From the 10K: Industry Overview
NeoMedia Mobile
NeoMedia Mobile (NMM) business unit encompasses all the technologies,
products and services designed to connect the physical world to the electronic
world, with consumer, enterprise, educational and governmental applications.
Being an early pioneer in the wireless solutions industry, NeoMedia has been
developing its PaperClick platform and applications since 1996. During that
time, NeoMedia has also established an extensive portfolio of intellectual
property.
The original commercial use of the PaperClick technology depended on
utilizing a scanning device (e.g. pen with scanner) to de-code printed codes,
which it would then link via PC to the Internet to enable the consumer to
retrieve extensive information on the Internet. With the advent and
proliferation of the cell phone, NeoMedia realized the immense potential to
reach consumers anywhere and anytime with a device that they carried with them.
This was further augmented by the escalation of camera phones in the marketplace
over the past several years. With the PaperClick platform, cell phone users (and
users of other mobile devices such as personal digital assistants) are able to
directly access the mobile internet in one step, via "texting,, "keying,"
"clicking" on printed barcodes or smartcodes, or "keying" in keywords or product
on their cell phones.
To accelerate NeoMedia's entry into the fast-growing and lucrative mobile
marketing marketplace, NeoMedia has made a number of several key strategic
acquisitions already in 2006: Boston-based visual recognition provider Mobot,
London-based applications developer Sponge, Aachen (Germany) based code-reading
specialist Gavitec and Munich-based award-winning mobile marketing agency
12Snap. All of these companies have proven track records in creating highly
innovative wireless marketing solutions that they have successfully introduced
into the market, on behalf of numerous household name consumer goods and media
companies in the US, across Europe, and in Asia/Pacific including Australia and
Japan.
NeoMedia anticipates further growth in the mobile marketing industry to
come from several factors:
(1) The increased growth of mobile subscribers, and those
subscribers accessing the Internet. According to the Cellular
Telecommunications & Internet Association (CTIA) and the
Mobile Marketing Association (MMA), there are over 1.9
billion-plus phones in use worldwide--more than TVs and PCs
combined, and, that by the end of 2008, it is projected that
more than 600 million phone users will have Internet access.
(2) Improvements in Infrastructure. The penetration of high speed
GPRS networks is increasing bandwidths, which in turn allows
more complex application development, faster speed and
enhanced user experience, resulting in mobile customers
embracing mobile content in ever greater numbers and
complexity. NeoMedia's 12snap unit, for example, is now
offering consumers in Germany personalized screensavers and
animations for their handsets..
(3) Enhanced Handset Functionality. Color screens and camera
phones are driving sales of mobile devices in the replacement
market. Worldwide, 295 million camera phones were sold during
2005, and that number is expected to grow to almost 750
million by 2009 (Source: Gartner Dataquest, November 2005). No
less than three products in NeoMedia's arsenal of solutions -
PaperClick, Gavitec's Lavasphere and Mobot's visual
recognition product are technologies that are designed to
bring enhanced user experience to consumers via the camera in
their wireless handsets. Additionally, in early 2006 NeoMedia
obtained a further U.S. patent covering the capture and
processing of bar codes explicitly from camera cell phones.
The Japanese and European marketplaces are leading the way in mobile
marketing usage and acceptance. In Japan, the use of 2D "smart codes" in
advertising and marketing has become increasingly more popular with subscriber
levels now approaching 10million consumers. Northwest Airlines recently ran a
30' billboard of a smart code in downtown Tokyo, promoting one of its Japanese
routes; according to The Wall Street Journal, "For Northwest, of St. Paul,
Minnesota - which last month filed for bankruptcy protection in the face of high
labor costs, soaring oil prices and intense competition - the [smart code]
campaign is a chance to boost its Japanese presence and its reputation as a
technology leader."
In Europe, two specific areas where mobile marketing has already proven
successful are SMS (text) and MMS (picture messaging) mobile marketing
campaigns. There, 40% of brands surveyed have already deployed text messaging
campaigns and 18% have deployed MMS campaigns (Source: Airwide Solutions Feb.
2006). This study also showed that by 2008, 89% of brands expect to use wireless
marketing campaigns to reach their audience, and in five years 52% expect to
spend between 5% and 25% of their marketing budget on the "Third Screen" as the
cell phone is now being described in marketing circles. NeoMedia, by acquiring
Sponge, Mobot, 12Snap and Gavitec in particular, has overnight become an
innovative global leader in creating and executing mobile campaigns and in
developing related content. From campaigns that 7% of the population take part
in - as was the case with a recent Walkers (Frito-Lay) promotion in the UK run
by its Sponge unit - to 12snap winning four prestigious Lions at the renowned
Cannes Advertising Festival, NeoMedia has added companies with wireless
solutions of the highest standard to accompany its groundbreaking PaperClick
technology, driving recognition as one of the lead players in its industry.
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