724 chief says North America a wireless laggard

Not betting too much on North America too quickly, and concentrating on technology rather than the market, is how John Sims plans to bring 724 Solutions to the forefront of the wireless movement.

With little more than six months under his belt as president and CEO of Toronto-based 724 Solutions Inc., a supplier of wireless infrastructure and applications aimed at the financial services sector (and which helped establish the Bank of Montreal’s wireless banking service, Veev), Sims has seen a lot of changes take place.

At one point Sims was vice-president and general manager of worldwide telecommunications for tech pioneer Tandem. This time last year he was president and CEO of another wireless software company, Austin, Tex.-based Tantau Software Inc. – a company he co-founded.

724 acquired Tantau last November, and Sims landed at the helm of the combined company.

“It changed the company by very quickly giving it a global feel,” Sims said during a recent interview with IT World Canada. “724 was still very much focused on North America. Ninety-five per cent of our business in the pre-acquisition phase was North America. In Q2, which we ended in June, 40 per cent of our business was outside of North America. That’s a very dramatic shift.”

In recent months, 724 signed agreements with the Asian division of the Bank of America and Hanvit Bank in South Korea.

Sims said establishing a global presence is important for 724, given the nature of the wireless industry. Until now, computing revolutions – such as the rise of the PC or the Internet – arose from North America, and in particular Silicon Valley.

Not so with wireless. In Europe, Japan and several other Asian nations, citizens can easily access the Internet on cell phones, download streaming media and even do banking.

“It’s an unfamiliar position to be in, because North America likes to lead the world in everything,” Sims said.

One reason is standards. Most European nations have adopted GSM (Global System for Mobile Communications) as the wireless standard of choice, allowing citizens to cross borders and still access their cell phone service. Although no standard is enforced in Japan, NTT DoCoMo Inc., its primary telecom provider, is so dominant that whatever path it chooses becomes the de facto standard in that country, Sims said.

Here, however, no single standard is enforced, so, as Sims explained it, when he arrives in Toronto from Austin, he can’t use his wireless provider to log onto the mobile ‘net.

That’s created a chicken-and-egg scenario – no single standard means few users of the mobile Internet, which means vendors don’t bother targeting this side of the ocean.

“So the devices that have come to the market first for the mobile Internet were not in the CDMA (Code Division Multiple Access) or TDMA (Time Division Multiple Access) networks of North America, they were for the GSM markets of Europe,” he added.

GSM and another standard, FDMA (Frequency Division Multiple Access) are also in use in North America, making for a technology gridlock.

Still, Sims said it’s simply a matter of time before the logjam is broken. What it will take is increasing consumer demand, which he sees evolving over the next two years, as well as the better bandwidth and packet switch networks that come with the 2.5 generation of networks, currently being implemented across Canada and the U.S.

What will users demand of the wireless Internet? Many experts have been leery about the prospects of m-commerce, as it’s been dubbed, questioning the consumer’s willingness to shop via handheld devices – a sentiment with which Sims agrees.

“I don’t have a vision that people will fire up their phones and say ‘let’s go shopping,'” he said.

Instead, the concept, according to Sims, is to offer very precise services targeted to very particular market segments; for example, a paid service whereby soccer fans get to see immediate replays of matches.

On the business side, Sims said 724 has noticed the slowdown gripping the tech industry, but didn’t classify it as a major concern.

“Our deals tend to be reasonably good-sized, and there were a number of large deals that were taking longer to close, and that was the source of the slowdown,” he said.

“We see a little lumpiness in the way deals come to closure, and we see that primarily in North America.”

Sims said 724 is better off than many of its competitors, and has an ace up his sleeve given the cash-rich, blue chip financial institutions that make up the bulk of the company’s clients.

“We’re been very strong in financial services . . . (and) we’re in the process of expanding our business into the m-commerce market, and the primary target there is the mobile carriers.”