Notify Technology Provides Shareholders With Business Update
Company Reviews Exciting New Wireless Business Model
SAN JOSE, Calif., Feb. 6 /PRNewswire/ -- Notify Technology Corporation (Nasdaq: NTFY - news), an innovative Communications Service Provider of wireless and wireline notification and messaging services, is providing shareholders with a business update. ``In response to our recent announcements of our new wireless products and services, our agreement with WebLink Wireless and our Memorandum of Understanding (MOU) with Motorola, shareholders have been asking what impact these opportunities will have on our future business,'' said Paul DePond, president and founder of Notify Technology. ``We are providing the following business update to our shareholders so they may better understand our market strategy and the revenue model for Notify's new wireless products and services. I encourage anyone who wants the convenience of wireless e-mail to try the appropriate NotifyLink product, which caters to your specific needs. Our Vice President of Marketing would be happy to assist you.''
Background:
Late in 1999, Notify began to design a wireless software architecture that would become the basis of its NotifyLink product family. The goal was to develop a solution for the paging carriers to help transition a large portion of their 30 million one-way paging subscribers to two-way messaging subscribers. Their transition started by upgrading their one-way network to a two-way network called ReFLEX. The largest ReFLEX carriers today consist of WebLink Wireless (formerly PageMart), SkyTel, MetroCall, Arch Wireless and PageNet (now wholly owned by Arch Wireless), Verizon Wireless, PageNet Canada, and Bell Mobility Canada. Notify believes that the ReFLEX carriers have four major strategic advantages over any other 2-way service. 1) The carriers have marketing and selling arrangements with over 8,000 retail outlets for their two-way products and services that include Radio Shack, Circuit City, Office Max, Office Depot, Staples, etc. 2) They have over 4,000 direct sales personnel calling on small to large companies and resellers. 3) They have created a 2-way network that spans from Canada to Mexico and extends out from major metropolitan areas and business centers to include hundred of small cities and fast growing suburbs. The coverage area for the ReFLEX network in North America now stands in excess of 90%. 4) They offer superior in-building penetration compared to other two-way networks, which provides an almost seamless connectivity wherever you travel.
ReFLEX Market, Size & Scope:
The In-Stat Group has projected that, ``The market will increase exponentially with mobile data subscribers growing from 5 million in 2000 to 172 million in 2007. Internet-ready two-way paging unit shipments will exceed 10 million by 2004_.'' The Group went on to comment that, ``Much of the growth in the wireless modem market will come from after market upgrades to mobile computers built without wireless capability.''
At its peak, the one-way paging market surpassed over 30 million subscribers according to a white paper by WebLink Wireless in September 2000. The potential size of the ReFLEX market could approach the number of subscribers currently using one-way paging devices as they upgrade their devices and become aware of new applications. Notify believes the demand for current and future ReFLEX solutions is expected to increase as companies move toward providing their employees wireless access to e-mail and corporate information. An early indication of this trend occurred when in January 2001, Motorola announced it had shipped over 750,000 of their T900 Talkabout two-way messaging devices. We believe the market for these devices could exceed several million units in 2001. The market for the Motorola P935 TimePort and the Glenayre @ctiveLink ReFLEX module for the Handspring Visor could also be sizeable and will provide customers with competitive alternatives to many of the current RIM two-way devices. Up to now, RIM's Blackberry solution has been unchallenged in the corporate market since the ReFLEX carriers have not had a competitive solution.
Notify's Wireless Product Strategy:
The Feb. 6th issue of Business 2.0 listed a stunning statistic from the eMarketer. In the US, 570 Million pieces of mail are sent through the post office each day. In comparison, 1.47 Billion emails are sent in the US each and every day.
The development of a desktop software module capable of operating behind a corporate firewall has created a solution that could enable the ReFLEX carriers, for the first time, to compete effectively against a RIM Blackberry product. Notify has developed a family of products and services called NotifyLink that works on the Motorola T900 Talkabout, P935 TimePort, PageWriter 2000, and Handspring Visor using the Glenayre @ctiveLink ReFLEX module. Notify's strategy is to provide the carriers with a family of feature rich wireless applications using their ReFLEX network and compatible with the full range of their two-way messaging devices. NotifyLink was designed for wireless e-mail access and management, as well as wireless Personal Information Management and desktop control. Notify plans to maintain its market leadership by developing and marketing new enhanced versions of its software to the carriers.
After examining the various competitive solutions for wireless e-mail access and management, it became apparent to Notify that the initial focus of these products was targeted at the ``always on'' user. Notify believes that these solutions limit the potential market size for wireless e-mail access. Notify's strategy encompasses the ``always on'' user, as well as the home or SOHO ``dial-up'' user. Notify defines ``always on'' as a continuous connection to the Internet offered by cable or DSL providers or on a LAN/WAN company environment. Solutions like the RIM Blackberry product focus only on the ``high end'' user due to the high cost of the device and service. With the introduction of the T900, Motorola lowered the entry point for a useful two- way messaging device and expanded the market for wireless e-mail access and management.
Notify's Revenue Model:
The NotifyLink software and service is intended to provide Notify with two revenue streams. The first revenue stream is a monthly recurring fee from carriers who offer the NotifyLink Internet Edition service. This service provides ``dial-up'' users with wireless access, management, and synchronization with up to five different e-mail accounts including AOL, Yahoo, AT&T WorldNet, EarthLink and most other POP3 or IMAP4 email services. Notify will charge the carriers using a formula based on transaction volumes and subscriber monthly fees. A transaction is defined as a transmission of a wireless message in either direction. Notify's revenues could be as much as $0.50 to $2.00 per month per subscriber depending upon the subscriber's usage.
Notify expects a second revenue stream will come from sales of the NotifyLink Standard and upgrades to the Professional Edition Desktop software for the Motorola T900 Talkabout, Motorola P935 Timeport, and the Handspring Visor using the Glenayre @ctiveLink ReFLEX module. This software could be sold through the carriers and Motorola. Recently, Notify announced an MOU for a software OEM business relationship with Motorola. Currently, Motorola and Notify are working on qualifying the product for release and working out the details of a definitive agreement prior to a planned formal rollout. The current MSRP being considered for the NotifyLink Standard Edition is $29.95 for the T900 Talkabout and $39.95 for the P935 Timeport and @ctiveLink with Visor. The MSRP being considered for the NotifyLink Professional Edition is $39.95 for the T900 Talkabout and $49.95 for the P935 Timeport and Handspring Visor using the Glenayre @ctiveLink ReFLEX module. Notify believes that the carriers can market and sell the NotifyLink desktop software package or the NotifyLink service to a significant portion of new ReFLEX subscribers and upgrades to their installed base.
Future Wireless Opportunities:
In December of 2000, we announced a formal agreement with WebLink Wireless and a Memorandum of Understanding with Motorola. WebLink's business model is broken into two main components. The first is their retail channel and their second is their large Telco carrier partners which include BellSouth, Sprint and Excel Communications to name a few. WebLink has only just started to roll out our NotifyLink Internet Edition service and is currently planning to launch the NotifyLink desktop software in March.
Our relationships with other ReFLEX carriers are in various stages of evaluation and negotiation. We feel future relationships with wireless device manufacturers are also important. We customarily work under non-disclosure agreements that prevent the discussion of specific relationships, but we are pursuing opportunities with every ReFLEX carrier. Notify's goal is to establish agreements with the majority of the ReFLEX carriers, making NotifyLink software the defacto standard for the ReFLEX market.
Current Company Operating Expenses and Funding:
Over the past six months, Notify began optimizing spending to shorten the path to profitability. Our spending level has decreased approximately 25% per month and we plan to keep spending control a major issue. On November 16, 2000 we announced that we had closed a private placement of $1.2 million. Currently, we are exploring various options to raise additional capital.
Future Revenue from our Wireline Products:
Over the past two quarters the demand has softened for our wireline products. We anticipated a decline in sales of these products based on the erosion of pricing on adjuncts during the past year. Unfortunately, due to market factors, the decline has occurred more rapidly than planned. Although we continue to market and sell our wireline products, we continue to focus our efforts to complete the development and launch our new wireless products and services.
The Future of Visual Got Mail:
We have been pursuing alternate ways to build up the installed base of our Visual Got Mail products and services. We expect to announce an important licensing opportunity, which will result in the launch of the Visual Got Mail service into the retail market. We are very excited about this opportunity because our role will be to focus on providing the monthly service rather than to build and market the eView device associated with the Visual Got Mail service.
About Notify Technology Corp.
Founded in 1994, Notify Technology Corp. (Nasdaq: NTFY - news) is an innovative Communications Service Provider of wireless and wireline notification and messaging. Notify Technology currently sells its products through OEM relationships to major telephone companies and telephone equipment distributors. The company is headquartered in San Jose, Calif. For more information, see www.notifycorp.com or call 408-777-7920.
Forward-Looking Statements and Risk Factors: This press release contains forward-looking statements related to Notify Technology that involve a number of risks and uncertainties, including, but not limited to, the statements regarding Call Manager opportunities, ReFLEX market size, pending Visual Got Mail pilots, mass market roll outs, revenue streams, product pricing, discussions with partners, market potential for NotifyLink products, licensing agreements and two-way wireless relationships. Those statements are based on current information and expectations and there are important risk factors that could cause actual results to differ materially from those anticipated by such statements. These risks include, but are not limited to, our ability to deliver products and manage growth, market acceptance of certain products, business and economic conditions in the wireless industry, changes in customer order patterns, as well as other risks. These forward-looking statements are made in reliance on the ``safe harbor'' provisions of the Private Securities Litigation Reform Act of 1995. For further information about risk factors that could affect Notify Technology's future, please see the risk factors listed from time to time in the Company's filings with the Securities and Exchange Commission, including but not limited to the report on Form 10-KSB for the fiscal year ended September 30, 2000. Prospective investors are cautioned that forward-looking statements are not guarantees of future performance. Actual results may differ materially from management expectations. |
