains the customers as their own, sells the hardware products and sells new services,” May said. Geotek now is beginning to sign up resellers as well, who will manage billing as well as distribution. Geotek may do some direct mailings and advertising.
May is the former director of sales for Los Angeles Cellular Telephone Co., and was a general manager at Nextel Communications Inc. before joining Geotek last summer.
Nextel is Geotek’s primary competitor, and the two operators are in a crucial market race at this time.
Nextel has a head start in the buildout of digital systems, but distribution efforts have cooled while the company waits for a second-generation handset from Motorola Inc. that can provide better voice quality.
Meanwhile, Geotek is turning on systems at a rapid rate, taking advantage of the Nextel handset delay.
The past is the primary difference between Nextel and Geotek. Nextel has more than 800,000 analog SMR units in service, which it is moving over to its digital networks as they are constructed. Nextel is using direct sales as well as dealers and agents.
But Geotek and Nextel share the common experience of launching new digital technology. Nextel is using Motorola’s integrated dispatch enhanced network (iDEN) technology and equipment. Nextel has about 130,000 customers on its initial iDEN 6-to-1 system, which splits the channel into six paths. Motorola has reconfigured iDEN into a 3-to-1 system now, and those handsets are being beta tested in commercial markets. Consequently, Nextel isn’t aggressively marketing its product at this time.
Geotek’s proprietary technology is Frequency Hopping Multiple Access, which is new to U.S. two-way operators and has its roots in Israeli military technology.
