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Gauging the mobile Net's future

Openwave CEO Don Listwin says the revolution is already happening--in the guise of 2.5G--and it's time to pay attention.

When Don Listwin talks to Wall Street these days, he says something that an increasingly smaller number of his colleagues are able to say: Our revenue projections remain on track.

That's because as chief executive of Openwave Systems, Listwin is riding the crest of the wave of the increased popularity in mobile Internet applications. The company, created by the merger of the former Phone.com and Software.com, builds mobile phone browsers and gateways to servers to facilitate wireless browsing.

As pertains to 3G and the full spectrum of next-generation technologies, I think the wireless technology (industry) got caught up in the exuberance of the '90s. I wouldn't characterize it any differently than that. There was enough (blame) to go around. Like many companies in this battered sector, Openwave has had its fair share of ups and downs. The company's stock trades a few cents shy of $16, compared with its 52-week high of $126.88. Stock vagaries aside, the 42-year-old Listwin is betting on the strength of the company's technology to carry it through the current tempest.

But Listwin, a well-regarded executive who spent ten years in the trenches at Cisco, will be sorely tried in the months ahead as mobile Internet phone sales remain hostage to the larger--still cloudy--macro economic picture. What's more, the much-touted advent of the 3G era seems at least another couple of years away. And with handset design remaining somewhat clunky and always-on status still elusive, selling customers on these shores, at least, on the benefits of mobile Internet telephony, will present challenges for all the companies competing in this sector.

CNET News.com recently caught up with Listwin to get a status report on his company and the evolution of the mobile Internet.

Q: When it comes to mobile Internet and cell phone technologies, a lot of U.S. companies have developed the technology but then it seems they go to Europe or Pacific Rim countries to cut their teeth. Only later, do they offer it up here. Is that order ever going to change?
A: The market still develops in Japan and the U.S. is the last (one) focused on adoption. That's changed noticeably in the last twelve months...But in the U.S., we need to work on having sexier handsets, which will drive the adoption rate.

Has the mobile wireless industry fallen victim to its own unreasonable expectations, and if so, who should shoulder the blame for the overkill?
I would segment what you said into two key slots. It's been dramatically proven that mobile services on 2.5G networks have been outstandingly successful and profitable. What the industry recognized is that it shouldn't have named it a half step (between 2G and 3G). It's a full step and an important one. As pertains to 3G and the full spectrum of next-generation technologies, I think the wireless technology (industry) got caught up in the exuberance of the '90s. I wouldn't characterize it any differently than that. There was enough (blame) to go around.

I keep hearing how the next generation of cell phones will be Internet enabled, but I'm still waiting for the big breakout. When is the hype going to give way to the real deal?
We think Q4. In the mobile Internet in the U.S., it's sort of like your IBM 3178 screen: The green screen with no graphics, menu or mouse--a pretty crude experience. By comparison, in Japan, the analogy I'd make is that it's color-based, Windows with Explorer, to use the PC metaphor. And so it's sort of like saying that computing didn't take off when IBM had a closed, ugly environment. In Europe, there are always-on networks and there's a great handset experience where the user doesn't have to be a geek to make the things work. Those handsets are on their way.

A lot of people have weighed in on what they believe will be the preferred type of device--be it cell phone, PDA, Dick Tracy wristwatch in this mobile Internet future. Why won't all three--or more--wind up being used?
All of them. When something reaches high utility, the market gets specialized and we'll see that. Ninety percent of the volume on a global basis will be predominantly in the form factor of a phone with the ability to have mobile Internet applications with it.

From where you sit, what are the big obstacles remaining for the mobile Internet to really break out?
If I had to pick one thing, it would be the handset. But to talk about technology and the value chain, handsets that are compelling to use and having an always-on network.

this vision of streaming video going to the handset--I don't know we're going to see that in the foreseeable future, even in this decade, because the bandwidth is not here.When do the early adapters give way to the folks in Peoria?
I think we've already passed the early adapter stage. There are 30 million mobile Internet users outside of Japan.

So, when we're all wired up and ready to go, what are they going to use it for primarily? Games?
Entertainment is absolutely a big category. If you look at the market and analyze, one of biggest things is downloadable ring tones. Personalizing the phone--and this is one thing that Nokia, for example, has done such good job in that they understood it's a personal lifestyle tool.

When does it become something that consumers and businesses use in a bigger way?
Consumer adoption is in a couple of areas--information and entertainment, which becomes bundled into the service offering. The other is a communications offering. One thing that I think will take fire is instant messaging. In Europe, one of the huge things is SMS, so you can send short messages for ten cents. This will be the big, next step. But it's not useful unless the phone is always on. On the enterprise level, there needs to be some level of application integration and higher-level security.

How far away is 3G and what do you think needs to happen to get it going?
To some degree it's a semantics issue...people in Hong Kong and others are going to the next generation. But this vision of streaming video going to the handset--I don't know we're going to see that in the foreseeable future, even in this decade, because the bandwidth is not here.

Is there any future for WAP in its current incarnation?
Absolutely. There's a big misunderstanding. WAP is really like the IETF; it's a forum and protocol definition. It got branded by the industry as the experience. It's not; it's the underlying technology. What happened is we made the mistake of lumping those two things together.

In Europe, there are always-on networks, and there's a great handset experience where the user doesn't have to be a geek to make the things work. Those handsets are on their way.Openwave has been among the most aggressive companies in signing up developers to work with its software standard. And your wireless Net browsing software has been adopted by most of the largest mobile phone carriers in the world. Do you believe you're now the closest thing to a standard Net software that exists for the wireless world?
I think the answer is yes but what we're trying to do and express in our name change is the belief that the open standards approach is the right way to approach a market...We'll get our fair share along the way.

How will the technology develop, that is, you make mobile phone browsers and gateways to servers for wireless browsing. How do you think the innovation is going to manifest itself for regular users?
In the first half of 2002, you'll see support for customers of integrated messaging technology that makes it easier to extend current messaging onto your phone. One example, the way our Internet messaging works, you could be on the phone, having an IM chat with someone at work, walk into your home, turn on the PC and keep the chat going.

You've remained profitable since fiscal second quarter of last year. In that time, the telcos have been whacked hard and the sales in the sector have taken a fall. Are you sticking with your current sales and earnings projections?
We're staying with 43 cents per share earnings. We told Wall Street that 10 percent to 20 percent growth will be on the low end of the quarter. Not to say it's not a struggle day in and day out, week in, week out. We're one of very few companies maintaining our guidance.

How has the slowdown affected the pace of acceptance of wireless internet usage?
The ability to sell technology for technology's sake has entirely changed. You can't sell to the CTO anymore; you have to sell to the CEO.

You're a former Cisco exec. Do you think your former company will ever regain its luster?
I think Cisco has been and will continue to be a world-class company. We all need to be mindful, looking at companies with the eyes of the late 1990s. I' m not sure any of us will get back to that level of exuberance.

Seems that a fair number of Cisco execs are becoming former Cisco execs. Is there a brain drain in the making?
In all companies, there are ebbs and flows. Clearly, this change in the market environment causes people to think about what they'll do and do next. I think it's just the normal change of companies.

One of your extracurricular activities is your role as chairman for NetAid. This is part of a drive to use Net technology to help wipe out global poverty?
The idea is to engage them in programs that have a long-term view of wiping out global poverty. It's hard to quantify but one measure is the number of people involved in advocacy. The other program is online volunteering and we have a lot more volunteers than programs.

Have your fellow CEOs in Silicon Valley gotten the spirit yet or do you still need to do some more evangelizing?
I think we need to do more evangelizing. We're launching a program called the global schoolhouse to get kids in developing nations into schools, and one of our new programs is to get corporations more involved. We're going to organizations who have global constituencies, and generally they're looking for programs to get their employees engaged on a global base.

So how are you doing?
How are we doing? Well, like any dot-com, we've realigned--but we're doing well with funding. And we've got a lot of people focused on making this into a go. We've got bright, talented people and think we can get some engagement going.