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Metricom
Stop Trashing 3G

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By Metadope
March 6, 2001

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A lot of posters here spend a lot of time trashing 3G (3rd-generation wireless), and I'm here to tell you, respectfully, that this is a waste, a misplacement of focus.

First, understand that 3G and Ricochet have almost nothing to do with each other. Certainly they can both be categorized as belonging to the burgeoning industry collectively referred to as "wireless data," but they are in no way competing for the same market. Juxtaposing R2 and 3G is like comparing Sawtek (SAWS) and Lam Research (LRCX) -- yeah, they're both in the chip business (SOX), but they are not competitors.

I understand the psychological need to trash 3G, as the hype surrounding its always-impending deployment gets all the press, while the already-available (somewhat) Ricochet is largely ignored (or in any case, does not receive the same attention). This 3G hype can cause resentment, but that resentment is misplaced. It is like Harley-Davidson resenting Ford for one of its concept cars. Two completely different business models.

Understand that 3G is going to be a (qualified) success, but mainly because it is about increasing voice capacity. The focus on data (the hype) is distracting from the very real economic and technological benefits of 3G. The simple fact is, everybody wants a mobile phone, from my teenage nieces and nephews to their grandmother, and 3G as an overlay increases capacity at a reduced (though still substantial) cost.

But that is enough about 3G on a Metricom board, don't you think? Metricom's Ricochet is about wireless access, and those two separate words provide two separate focal points.

Let's move on to Seybold. Seybold was/is right on two points. He is right that Metricom's pricing model will inhibit a spectacular success for Ricochet.

R2, as a business-person's mobile access tool, can certainly "succeed" in that market with its current pricing -- but to grab the public's attention and to become something larger than a niche player, the pricing has to be adjusted. There have been several good suggestions here on how to adjust the pricing to involve other market segments; I would respectfully suggest that this is an issue, discussion of which benefits MCOM shareholders (as opposed to paying any attention whatsoever to Ford:-).

He is also (somewhat) right about the PDA vs. laptop focus. Here, real-world time-to-market issues make his complaint spurious and annoying -- we'd all like to see (and use) the small PDA R2 attachments that are currently being designed (aren't they?); to have those available now. This, however, is focusing only on the one word, the wireless part. Yes, it is half of what Ricochet offers, the ultra-mobility of data that has everybody excited (and which causes the 3G hype machine).

But in the real world, these things take time. The smaller mobile devices with R2 service are a sexy (and obvious) idea, but the focus on that future mobility detracts from the currently-available very large market: Regular people, like you and me, who are willing to pay (a reasonable price) for convenient and (somewhat) speedy internet access. These are not mobile users, unless mobile means "sometimes in the kitchen, sometimes in the dining room" (for home laptop users).

There is too much focus on the wireless (thus this board's undue attention to other wireless entities), and not enough focus on the access.

Perhaps an anecdote will help illustrate what I mean (sorry for the growing length of this post):

I have a 55 year-old friend, well-read but computer-illiterate, who has been hearing for years about the wealth of information that is available, "out there". Recently, he took the plunge, called me up and announced that he was the proud owner of a new computer, had his own email address, and was "online". He got the whole system, he said, for a few hundred dollars.

I knew immediately what he had purchased-- one of those packaged systems, where an access provider (Microsoft's MSN in this case) underwrites the PC purchase with a rebate (the sign-em-up-for-three-years business model). [Sounds suspiciously like getting a mobile handset for "free":-].

But his wife hates it, this new toy of his, because whenever he is online, making a long slow download of some SOTA web page, everyone calling their house gets a busy signal. Now, he is considering the addition of the second phone line, an obvious solution to his wife's complaint.

How I would have loved steering him to a package that contained a Ricochet modem, and an R2 service agreement! Take the installation and monthly cost of that second phone line, take the monthly fee for dialup access -- provide a much higher-speed access rate, and toss in a little in-house mobility -- voila, a feasible, cost-effective alternative that is even worth a few dollars more to ordinary people.

Here, on the other end of the market spectrum, far from the yuppies in the coffee house with their PDAs, far from the businessmen in the airport hotels with their expensive laptops, sits this mundane market, the serfs of the surfing world, people like my buddy, who have never heard of Ricochet, but would jump on it if it was available to them.

These are the people who truly snicker at 3G data (and they have that right), and their natural common sense makes the promise of 3G (and of R2) irrelevant. They don't care. They would ask the same pointed question, "Who needs it?" -- whether the wireless is at 14.4 Kbps or 2.4 Gbps. How much data does the ordinary person need to hold in the palm of their hand?

The sexiest part of wireless access is a decade away, as a cultural invasion and penetration -- but Metricom could be penetrating a very large market today, and become very successful almost by accident... simply by shifting focus from one word to another, from "wireless" to "access".

Stop trashing 3G. Pay no attention to the man behind the curtain. Ignore wireless data -- nobody (or hardly anybody) needs it today. Someday, we'll all wonder how we lived and worked without it, but that is then, this is now. The misplaced focus here, on the success or failure of 3G, is an indicator of the also-misplaced focus on Ricochet's small, mobile business market.

Hype is good. Hype is what drove the funding of R2's current build-out. The wireless data hype served its purpose. Now there is working infrastructure in place.

Now, throw the world a curveball, take the investment community by surprise, and delight them with a sudden and spectacular increase in subscribers and potential subscription market. Ignore the yuppie and the mobile businessman; treat them as the aftermarket, the extra niche that is also served (at an appropriately premium price). Get that Ordinary Joe, jump right over the cable and DSL and telephone companies, and show Joe how easy it is to bring the Internet into his house (if he is lucky enough to live within R2 coverage).

Then, tell everybody that you had this planned all along.

All of the above is just, of course, IMHO...