In a Dallas factory once used for making bombs during World War II, Stick Networks Inc. is building a new class of wireless Internet services it hopes will prove just as explosive.
Much has been discussed about the convergence between the Internet and wireless networks. But most of that talk has revolved around adding the Internet to existing wireless applications. Stick Networks is doing the opposite. Rather than trying to transform the Internet to fit the wireless model, it aims to transform wireless to fit the Internet model.
“We felt the wireless Internet needed to evolve beyond the task-oriented first-generation network services and devices,” like WAP phones and personal digital assistants, said Brandon Cotter, Stick Network chairman and chief executive officer. “We’re going to change an entire generation’s way of connecting to the world … but with a clean slate, not duct-taping existing Internet applications.”
The company is developing what it calls a Personal Digital Network-a collection of Internet-based content, services and applications targeted at young adults aged 15-22. But unlike other wireless Internet solution providers, Stick Networks is not targeting wireless phones, pagers or PDAs. It plans to introduce a whole new device category, which the company describes as a cross between a Blackberry device and a Gameboy.
“The device is much more like a media player than a PDA, more like a video-game machine than a phone,” Cotter said. “When you get one in your hands, you’ll stop everything and play with it for the rest of the week.”
The device will allow users to listen to Internet-based music, play Internet-based games and engage in other Internet-based activities like instant messaging and e-mail.
“We’re really talking about a mini-Internet computer,” Cotter added.
He said the unique combination of services he plans to offer via the PDN necessitates a new device. Expected applications include an animated graphic user interface, video games, music, information services and alerts, m-commerce and messaging service.
Therefore the company wants a device with a full Qwerty keyboard, high-resolution color display, internal wireless modem, GPS chip, 206 megahertz of processing power and navigational controls.
“We feel we’re at a place and time where users are demanding a much richer experience … rather than just delivering data to devices,” Cotter said.
PDN services will feature things like awareness and instant-messaging capabilities, so users about to enter a mall can determine which of their friends with similar devices are in the mall and available for messages.
Cotter also said the PDN will be able to learn what each user likes and dislikes receiving on the device. For each bit of information content sent, the network allows users to vote whether they think its “cool” or “not cool,” as well as recording which bits of data result in m-commerce transactions.
This is not a wireless portal or wireless application service provider service offered to carriers as a value-added service. Stick Networks will market the PDN to consumers itself, the company said.
Because these services require packet-based, high-speed, low-latency networks, the company plans to buy airtime initially from CDPD operators with plans to resell third-generation network airtime as well, when available. The company also has a deal with a large unnamed consumer electronics manufacturer to create the device.
“We’re putting together the complete offering that goes to the consumer. Everything they see is from us,” Cotter said.
The closest existing example to Stick Networks’ proposed model is the OmniSky solution for the Palm V. Both companies offer a custom collection of Internet-based content, software, wireless connectivity and hardware created especially for their respective solutions. Both also compare themselves to America Online Inc.
In time, Stick Networks may offer the PDN to carriers, Cotter said.
“We’ve spoken with a number of other carriers and they expressed their intent to offer it as well in the business-to-business sense,” he said. “We would provide the PDN to the carrier and they’d offer it to their customers.”
Given the vast popularity of existing wireless devices, any plan to introduce a new device category to compete with the current wireless boom seems like a risky strategy. But Stick Networks is betting that it can circumvent this challenge by targeting the youth market at an age where people in younger demographics have not made up their minds about which devices they prefer.
“Kids aren’t hanging pagers and cell phones off their belts, but they are using Discmen and Gameboys,” said Fiona Dias, Stick Networks’ chief marketing officer.
She pointed to iMode users in Japan and the popularity of SMS messaging in Europe as evidence that a properly positioned wireless Internet service could prove vastly popular with this age group, regardless of device.
“Young adults abroad have readily adapted to a world where the Internet is portable and can go anywhere with you,” she said. “We’re targeting young adults who have been underserved by the wireless companies.”
The company readily admits its plan is a risky one, but feels it has just as much a chance to hit a home run as strike out.
“We believe it is a very aggressive plan, but also that it’s the right time to look at the market in this way. It’s right to look at things from an Internet approach,” Cotter said. “The intersection of wireless and the Internet is too large of an intersection. It’s not going to happen just on WAP phones and PDAs.”
