Last year, at a networking conference, Cometa Networks, Inc. CEO Gary Weiss delivered one of his first public speeches...
since he was enticed out of retirement moth balls to head up the wireless LAN company and perhaps convince a skeptical enterprise segment that a big fish in a small pond was a much better bet than dealing with a lot of smaller minnows. Weiss injected a little excitement into his presentation by stating that Cometa's ultimate game plan was not to just offer Wi-Fi hotspot access -- as was originally intended -- but to eventually dabble in mesh networking and metropolitan area wireless. The company's Wi-Fi wanderings, in places like Seattle, were pretty much small-scale beta tests of what would eventually come from this brave new organization, formed by such killer partners as Intel Corp., IBM Corp., AT&T and a smattering of investors.
Unfortunately, we will never know if this vision would have become a reality. As we all know, Cometa has thrown in the corporate towel and will soon close its doors, and Mr. Weiss will presumably return to a life of the IBM retirement home, from whence he came. The big question, of course, is what happened? How could a company with so much promise and kinetic energy, functioning within an industry with so much promise and hope, suddenly disappear from the public radar? There are a number of reasons, and we'll do our best to pinpoint the most obvious so that others following in Cometa's footsteps might perhaps learn from some avoidable and not-so-avoidable mistakes.
Don't sell tomatoes if your real business is watermelons. Even though localized Wi-Fi is hot and continues to grow by leaps and bounds, this doesn't necessarily mean that wireless LANs can easily be expanded and launched as a national network. Cometa's original plans called for the deployment of more than 20,000 Wi-Fi access points in the years following its launch. Rather than selling services directly to business users and corporations, the company planned to offer access to its wireless gateways through telecommunications companies, Internet service providers, existing cable operators and others who are already involved in both wired and wireless access.
While this sounds like a terrific idea, the reality is that many business users already subscribed to aggregating services such as Boingo Wireless , which presently claims to have more than 6000 Hot Spot locations under contract and over 3300 live in 18 countries, 708 cities and 47 states. Add to that the countless hotels that are serviced by early Wi-Fi pioneer Wayport, Inc., the wireless phone stations launched by Verizon, and the many providers of free wireless service, and you have a pretty well-established network in existence. It would have been far better for Cometa to come out of the gate with the metro-wireless strategy, instead of spending nearly two years trying to carve out a piece of a rapidly-shrinking Wi-Fi pie.
- Killed by the bill, too. One of the great promises of companies that offer integrated Wi-Fi services is that they eliminate the problem of multiple bills – you know, the ones you get when you hopscotch from city to city and airport to airport and use different Wi-Fi services to check your email see who is ahead in the office baseball pool (and occasionally do some actual customer-centric online work, of course!). The trouble is that Wi-Fi billing systems tend to fall apart when they are based on minute-by-minute usage or are mixed with the billing structures of wide area wireless service providers (cell phones and such). These is why companies in the Wi-Fi camp prefer a single-rate subscription structure, and mostly shy away from integrated services (and why if cellular companies like T-Mobile approach Wi-Fi as a distinctly different area and one with unique use and billing characteristics.
Solving billing issues is not impossible, although the politics of Wi-Fi cellular service can make it a daunting experience. One company that has made some significant gains in this area is Canada-based Bridgewater Systems Corp., which provides IP network, services and access control to wireless service providers. The company has developed products that can easily merge CDMA and 802.11 wireless networks, resulting in a single sign-on and single bill for wireless service subscribers. The company has also developed technology and products that focus specifically on the complicated billing structures and potential difficulties created by mixing different wireless infrastructures. These products include revenue collection and formatting, as well as tools that are geared toward flat-rate billing structures.
Typically, the company can come in and develop a merged network and simplified billing system for wireless service providers within 3-12 weeks, depending on the complexity of the current system, say company execs.
- Dream teams don't guarantee success, and may even create problems. Who wouldn't be impressed with a company formed by such heavyweights as Intel, IBM and AT&T? After all, it's not everyday that a chip manufacturer, a computer maker, and ..er, whatever AT&T is this week, comes together with a single vision to set the industry on its ear. Problem is, most people are not impressed with impressive corporate monikers anymore, and many in the enterprise may even be turned off by collaborations that smack of proprietary unions and approaches (even though this was not the case). Also, to quote an old Maine adage (we think...), "Why pay for the cow when you are getting the milk for free?"
This is exactly how ex-Bluesocket, Inc. CEO Eric Jantzen viewed the Cometa commitment, and he should know having been a long-time and respected player in the Wi-Fi industry. As our friend Eric put it in a conversation we had with him late last year: "Executives at Cometa see it just as one big happy Cometa world. But, if you have a coffee shop access point, and a hotel access point, and Sprint is charging "n" dollars, and you're charging zero, then which one are you going to use? I'd use the zero dollars one, unless there's some key service offered by Cometa that was significantly compelling that would make it worth it. The question is 'what are those services?'
Thanks Eric, couldn't have said it better ourselves.
- In comedy or pioneering, it's timing that is key. There is no question that Wi-Fi communications is being positioned as a lower cost, or at least a cost-lowering alternative to cellular wireless and even wired communications systems. A number of companies are already using systems that employ multiple wireless networks within the same building to reduce the cost of communications traffic, and companies up and down the Fortune 1000 ladder are realizing the cost-savings benefits of Wi-Fi-enabled voice over IP (VOIP) telephone systems. A number of hospitals are also using Wi-Fi-enabled communicators and 'badges' to maintain communications among critical-care workers and track those workers within a networked space using location-aware technology.
Unfortunately, Cometa seemed trapped between the fast-maturing world of generic 802.11 Wi-Fi and the just developing world of mesh networks and multiple and synchronized wireless LAN systems. If Cometa had perhaps launched two or three years earlier, it might have been positioned as a leader in the then nascent Wi-Fi space. By the same token, if the company launched later this year or into next, then it might have caught the increasing wave of mesh networking and potentially huge market for machine-to- machine (M2M) systems. As it is, though, Cometa was caught betwixt and between emerging trends, which as we all know can be fatal to even the best ideas and efforts. Just ask Apple Computer about how that this anti-nexus positioning impacted its Newton handheld computer – which was a really good system that debuted at a really bad time.
- Fast food, plus fast access equals fast adoption. Most everyone in the U.S. has heard about Morgan Spurlock's irreverent documentary 'Super Size Me', which tackles obesity in this country right where it hurts: At the fast food counters of McDonald's and other purveyors of high-calorie gastric diversions (breakfast offerings included!). Ironically, the fast food formula of 'millions served' and consistent quality (or non-quality) also works well for Wi-Fi. In the months prior to its demise, Cometa was lobbying for the lucrative contract to offer Wi-Fi access at the thousands of McDonald's outlets across the country. Just days before the company announced it was tanking, Wayport, Inc. trumpeted that it had indeed won the contract to installed Wi-Fi systems at McDonald's eateries, thereby assuring it will be the fast access king in the fast food world.
Just like Cometa, Wayport has its eye on converged networks and has plans to offers its services through wireless carriers and others in the cellular space. Indeed, the company has already started talks with some of the top wireless carriers in the U.S. The company claims to have roughly 1,500 hot spots today (a fraction of competitor Boingo), but will quickly add to that by wirelessly-enabling more than 8,000 McDonald's outlets over the next 12 months.
Pricing and the commoditization of Wi-Fi (to the point where it is an assumed 'giveaway') may ultimately be Wayport's undoing (as well as the demise of other expensive services), but in the meantime its strategy is the most feasible and economically viable approach. We think, in its heart, that Cometa realized this fact. But, alas, the siren's call of emerging frontiers was just too much to resist and in the end a fatal mistake.
Tim Scannell is the president and chief analyst with Shoreline Research, a Quincy, Mass.-based consulting company specializing in mobile and wireless technology and initiatives. Shoreline works with end users, looking to implement mobile solutions, and vendors, developing new products and seeking business and customer opportunities. The company also specializes in training and strategic planning projects. For more information on Shoreline Research and the company's strategic services please go to http://www.shorelineresearch.com.