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Friday, October 14, 2005 2:12:58 PM
HE WRITES:
Yes - The application would be big if they can get the carriers, Verizon Cingular etc to embed the software in the phones on thier network. However a Verizon could build ther own solution with Google or Microsoft and make it uneconomical for Neomedia to defend thier patent. The problem with software based internet solutions is sort of like the Vonage problem - if let say Verizon see a large loss of paying POTS line service to Vonnage which is travelling over thier DSL lines - it is a no brainer Verizon would be highly motivated to degrade the service and offer their own competing solution. Personally I would not be surpiirsed if voice service becomes a freebie in the long run. Unlike Vonage because we are a network we have peering arrangements which if honored would prevent Verizon from blocking our traffic - in the Vonage model they are subject to traveling over someone else's road.
Our alternative is based on the packets of information sent not how they are generated. Information travelling on the internet can be broken down into 7 layers. See chart. There solution deals with the application layer and ours is a network solution. The hardware portion is the transport layer. It can be patented but the network layer portion can not.
I WROTE:
Should I assume that neom’s potential should be assessed, not in light of its patents, but in its ability (or inability) to become the ubiquitous application, gets its software onto every handheld – in essence, to be the first application to market in this arena (in other words, just as Microsoft or Google don’t have ownership of the operating system or search space, still, they have become the only games in town, so to speak)?
HE WRITES:
Yes that would be how I would look at it. If they can win in court but no one licenses the technology what value do they have. Next so much stuff is being done to capture this future market which does not even really exist now. I am sure other competing technologies which don't infringe on the patents will emerge. To me getting the software on a device is not as crucial as getting a telco carrier to let it be used. I would want to see more deals like the Virgin Atlantic deal with other carriers. The thought from a network perspective would be the operator charging 10 cents or some fee for every look-up.
FYI - over 65% of the internet including Google uses Open Source Linux and not Microsoft.
From an investment point of view I have no idea how to assess this, however I am not aware of many penny stocks in tech that have become big corps. I am however aware of lots of tech stocks that ended up on the pink sheets
I WROTE:
Thanks Chase, for that very thoughtful piece. I guess the bottom line for me is getting your perspective on the tech that Neomedia offers (you see, it’s all about me and whether I can make money off this company’s stock price…). It sounds like you are offering an alternative that accomplishes the same end, without infringing on neom’s patents (Is my understanding correct here?).
Should I assume that neom’s potential should be assessed, not in light of its patents, but in its ability (or inability) to become the ubiquitous application, gets its software onto every handheld – in essence, to be the first application to market in this arena (in other words, just as Microsoft or Google don’t have ownership of the operating system or search space, still, they have become the only games in town, so to speak)?
Again, you’re the tech guy and I don’t have a clue as the difference between one system and another. As an investor, I am only concerned with whether or not these guys are substantially and protectively differentiated. If not, there are big players who could effect the same result (i.e. spearhead the mobile marketing paradigm). Are Neomedia’s patents of any REAL value here?
Thanks again. I know you’re busy; reply only as is convenient.
HE WROTE:
"What is in it for the network" is what I am betting on in building a structured wireless mesh for Central Maryland. We believe the revenue will be large enough that in a competitive situation we can and will offer free high speed access of over 1 Mbps up and down.
A network is very similar to any transportation system - it delivers goods and information. Computer networks deliver goods such as software, music, video or what ever else information a user can download. If it is too big to download, FedEX can bring it to you. Consider a network to be similar to a railroad or a toll road. I can block anything coming on or off the network if I run it. Presently you have already given implied consent to filter out some info coming to you over the Internet - SPAM. Perhpas in your hhome you fliter out other content like porn from your kids or you want it done.
Besides selling ad words Google, Yahoo & others makes revenue by directing a search to a particular web site. You type in a subject for a book, a link to Amazon comes up and if you click threw Amazon pays Google some money, around 15 cents in certain instances for the traffic. Google also sells adwords like Paperclick.
If you are on my network all of this occurs over my road. What happens in the background when you click in books or pizza is the packet of information containing that request is translated into a number which identifies the site you wish to go to. This is called a DNS server. That DNS server resolves the translation and issue of connecting the sender and receiver. To save on addresses most users connect with a dynamic address which changes periodically as opposed to a static address which is assigned. This is done by your ISP or ntwork administration to creat efficentcy. We have a patent pending solution called HOTWORDS that lets us send your keyword request to our sponsored links. It works with any device connected to our network, which is why I was interested in Neomedia and its patents. Our patent is based on core packet switching, a totally different solution than Neomedia which is based on the hand held device. It all happens invisibly in the background for the user in nanoseconds.
What we as the network get is a share in the ad income stream paid by Amazon to Google or Paperclick for that matter. We don't publicize this to users but we do promote this to investors. Most users reaction is that this is a violation of privacy. What most users don't realize is that this already occurs in order for the net to work, only no one is attempting to capture the income revenue to any great degree. Part of the reason they don't is because older technologies such as wire line and cable are "smart networks" and can't. We are building a "stupid network" which does permit this. "Smart networks" was a theory proposed by a senior tech analyst at AT&T who released an article to the Internet about "Smart Networks" and that the future was in "Stupid networks". AT&T fired him and he now teaches at MIT. AT&T continued building a Smart Network and I believe was sold this year and is no more. The tech analyst is now considered one of the Internet prophets for predicting the future. Anyway if Paperclick were to say I am prohibited from capturing part of the income stream for any legal reason, I can block them from travelling on my network for free.
Having all purchases show up on a phone bill, or a device that could point and make a purchase is interesting but presents a major security problem. I could easily get my bills to show up on your bill which I don't think folks getting the bill would like very much, especially since they would not have a clue about who charged the purchase. Actually present credit card technology is so outdated they are a real major security risk. However no one has yet to come up with a economically viable alternative and the presents losses to banks don't justify a massive switch in technology. It is cheaper to add in a fraud ratio on a spread sheet.
The present regulations by the FCC, the Supreme Court and Congress state that information providers, ISP own their networks. Thus Verizon can in a year kick off an ISP from their DSL lines. You don't need AOL to connect threw Comcast. If Vonage traffic goes across my network I can block it. What is in it for the network is revenue. If you travel on my road I want a fee. Next if I do the billing, a separate service than traveling on my network I want an additional fee.
We estimated it will cost around $45 million to build a wireless Internet cloud over Central Maryland. Our investors and I would like a nice return for taking this risk. Our costs are alot less than the $350 million Verizon estimates it will cost to bring fiber to the premise over the same area. The back end money that changes hand is enormous and growing and we have devised a means to take our share to provide the end user with inexspensive access. Sort of like the business model of breweries which bought baseball teams and build stadiums so they could sell beer and sold cheap tickets.
a little about us -
Woodberry WISP LLC, owns and markets breakthrough Wi-Fi network technology which will grow to speeds 30 times that of a typical cable connection, will be the wireless equivalent of fiber with greater security than online banking. Woodberry WiSP high speed wireless data transfer technology not only provides real synchronous broadband connections capable of speeds upto 45Mbps but also provides added features and services to enhance both the consumer and business use and expansion of the Internet.
Ultra High-Speed 45Mbps Wireless Internet
Woodberry WISP delivers superior performance, mobility, security and reliability. Woodberry WISP’s ultra high-speed structured mesh wireless network carries four levels of security, and runs at current speeds of 1.5 Mbps (upload/download), and is about to expand to 3 Mbps and has the capacity to expand to 45Mbps. It is an adaptable and scalable architecture so as technologies improve and speeds increase the network can be upgraded.
VoIP
Woodberry WISP offers Voice over Internet Protocol (VoIP) with unlimited national and Canadian phone call service for $25 for consumers and starting at $45 for business. This service includes a host of features such as Call Waiting, Call Transfer, Call Hold, Call Forward, Caller ID, and Local Number Portability.
Woodberry WiSP’s wireless network is capable of providing mobile VoIP. A Wi-Fi VoIP phone from Woodberry Wisp can be used anywhere under our cloud of coverage or any open Wi-Fi Hotspot in the world. As our coverage area grows and better wireless VoIP handsets are manufactured, this phone service will be able to compete with traditional cell phones at a fractional of the cost of cell phones and offer features such as voicemail, conference calling and calling forward as standard features. Woodberry WiSP projects that cost for a mobile VoIP phone with unlimited minutes capable of connecting to any phone in North America will be $50.
VoD, IPRadio, IPTV, HDTV
In addition to Internet access, and VoIP, planned future products will include Internet Protocol Television (IPTV) with up to 150 channels of television including HDTV, including a software based Digital Video Recorder (DVR). IPRadio, allowing our customers to listen to their favorite syndicated Radio talk show programs at a time of day when you want to watch or listen. The audio content will be capable of being downloaded to an Mp3 player or iPod or played on a mobile Wi-Fi radio. Our customers will enjoy Video-On-Demand (VoD) service that will allow you to choose your favorite newly released full-length feature length films for download and viewing. It is projected the costs of these services will be less than 1/3 of typical cable costs or telco DSL.
Woodberry Wireless is the technical group which along with strategic partners will develop and market add-on features and applications for use over the Woodberry WiSP network providing such services as home and business security and monitoring systems, network help, internet back end services such as hosting, domain name registrations & traffic and ad monitoring, e-commerce sites, web design, audio (podcasting) and video design and hosting over the Woodberry WiSP network that is being built. Woodberry Wireless also builds and designs PBX phone systems for business and local wireless networks, and can manage such networks for the client remotely, allowing the business to concentrate on it core effieceintcies and not IT management.
Woodberry Marketing is the technical marketing group that provides ubiquitous advertising and marketing over the Woodberry WiSP wireless network providing ad words and other sales generating techniques to our subscribers, along with secured e-commerce solutions.
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I WROTE:
Thanks for looking at it. The EFF claim has been debunked (to my
understanding): the prior art was some Harvard or MIT guy 30 years ago
who was putting for idea for tech involving transmitting printed word.
Your point about "what's in it for the network" is one that I haven't
seen fully resolved (I don't fully understand the business), but I'm
wondering if mobile commerce (the whole point of Paperclick) would
benefit the networks to the extent that all purchases show up on a phone
bill (I don't know this to be true, but I've heard it bandied about).
One of the biggest/most prestigious global marketing firms has been
working with neomedia for almost a year (Foote & Cone; mostly
Euro-based).
They are represented by a well-known patent firm out of Chicago on a
contingency basis only (they get paid only if they win).
These things, combined with the fact that the writing is on the wall for
the direction of marketing (mobile, with all its connotations for highly
specific targeting) got me thinking that there might be something to
this $0.40 stock (I bought at $.22, sold some at $.50, but was wondering
if the hype of it going into the stratosphere was potentially
well-founded).
Thanks again for taking a look.
(I just saw a PR released this morning: another world-leading marketing
firm, Arnold, has just entered in a marketing/co-branding agreement
w/neomedia)
If you want to poke around some due diligence links go here:
http://www.investorshub.com/boards/board.asp?board_id=2276
See you soon,
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