Wireless Technology An Entrepreneurial View

1. Wireless TechnologyAn Entrepreneurial View Michael Hathaway Venture Partner, Austin Ventures

2. Wireless Explosion Wireless Markets Are Dynamic • Growth markets in wireless technology include: • Digital Mobile Telephony • Wireless Ethernet (802.11x) • Wireless Mobile Hand held computers • GPRS • Convergence is happening in wireless first • Integrated voice and data WHY?

3. Why So Much Wireless Activity? “Wireless technology provides real solutions to real problems that consumers are willing to pay for. End of story!”

4. An Entrepreneurial Approach • First of all having a vision is essential. • Secondly technology is good… • But technology alone is insufficient • Thirdly, think beyond the hype. • What is really needed? • What will actually work? Can it actually be built? • Who is the customer and how much are they willing to pay? • Identify what can be leveraged • Time to market, technology barrier, etc.

5. VisionExploring The Possibilities • Ubiquitous Wireless Service • Quality, integrated wireless services everywhere • Fully integrated services and devices • Media integration Voice, Video and Data • Service integration – email, vmail, document access, etc. • Integrated devices and integrated device communication • Security differentiation • Better than “legacy” wired communication mediums. • New and improved devices and interfaces

6. RealityBusiness and Technical Challenges • Infrastructure is inadequate • Capacity is constrained, bandwidth limited • Frequency spectrum is rationed • Stringent investment community standards • Un-profitable businesses are punished • Un-profitable IPOs are a thing of the past • Venture capital setting a higher bar • Requiring experience,competitive barrier, and profitability • Established vendors/operators are playing it safe • Tending towards small, evolutionary steps

7. RealityNetwork Operators Under The Gun • Subscriber revenues are declining • Willing to pay less each year for commodity services • Specifically Internet access and mobile phone services • Operators want new billable services to add • Appetite for investment in capacity is low • Need to leverage capacity that exists Operators want new, billable services… Without having to invest significantly in infrastructure!

8. Categorizing Opportunities • Disruptive • Obsoletes existing technology • Digital Mobile Telephony replaced analog • 802.11x • Evolutionary • Enhancements to existing technology • 802.11a – increased bandwidth over 802.11b • Text Messaging added to digital telephony • Integration • Combining technology to create new product offerings

9. OpportunitiesEnhancing Existing Services… • Video/Satellite broadcast • Adding bi-directional data flow and interactivity • Mobile Telephony • Better Service by improving range, density, quality • Integration with data • Wireless Packet Networking • Reduce power, increase range, integrate security

10. OpportunitiesPractical Solutions Short haul consumer market • Eliminate wires: Infra-red, Blue Tooth, etc. • Integrated wireless links between devices • Security Enhancement and integration • Simplification of administration • Integration of encryption/authentication/policy mgt. • Client/End user • Power reduction,Miniaturization and cost reduction • Display enhancement

11. OpportunitiesNext Generation • Broadband Wireless • Convergence of voice, video and data • Broadcast media integration • Integration of satellite and terrestrial networks The Final Realization Of The Wireless Vision!

12. Rules For SuccessIncreasing Density and Capacity “Capacity problems are best solved by increasing capacity” • Spectrum limitations must be solved • Band aid solutions are not sustainable • Many solutions intrude on neighboring vendors/networks/solutions • Increasing spectrum is the ONLY long term solution • Bandwidth constraints • Best solved with added capacity • QOS only helps when congestion has already occurred • Customers don’t pay more for better class of service • They simply change vendors until they’re happy

13. Rules For SuccessWirelessSecurity “Encryption in and of itself, is not security.” • Essential security components need development • Service Permissions • Who gets access to what data and services? • Authentication • Are you really who you say you are? • Network protocol and data security • Is someone watching your activities? • Can your key be hacked? • Can your network session be spoofed? • Integrated management and account administration • Administrator must easily add, delete and change accounts

14. Rules For SuccessSimplification “Do not expose the customer to technical complexity.” • Example: Early Deployments of DSL • Difficult to deploy • Complex to manage • Capacity constrained • Resulted customer dissatisfaction • 3G – can we avoid another DSL experience? • New, complex services vs better existing service? • Capacity is still constrained • Japan’s 3G killer app – free text messaging • Vodaphone’s difficulties in deployment in Europe

15. Rules For SuccessSizing Development Efforts “ Keep tasks bounded and well defined.” • Clearly defined development effort • Believable schedules • Sensible staff requirements • Integration with existing platforms • Well defined interfaces are essential

16. Predictions • 2.5G will prevail • It’s a logical incremental, evolutionary step • Will people really pay more for 3G services? • WI FI will evolve into a service • Technology hurdles are surmountable • It’s here, it works and it’s simple • Integrators will seize this opportunity • At some point broadband wireless will happen • And it will evolve out of 2.5G and Wi Fi The industry will evolve on a path of least resistance

17. Summary • Having a vision is better than not having one! • Having the correct vision is even better • Hype generates media attention, not profits • Wireless broadband can and will happen • Enabled by existing technology and integration • Simplicity will prevail • Packet based networks • Intuitive, useful services, available on appropriate devices • Services that are easily managed and billed for