Two companies with lengthy wireless histories have merged into one entity that is geared to tackle the machine-to-machine market.
Velocita Wireless L.L.C. and SkyTel are launching their new business plan this week. Velocita was formerly owned by Sprint Nextel Corp. and SkyTel was formed 20 years ago, offering the nation’s first nationwide paging service.
The new SkyTel combines Velocita’s national data network, which was the first in the nation, with SkyTel’s network.
“We think of ourselves as the original M2M provider,” said CEO Mark Hull. “We are positioned very well in the market as a combined business. These two pioneering wireless data companies are a natural fit.”
Hull has been instrumental in creating the new company. Hull led Velocita when it was acquired by Sprint Nextel in February 2006. He left Sprint Nextel when United Wireless Holding Inc. bought Velocita in June 2007. In July, Velocita bought SkyTel from Bell Industries for $7.5 million.
Since then, the company has been going through a transition and making improvements to its network. With the merger, the company has 700,000 users and 240 employees in offices in New Jersey, Mississippi and Virginia. Of the company’s users, 500,000 are M2M customers.
Prior to the launch, the company added new base stations and switches to its network and improved backhaul. The company did the work to transform its industrial grade wireless data network into a system that can handle M2M applications.
Hull said developing M2M applications will be vital to the company’s success.
“Our go-to-market strategy is focused on applications and developing applications,” he said. “We have been a destination for application developers who are really specialized in different areas.”
SkyTel plans to market its applications to various segments of the market, which include transportation, energy, security, healthcare and retail sales that use wireless technology. The company will also cater to government and commercial customers.
Hull said the market is ripe for M2M applications because businesses are looking to operate more efficiently. By 2010, more than 77 million devices will require a wireless data connection, according to research.
“M2M is the new new in the wireless space,” Hull said. “But it has been a market that has taken time to get a lot of momentum.”
Competition intensifies
According to a study by ABI Research, SkyTel will face plenty of competition in the market.
Mainstream operators and mobile virtual network operators are now targeting the M2M market directly and publicly, said Sam Lucero, an ABI senior analyst.
“Traditional mobile networks are raising the visibility of M2M efforts that are already pretty robust,” Lucero said in press statement.
Lucero said the reason operators are venturing into the M2M market, which is relatively small, is the core voice/data market is becoming saturated.
“Operators are looking for new areas that show high growth and, if accessed correctly, can return fairly high margins,” he said.
The research firm projects revenue from cellular M2M services will exceed more than $8 billion in 2012.
Hull said SkyTel has a leg up on its competition because the company owns its own network and can tailor it network to meet a company’s specific need. SkyTel’s network can also be used by carriers that use CDMA and GPRS technologies.
“We consider ourselves the best-kept secret in the M2M space,” Hull said.
