Quite a long time ago I wrote about a startup called xG that claimed to have a wonder-technology that would render high-speed cellular, WiMAX and most other radio networks horribly obsolete. Supposedly it gives huge increases in range, bandwidth & power usage. I was pretty skeptical, especially given the stated intention to focus on wVoIP as an initial application.
My view that there might be something clever in the air interface bit (although most people I've spoken to have dismissed it as snake-oil), but even so, there was no way that a small RF company was going to be able to put together the whole value-chain including handsets, software, backhaul, authentication, application layer, network security and all the other 2000 "moving parts" that make up a working system.
Since then quite a lot has changed. Firstly, it has floated on the London Stock Exchange's AIM market. It has a scarcely believable £1.8bn market capitalisation [correction, the mkt cap should be US$1.8bn not £, even thought it's quoted in London the price is in $], given that it's had virtually zero revenues and clearly has a lot of risk attached, even if it's viewed as a potential future Qualcomm clone. For some reason it raised cash as "convertible preferred equity agreements of $120 million", although my financial knowledge isn't good enough to know if that's a good thing or not. It's missed its original end-2006 goal for launch of VoIP phones, which surprises me not at all. And it's claiming today to have shipped its first commercial base stations. (It's using 900MHz initially, so not usable in most of the world where that's used for GSM).
The lucky recipient is that well-known small Florida ISP & web hosting company, Far Reach Technologies. It's also signed an evaluation & test deal with Telefonica Mexico. Now I'm not a huge fan of over-designed websites, but I have to wonder about a service provider which has a "web design service" page like this (spelled "Developement"). If it can't afford a spellchecker/proofreader, or a copy of a decent web authoring package.... just how much is it spending on xMax base stations to help justify £1.8bn valuation for its supplier? You might also wonder about the conspicuous lack of an "about" page, or the words "privacy policy" at the bottom of the page that isn't actually a live link. I realise all startups have to begin somewhere, but this strikes me as a pretty odd choice of reference site if your ultimate aim is to sell to the world's major service providers.
... but then I find this announcement. "The first system launch will occur in March, 2007 in Volusia County, Florida. The additional launches will take place in the second quarter of 2007. Far Reach’s deployment has been funded with $100 million by the multi-billion dollar US based Phoenix Foundation and underwritten by a major UK based bank. Far Reach will initially offer the first ever metropolitan area mobile VoIP, with internet access and data services to follow in November of 2007. In 2008 the service offering will expand to IP Television". The only Phoenix Foundations I can find are a New Zealand rock band, a Canadian charity foundation, and this rather weird one. Now it's possible that this is some shadowy hedge fund that stays well out of the limelight, but again, this is all raises lots of questions.
Bottom line: I'm still extremely skeptical.
Dean Bubley's Disruptive Wireless: Thought-leading wireless industry analysis
28 comments:
Dean, your entire research is based on Google searches. You are still skeptical? Who are you, and why should anyone care about what you feel? You were wrong before, and you are wrong now. Worrying about spelling errors? Puhleesee!! Lets go back to your blogs and do a little spellchecking...It always is the do nothing bloggers that say "well if I were and if I could". You can´t. That´s why you are a blogger, not a doer. Why would you bring up GSM in 900MHZ if the rollout is taking place in the US? Where is the relevance there? Dean, you´re right, a local ISP has a spelling error on their website, the whole thing must not work. Too funny.
Dean,
You wrote this:
Since then quite a lot has changed. Firstly, it has floated on the London Stock Exchange's AIM market. It has a scarcely believable £1.8bn market capitalisation, given that it's had virtually zero revenues and clearly has a lot of risk attached, even if it's viewed as a potential future Qualcomm clone
1.8 Billion pounds or 1.8 billion Dollars? I would much rather make a spelling error than get a fact wrong, Dean. I´m sure most people feel the same. What do you think? Would you rather make a spelling error or get a fact wrong? That´s why you´re a do nothing blogger.
You also wrote this, you genius of spelling and grammar:
My view that there might be something clever in the air interface bit (although most people I've spoken to have dismissed it as snake-oil), but even so, there was no way that a small RF company was going to be able to put together the whole value-chain including handsets, software, backhaul, authentication, application layer, network security and all the other 2000 "moving parts" that make up a working system.
"my view that there was"...ever hear of a run on sentence, Dean?
That paragraph makes absolutely no sense at all. Sarcastically stating that Far Reach was a large ISP..what a joke. It´s a local ISP which fits in perfectly to xG´s plan of rolling out through local ISP´s who cannot afford spectrum. You probably didn´t read that in your Google searches, great job of DD. You probably did hear of Telefonica though. Too funny, Dean...skeptical at 5 US per share, and skeptical at 15. Good job, your foresight is tremendous...tremendously bad.
Dean, How in the world do you even hold a job, writing like this: realise all startups have to being somewhere, but this strikes me as a pretty odd choice of reference site if your ultimate aim is to sell to the world's major service providers.
All startups have to being somewhere??? What in God´s name are you talking about? You should be strung up at the next useless bloggers meeting. If you don´t know the language, or spelling, or grammar, what purpose are you serving by blogging. Not only are your facts wrong, but you can´t spell and your grammar is worse than my 6 year olds grammar. This is the funniest blog I´ve read in a long time. Trying to disparage the greatest communications development in years while using kiddy language and Google search as your DD tool You must feel like a real idiot right about now.
Dean, here´s some useful advice..find a real job.
OK, this is actually quite funny. Mr Anonymous clearly has a bee in his bonnet about what I thought was a fairly reasonable post - as indeed were the other posts I've made on xG in the past.
Firstly - who am I? I'm a wireless industry analyst & consultant, reasonably well-known and with a client base including a wide variety of small & large technology vendors, service providers and others. Both "establishment" wireless and disruptive innovators. As the name of my company suggests, I'm pretty opinionated, and with a pretty damn good record of being right. The blog is a vehicle for commentary I don't have time to put into formal reports & consulting assignments.
Secondly - my research is based on quite a lot of things besides Google, including meeting & speaking with xG in the past. I wasn't 100% convinced then, and I'm not now. I'm not 100% dismissive either, unlike a lot of commentators.
Thirdly - re market cap: OK, mea culpa, you're right it's dollars. I'd checked on the UK website ADVFN this morning at it gave 1800 and as it's an LSE-quoted company I thought it mean £. I've had another look and yes it does say units USD rather than GBP. Unusual for an LSE stock in my experience, but unlike you I'm capable of admitting when I'm wrong. And yes, I missed the word "is" in that paragraph too.
Fourthly - I know perfectly well that xG has a strategy of targetting ISPs. I think that's one of the main flaws in its business approach.
And yeah, I was so, so wrong when I said that end-2006 was an unrealistic target for the wVoIP xMax phones to be released.
If you'd like to spout any more vitriol, please feel free to contact me directly & I'm quite happy to have a civilised discussion with you.
And also, seeing as you're so omniscient, perhaps you'd be so kind as to illuminate me & this blog's reader about the Phoenix Foundation thing?
Dean,
When have I been wrong? What are you babbling about? Was I wrong to buy the stock at 4.5 and have it go to 18? Was I wrong in laughing at you do nothings as you searched Google for unsubstantiated gossip? No my friend, you are wrong. Yeah, you have a following, sure you do.
Yawn. I guess we'll know fairly soon.
a) The underlying tech may be revolutionary, it may not. It's my job to be skeptical.
b) I don't believe it's possible to put together a complete end-to-end wVoIP solution capable of competing with mainstream cellular telephony on a broad scale, even if the underlying RF does work, within 5 years. As I've said before, the RF is the easy bit - it's all the other stuff like network access control, handset software, billing, lawful intercept etc that are critical to make the whole thing work. Lots of revolutionary technologies fail because the packaging is lousy.
c) Yes, there's a typo in my previous comment. And probably on this one too as I don't have the time or inclination to check it thoroughly as I have a business to run & clients to deal with.
You do realise that by making such a big deal out of this, I'm much more likely to comment on this in future, don't you?
So, all you have to do is say I´m sorry about the misstated facts and the spelling and grammatical errors and you are back to being a world reknowned ??? while Far Reach makes an error on their website and that leads you to write that they are unfit to carry on with xG´s tech. Why did Phoenix fund the rollout? Why not? What about the UK bank, don´t you have any questions about them? Funny how you downplay your 1.8 Billion Dollar error but harp on phones being delivered a few months late. Dean, I get the funny feeling you just don´t get it.
Dean,
Your "job" to be skeptical? This is interesting. How much do you make for mangling facts and pulverizing the English language because you are "too busy" to put your "thoughts" down in a meaningful fashion? What about your 900mhz statement and its irrelevance to a rollout in the US?
What about going on about Far Reach and staying quiet about Telefonica? Who cares where the money for the rollout came from? Nobody likes to lose and I´m sure Phoenix is well versed in xG. You haven´t written much before, Dean, and I would love for you to write all about xG...just get your facts straight.
Anonymous#1 needs to start worrying.
A "wireless industry analyst" who puts "nanotechnology", "quantum cryptography", "commercial exploitation of space" and "bioinformatics" as areas of future research is clearly a force to be reckoned with and not a deluded fantasist at all.
OK, I've had enough of the ad hominem jibes from people worried about my comments. Clumsy & fruitless efforts to try and diminish my credibility simply reflect on the intelligence of the posters' investment decisions. I'll delete any further comments that are simply vacant rants rather than actual debate. http://en.wikipedia.org/wiki/Ad_hominem
Ironically for the previous commentator, I actually did author a 100+ page research report on Nanotech & Microengineering, for the FT's Business Information division, some time around 1996. It said, roughly speaking, "come back in 10 years time" which was pretty much exactly right as well. I've advised on most of the other areas at various points as well, including quantum crypto.
I actually reckon I'm doing xMax a favour by not dismissing it out of hand as many observers do - I'm criticising the chosen application (wVoIP) & marketing - not the underlying technology itself.
And at the countless conferences I've participated in or chaired, on wVoIP or wireless broadband over the past 3-4 years, I've not met a single representative of xG or its investor base, out of perhaps 2000 people I've spoken to personally. No audience member has ever asked a question on the subject, nor a presenter mentioned it on his/her slides.
Doesn't meean it doesn't work, but it's certainly not a major "part of the ecosystem" for wVoIP, even among the type of disruptive, startup, challenger-type companies at events like VON.
By coincidence, I just got off the phone to a WiMAX conference organiser, so xG should soon be getting an invitation to present to an audience of its main competitor's customers.
I'm also chairing part of the Wireless Broadband Congress at Olympia in London in a couple of weeks' time. If any investors, supporters, detractors or press are attending, we'll see if in fact the market is more or less critical than my own stance.
Put up or shut up
You never met anyone from xG because they work for a living, they don´t talk about things they wish they can do but will never happen. Press Releases are not worth the paper they are printed on.
Does posting comments anonymously on this blog count as work Anonymous1?
I have to admit I'm impressed by the market cap for XG but is it really worth a billion dollars more than a Flarion?
Thelf, I am on line all the time. Why would you insinuate that I blog for a living?
yeah, xMax is a major part of the wVOIP landscape, but it will leave wVOIP in the dust as the 2nd generation will lead to data, video and internet access. Your precious wVOIP will be yesterdays news, Dean, and being yesterdays news will finally allow you to get the story right.
You still have not addressed why you brought up GSM in 900MHZ as an obstacle when it is absolutely not, as xG is rolling out in the US. That is poor poor writing, Dean. You mean you spoke with 2000 people in person and nobody asked you about xMax? You also state you talked to xG. Certainly they brought up xMax. As far as spelling errors if you cannot afford a spellchecker because you are too busy, you are in the wrong career. Can I ask a serious question? Why did you blog this nonsense? What purpose did you have? All you did was raise questions about your ability to discern fact from fiction and reality from fantasy. Seems like a waste of time to me.
Mr Anonymous
OK, that reply was slightly more civil, so I'll leave it up.
The 900MHz issue is an important one if xG intends to export its products in the near term, or whether it needs to invest more time and money in another round of development, testing etc at a different frequency.
You're an investor - I would have thought that anything that could potentially impact timelines for revenues would be of interest. Especially given the rumoured UK deal for 2008 that I'm sure you're aware of. Doesn't mean they don't have something in the pipeline at other frequencies, but it hasn't been announced.
You'll notice that in the original article I referred to "most of the world" where 900MHz is licenced spectrum. (I believe Mexico is OK at 900MHz, though). And the comment was in parantheses - I was expecting the intelligent reader to infer that I was talking about future exports. Maybe that was an over-optimistic assumption on my part, but I know my normal readers are a pretty bright lot on the whole.
Why did I blog this? I blog lots of things - look through archives. Some lengthy posts, some shorter or more trivial ones. A press release caught my eye yesterday morning when I had a few minutes, and I realised I hadn't mentioned this in 12 months or so. No big deal, I do it all the time. If I'd had a 9am meeting scheduled I probably wouldn't have bothered.
What I didn't realise until after you'd goaded me into a bit of digging was that an ongoing financing deal was in progress, and that the $120m funding was currently being assessed based on the state of the initial network deployment. Which puts your seeming panic in multiple posting on what you think is an irrelevant blog into sharp relief.
So now I've had the motivation to look more deeply, the 2008 forecasts look pretty punchy to me at first glance. And the R&D cost estimates certainly don't look consistent with creating a massmarket wireless consumer-grade VoIP service from end to end, including networks, devices, applications and all the rest. It's also a bit unclear about how things like interconnect & termination fees fit into the revenue model. I might try & dissect the research note I've seen a bit more fully later on if I have time.
Luckily for you, I'm no longer an FSA registered representative and thus am not qualified to give investment advice on UK quoted equities or other financial products.
That said, I know various institutional & private equity buy-side investors who read this blog anyway for industry rather than financial insight. If anyone would like to chat to me on this, please contact me via dbubley AT disruptive-analysis dot com.
The 120 mil is the end result of a financing deal made in December. It involves some institutions in London. I know it´s happening, why would I be nervous? Am I a little perturbed about the price being so high 5 months later...absolutely not. We are very excited at the prospect of xG having cash at hand to subsidize handsets initially and to grow their business. Absolutely correct on different plans for the rest of the world rolling out xMax networks. When you "take a closer look" at the Hichens research report, you will notice that it is considered borderline ridiculous to be a skeptic for the heck of it at this point in time regarding xG´s capabilities as a commercial communications stalwart.
Anonymous:
I'm also a skeptic of xG's technology and ability to bring it to market (in fact, if you peruse most of the stories in 2005/2006, as I'm sure you have, there's a strong current of doubt). So I'm impressed that xG is as far along as they are and perhaps they have the momentum to bring about a significant change in the mobile communications world.
One point, and then a question.
If xG claims that it's offering the first metro-wire mobile VoIP service then I would ask what you think of Earthlink's offering in Anaheim, California (http://www.fiercevoip.com/story/earthlink-betas-wifi-phone/2007-03-26)
How will xG's system provide the capacity required for mobile communications services? One of the aspects that has been heavily emphasized by xG is coverage, which has been a problem for metro Wi-Fi deployments, but we know that wireless carriers continue to add more radios and picocells in cities and other dense usage areas to add capacity, and that's just for voice. Is there perhaps a bandwidth per square kilometer/mile metric that you can discuss and compare that to current cellular and metro Wi-Fi markets, as well as potential WiMAX-based services?
Frank
So, going back a few years to reference some misguided blogs about xG. So, you´re a skeptic? I have an idea...let´s crucify the staff...why not? You "skeptics" crucified Christ...what´s the difference? Oh, by the way, skeptics also swore up and down that the earth was flat. I´m not putting you in the same boat but...
You know what else is funny, being skeptical without reason. Frank, you say you are skeptical and then you ask questions regarding information you should already know...if you are skeptical. Being skeptical without trying to find the answers to your questions, relying on a free anonymous site for your info, well thats plain silly (as most skeptics of xG are)
Skepticism only works if you have facts to base your skepticism on. It doesn´t make any sense at all to claim you are skeptical if you have no knowledge of what you need to be skeptical of.
On the other hand skeptics have also criticised ideas like astrology, conspiracy theories, clairvoyance and a million-and-one "too good to be true" companies.
I've been skeptical of UMA technology for about 2.5 years, although the guys at its inventors Kineto Wireless (and its investors) are always perfectly civil & professional when I meet/speak to them. My skepticism is fact-based. As it is with xG.
Fact#1 : I'd say it's pretty reasonable to be wary, when a company's house broker puts out research written by someone who discloses he has held shares in the company since before the float. That's highly unusual.
Fact:
There is nothing at all unusual about a House Broker disclosing he bought Private Placement shares. Maybe he..umm..I don´t know, wanted to make some money??
Dean, if the choice is to disclose or not to disclose, is it a choice?
That was weak, Dean..you can do better
Many banks' compliance departments take a very dim view of analysts owning shares in companies they cover. It raises the question of conflicts of interest, even where full disclosure is made.
You are right, however. I can do a lot better than that, in criticising the content of the Hichens report.
But not for free, as a blog comment, just as sport so that I can play with the trolls a bit more.
If any investors, equipment or silicon vendors, service providers, WiMAX/HSPA marketing personnel or others would like a formal analysis, please get in touch.
This thread is now closed & all further entries will be deleted without comment.
DB
Haha, made you look again, Dino...who is being played now?
I'd say the fact that nothing has happened (beyond a few PR announcements) since this discussion shows that Dean was on the right track, and Marc Dannenberg, uh, Mr Anonymous didn't know what he was talking about.
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