Switzerland’s wireless wipeouts

The wireless data market is developing at a much slower rate than predicted (picture: Nokia) mobile Nokia

The wireless market is developing at a much slower pace than expected. A number of Swiss startups have already run aground, merging out of existence, going into bankruptcy, or quietly shutting their doors.

The introduction of mobile data services built up hope among technologists and entrepreneurs in Switzerland, as it did across Europe, that the market was on the verge of a mobile Internet boom, a boom that so far failed to materialize. Now two more wireless startups have hit hard times.

Thirty-two-month old, remote-i AG in Zug has laid off all but two employees and the even younger, Bushbird Technologies of Zurich, filed bankruptcy papers this month.

The news comes only weeks after two Swiss mobile data pioneers, MobileChannel.Network and uB-mobile merged in effort to concentrate their efforts and conserve cash, while another promising startup, Monzoon Networks is revamping its business model after failing to find venture capital investors to support its original, more ambitious plans.

Layoffs and bankruptcy proceedings

remote-i AG, which was founded by an experienced, international management team, was looking for venture funding for the past 12 months, but could not close a deal. As a result, it let go 10 of its 12 employees.

The two remaining employees, including company CEO Michael Stennicke, are trying to find another market or use for the technology and at the same time are looking for sell off assets. “The company is in not about to go into liquidation,” Stennicke told Swiss Venture Update.

remote-i developed software and an “exchange platform” to enable service providers to host mobile applications, in a kind of e-Bay /Napster platform for digital file transfer via mobile networks. Cited as a promising wireless application firm in an event run the Wall Street Journal last year, remote-i’s software prompted industry guru and investor, Esther Dyson to write at length about remote-i’s “chilling” potential.

Even with network of Fantastic Software Corporation co-founder and business angel, Peter Ohnemus, who was on the board and an early investor in remote-i, as well as his e-Firm consultancy in Zug, could not help the fledgling software firm in the face of a mobile data market that refuses to budge much past the SMS level of communication.

Investors are not willing to wait five years for their portfolio firms to blossom. They want investments that they can deliver significant growth within six months.

Bushbird Technologies also failed to find financial backers. It was a spin-off of the innovation lab at Atraxis, once the largest IT company in Switzerland. Atraxis specialized in airline industry software and its largest client was Swissair, which was also a shareholder.

Bushbird had an idea for a voice-based messaging platform that worked like a kind of virtual classified advertising system. Just a few weeks before, the startup had received an award for outstanding technical innovation from the Location: Switzerland contest.

Stalled sector growth hampers startups

Everyone now realizes that it will take years before high-speed data services become viable. Growth stalled last year in the mobile market last year. Services paid for by mobile subscribers are expected to generate some 97 billion Euros across Western Europe in 2002, which is a slim 4 percent increase over 2001 figures, according to Analysys, a UK based telecommunications market research firm.

There is very little sign of the high-speed third generation mobile networks that operators will pay billions to implement and license. Mobile data, if you can call it that, consists of messaging, downloadable ring-tones and mobile Internet access. Non-voice services account for only 8 percent of mobile revenue per users, according to Analysys.

Not all bad news

It’s not all bad news. There a few winners in the wireless startup scene in Switzerland that have less sexy or “chilling” products but a stronger bottom line. They are firmly established in the messaging or SMS niche.

UCP AG is probably one of the biggest in terms of revenues. Based in Lugano, Switzerland, UCP has a range of SMS services for consumers and for business. It reports that it generated some 29 million Euros in revenues with 120 employees in the first quarter of this year.

But even this apparent success story requires some restraint in commentary. Late last year UCP told England’s Financial Times newspaper that it would break even across all business units by last month. But only one business unit is profitable at the moment, according to the firm’s latest press release.

The others are now targeted for profits by end of 2002. UCP received more than 30 million Euros investment from Deutsche Telekom back in 2000.

Up and comers find wireless niche

Other up and comers on the Swiss scene include Togewa Holding, mobile solutions, bmd wireless, mobilesolutions AG, and Mogid.

Togewa owns a number of tiny startups all active in the digital cellular subscriber roaming business niche. Its biggest fish is the Swisscom spin-off, Comfone in Bern.

Dubendorf-based mobilesolutions AG is owned by Lehmann Holding. It doubled income from 2000 to 2001, according to the company, going from 5 to 12 million francs turnover.

A third player to watch in Switzerland’s mobile data sector is bmd wireless, a small, profitable, engineering firm based in Zug makes software for mobile network operators to improve their SMS and other data services.

And tiny Mogid is one to eye too. While not yet a winner in terms of revenues, it has an innovative technology to develop and it managed to attract a small amount of venture money in the past few weeks.

by Valerie Thompson