David Steinberg stands as an example of the surplus of opportunity within wireless.
As chief executive officer of Internet activation company InPhonic Inc., Steinberg has overseen the growth of the company’s revenues from $0 five years ago to between $315 million and $325 million this year. The company also netted $160 million in one of the most successful initial public offerings of last year. InPhonic activates nearly 50 percent of all mobile phones sold in the United States and Canada not offered directly by the carriers themselves. Indeed, the company was T-Mobile USA Inc.’s Internet Partner of the Year last year and Sprint’s Partner of the Year. Inc. Magazine voted InPhonic the No. 1 company of 2004 and Ernst & Young named Steinberg Entrepreneur of the Year. Steinberg is 35 years old.
Further, InPhonic’s board includes such luminaries as John Sculley, the former head of Apple Computer Corp. and PepsiCo Inc., former CTIA Chief Thomas Wheeler, and Jack Kemp, the former congressman who ran for vice president with Bob Dole in 1996.
Wireless “is a huge industry,” Steinberg said. The opportunities for growth sit everywhere, and InPhonic has dabbled in quiet a few of them.
Steinberg began growing InPhonic in 1999 from the remnants of his former mobile-phone dealer business, Sterling Cellular (which he founded in 1993 in his early twenties). The goal was to take advantage of the potential of the Internet in helping customers find the right phone for their needs.
“We believe that the distribution and activation of mobile phones is moving to the Internet,” Steinberg said. “It seems like a lot of the savvy customers are moving onto the Internet.”
That guess has largely paid off, as InPhonic has been activating all sorts of handsets for all the nation’s major carriers. Indeed, the company in December acquired its nearest competitor, A1 Wireless.
But Internet activations isn’t the only area in which Steinberg has played. InPhonic was one of the first to jump into the mobile virtual network operator market. The company runs Liberty Wireless, which works on Sprint’s network and offers prepaid service. And InPhonic just this month launched a second effort, Viva Wireless, to tap in to the Hispanic market for wireless service. InPhonic also operates a mobile virtual network enabler business, and has been contracted to manage the AT&T Wireless MVNO plan for AT&T Corp. Steinberg said that InPhonic is still working with AT&T on the project despite SBC Communications Inc.’s acquisition of the long-distance provider.
But InPhonic’s moves within the wireless sector don’t end there. The company has acquired close to a dozen different companies, including a mobile marketing firm, a device management company and a wireless data software vendor. Steinberg has admitted that not all the acquisitions have panned out into profitable endeavors, but the moves indicate InPhonic is testing the wireless waters from every angle.
Today, Steinberg carries a Motorola Inc. Razr phone as well as a BlackBerry from Research In Motion Ltd. The Razr, Steinberg said, is flying off InPhonic’s virtual shelves due to its sleek design-notable in an industry largely driven by cutting-edge technology, bells and whistles.
“The Razr has blown everyone away,” he said. “I switch between the carriers predicated on what the cool new product is.”
As a fan of cool new products, Steinberg serves as a sort of cheerleader for the wireless industry-a business in which he has found so much success. Steinberg sees 3G services like Verizon Wireless’ CDMA EV-DO and Cingular Wireless’ W-CDMA/HSDPA as the future of the industry. As carrier revenues decline, new data services likely will serve as the catalyst for growth. Steinberg also said that new services such as push-to-talk will add further value to an already valuable service. And such advances further play into InPhonic’s business of activations.
“We love next-generation technology,” Steinberg said.
InPhonic also serves as a mirror for the industry’s next-generation evolutions. Two years ago the company didn’t offer any camera phones. Today, 70 percent of its activations are of camera phones.
“I ultimately see every phone becoming a smart phone in the next year or two,” Steinberg said.
So with all of the developments and advancements within the industry, where will be the next area of expansion for InPhonic? Steinberg has discussed ring tones and phone accessories, as well as more imaginative areas like financial services, as potential avenues for growth. Steinberg also said InPhonic is evaluating the nascent but potentially revolutionary nexus of cellular and Wi-Fi. Voice over IP companies have been approaching InPhonic with various proposals, although the company will have to balance its allegiance to its carrier customers with its own market opportunities.
Although InPhonic’s exact expansion plans remain unclear, Steinberg will continue to evaluate his next big move. He does have plenty of options. “It’s a huge industry,” he said.
