IBM Corp. and Geotek Communications Inc. announced they will join forces to provide integrated mobile communications services, equipment and software to business customers in the United States and some international markets.
The agreement will see the two companies working together in two areas: technology, and marketing and distribution.
On the technological end, IBM will upgrade the switching and switching control systems for Montvale, N.J.-based Geotek’s Frequency Hopping Multiple Access commercial mobile radio system, to allow for greater network capacity and speed as well as added flexibility.
The current network uses the Transmission Control protocol/Internet protocol. The upgrade via IBM will allow additional capabilities, such as roaming and handoff features to allow services to operate in different Geotek markets, network interface with network standards like Interim Standard-41 and Signal System 7 and subscriber management, operations, administration and maintenance capabilities, such as billing system interface specification.
“We see this project as the next step in the evolution of the FHMA program,” said Geotek Chairman and Chief Executive Officer Yaron Eitan. “We’re very excited about the program.”
IBM will conduct the majority of the work on the new switching system integration, scheduled for completion by the end of the second quarter 1998. This is the initial phase of the agreement, with a potential value to IBM of $50 million for work in the United States alone and up to $150 million internationally.
International markets include Korea, which is currently undergoing network upgrades in five regions. Future markets include those in the Far East and Latin America.
The two also signed a letter of intent to market Geotek’s FHMA Network together with IBM services and products, such as IBM ThinkPads and software applications. IBM salespeople will be trained on how the Geotek network functions and will sell the system along with its own products. The agreement identifies 300 of IBM’s distribution business customers in Northeastern markets from Philadelphia to Maine as the pilot markets.
“Geotek is taking a major strategic step to become the leading mobile business solutions company in the fast-growing global wireless industry,” Eitan said. “As we strengthen our position in the U.S. and international markets, we could not have wished for a better, or more enthusiastic IT partner than IBM … IBM’s distribution channel fits our customer focus.”
According to officials of both companies, the agreement will allow an employee in the field with an IBM Thinkpad to be connected via Geotek’s network to the home office, to process invoices, credit cards and so on. The client’s home office also will be able to track exactly where a vehicle has been, where it is going next and in some cases the condition of the vehicle, without the driver even making a call.
The partnership comes after two years of working together on other projects. In December of 1996, the two announced a nationwide marketing agreement that allowed IBM to sell Geotek’s integrated suite of voice and packet data services together with its own services. IBM has provided Geotek with turnkey site construction and project management for Geotek’s wireless network build out since 1995.
In the last five years, the specialized mobile radio industry has grown considerably, and has become more competitive. But according to analysts, this agreement places Geotek at the SMR market table. Geotek had 2,000 customers at the end of last quarter in Boston, Philadelphia, New York, Miami, Orlando and Tampa, Fla., Dallas, Washington, D.C., and Baltimore and has radio spectrum licenses for more than 40 markets, including Houston, Chicago, San Antonio, Phoenix and San Francisco. IBM said it has set a goal to secure 25,000 potential Geotek FHMA Network users.
“This agreement with IBM really puts a feather in Geotek’s cap,” said Steve Virostek, SMR analyst for The Strategis Group, based in Washington, D.C. “IBM is a company with an established group of customers. It really is a key distribution point for Geotek.”
This is not IBM’s first foray into mobile data waters. The company collaborated with Motorola Inc. for the Ardis data-only network. While still using the network, IBM sold its interests in it to Motorola a few years ago. The company also created IBM To Go.data, an integrated network of ThinkPad computers, Lotus Notes and the IBM Global Network.
“IBM has made a significant decision that says wireless data is ready to fly,” said Pat Sweeney, president of The Bishop Group, in Kalamazoo, Mich. “This partnership with Geotek is just adding another kind of network to the capability.”
The deal “certainly adds a solid part to the Geotek foundation,” he said. “What’s already a chaotic, competitive market is just becoming more so.”