When a West-coast US company pays $239 million (€229 million) to buy a company that has estimated revenues of between $5 million and $6 million and a product for devices that have yet to go into mass production, you just know the Internet is involved. And so it is with Phone.com's purchase of Belfast-based Apion last week, through a share swap deal. Both Phone.com and Apion are leading providers of software that allows mobile phone operators to offer Internet-like services via specially adapted mobile phones. The service, called WAP (Wireless Application Protocol), is already being launched by operators around the world, including Esat Digifone and Eircell, but the handsets are only beginning to become available.
Apart from buying 114 engineers with WAP experience, it is thought Phone.com saw Apion as its nearest competitor, and bought it to better compete with Nokia, the leading WAP player.
A statement from both companies said Apion had 10 mobile-operator customers, including Finland's Sonera and Swisscom, and that Phone.com will add these to its existing 22 customers. But industry insiders at the Telecom C99 show in Geneva were sceptical of these figures given that few mobile companies have yet launched WAP services. With the media in full swing hyping WAP as the latest hot Internet/mobile product, the public could be forgiven for thinking the full functionality of the Internet is about to land on mobile phones.
Think again. To get a feel for what WAP offers, imagine accessing the Internet using a computer with four lines of text on a narrow screen. Limit yourself to the painfully slow 9,600 bits per second connection most mobile phones offer, and pay higher connection fees into the bargain. For this, you get text-based e-mail and access to a limited number of text-only Weblike services chosen by your cellular operator.
"This closed system is only temporary," said Mr Chuck Parrish, Phone.com's executive vice-president, when asked about the limited access to services.
He said markets with one or two operators may offer competing services with exclusive access to different content providers, but third operators will lead to more open access to content, as is the norm on the Internet.
Mr Parrish said US operators such as Bell Atlantic, GTE and AT&T were already offering open access.
In Ireland though, both Digifone and Eircell offer access to a closed set of services, the mobile equivalent of America OnLine's abortive initial service whereby Internet access was limited to a pre-defined set of websites. It is understood that CNN, for example, refuses to enter exclusivity agreements with operators for its WAP content. Besides ensuring their content is available to all WAP users, another issue for content providers is how to make money from the new service. Mobile phone users may be willing to pay to access some services - Mr Parrish cited Webraska's traffic information service for example - but they are less likely to pay for information that is already free on the Web, such as news.
With Nokia selling its 7110 media phone, and rival Ericsson due to start shipping its R320 WAP phone in the first quarter of 2000, WAP's popularity will likely be determined next year.
Other manufacturers are also planning WAP products. Improvements in the technology to provide data access on mobile phones should improve the speed of the service in coming years.
WAP industry insiders say one of the biggest applications for the new service will be extending corporate e-mail to mobile employees such as sales staff. They say data traffic will account for 10 per cent of mobile operator revenues next year, increasing from 2 per cent this year.
But even given this, and the continued phenomenal growth of mobile telephony, Wall Street's $6.3 billion valuation of Phone.com is thought by some in the industry to be inflated. Much will depend on whether Phone.com can generate revenue streams from commissions on mobile e-commerce transactions, rather than just on sales of WAP servers.
Eoin Licken is at elicken@irish- times.ie
