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Notify pins hopes on GroupWise, Wi-Fi

Notify Technology expects that its new support for Wi-Fi and Novell's GroupWise, along with the low cost of its mobile office product, will give it a competitive advantage in the crowded mobile e-mail space. According to The451, the company has a chance to succeed if it can make inroads into the GroupWise user base.

Notify Technology recently announced support for Wi-Fi networks and enhancements to its NotifyLink suite of mobile office products, extending NotifyLink support to all major wireless networks and devices. Built to work securely with all major back-office systems, Notify has also paid close attention to Novell's often-neglected GroupWise and has won the company as a customer and partner.

Context: Notify started life in 1994, offering voicemail and call routing/call center products, which it still sells, primarily to AT&T. These products account for 99% of its ongoing revenue stream, which was $2.9m in its second fiscal quarter, ending March 31, with net losses of $569,753. Company founder and CEO Paul DePond expects the wireline products to generate flat but ongoing yearly revenue of approximately $8m for the foreseeable future, which will continue to fund R&D for its mobile products until NotifyLink sales begin to generate self-sustaining revenues.

The company went public in 1997 and received $4.5m in a private placement in 2001, but was delisted from Nasdaq late in 2002 because of its inability to maintain the exchange's minimum share price and net asset requirements. It now trades over the counter. At the end of March, Notify had $578,834 in cash and equivalents and $500,000 in restricted cash. DePond says the burn rate was $95,000 during the company's fiscal second quarter, and that he is comfortable with Notify's current financial position. But he is crystal clear that Notify's future lives or dies with mobile.

Products: NotifyLink provides synchronized email and PIM functionality using a client that is customized for each supported device, which include RIM Blackberry and most Palm-based and handset devices. Select Pocket PC devices are also supported, with additional support for Wi-Fi-capable devices from Palm, Dell, HP, Sony and others is expected through the rest of the year. In addition to Wi-Fi, wireless platform support includes CDMA/1XRTT, GSM/GPRS, DataTAC, Mobitex and ReFLEX.

NotifyLink Enterprise Edition costs $10 per user per month and supports Microsoft Exchange, Lotus Domino, Novell GroupWise and NetMail, and POP3/IMAP4 environments. Exchange-only versions of NotifyLink are also offered for workgroup environments, small businesses and the professional consumer market, and are offered for $99.95 per year. Notify offers its customers a choice of quarterly billing or up-front payment for a year's service, but DePond anticipates that most new contracts will be prepaid due to the low cost.

Its push notification and over-the-air synchronization software interfaces eliminate the need for WAP and HTML browsing and cradle syncing of devices. The next major feature update, due out this summer, is scheduled to include support for attachments, full wireless bi-directional synchronization with desktops, and Bluetooth connectivity.

Strategy: Notify's enterprise sales strategy will be built around the low cost of entry and Novell support. With Novell claiming roughly 34 million GroupWise seats, this should be where Notify can exploit its differentiating GroupWise support, given the competition that exists in extending Notes and Exchange to mobile devices. Success or failure to land these GroupWise seats within the next six months will be a direct indicator of Notify's future.

The company claims 25 customers have deployed NotifyLink thus far, with another 40 currently evaluating it, including Hewlett-Packard and Sun. However, with only slightly more than $29,000 of second-quarter revenue ascribed to NotifyLink, that indicates the tiny nature of the deals signed so far. Of those 25, three quarters are GroupWise customers. Essentially Notify is still at the starting line in terms of meaningful revenue from its wireless products.

The key new customer and partner is Novell itself, which makes extensive internal use of Notify's support for GroupWise and Wi-Fi, and is now recommending NotifyLink to GroupWise customers. Novell's resellers are also beginning to push Notify in GroupWise environments and Notify claims that these resellers are beginning to generate solid leads on the order of about 20 per week.

In early May, Notify announced a partnership with Motient, under which Motient will offer NotifyLink Enterprise Edition to its large enterprise-level customer base. This is a much-needed step for Notify. The company's almost nonexistent marketing and sales capability is its major weakness and Notify must score many more of these deals to gain market awareness. Perhaps European mobile operator mmO2, which is renewing efforts to launch data services in the small to medium-sized business (SME) market with very limited device support, should connect with Notify.

Competition: Good Technology, Visto and RIM are Notify's direct competitors. These companies are well funded (in RIM's case, enormously well funded) compared to Notify. Good Technology and RIM have significant customer awareness as well. But they do not match Notify's capabilities on the back end. Good Technology and Visto, for example, only support Exchange, although Visto is currently developing Domino support.

Should Microsoft eventually provide its own Exchange-based mobile office tools that could be bundled with Exchange or provided as part of future Exchange upgrades, life could get difficult for vendors like Good Technology and Visto. Notify's back-end strategy should leave it positioned to tread in areas where Microsoft clearly won't be interested in going; and first mover GroupWise support should provide a competitive advantage if Notify can gain evaluations and convert them into sales.

Visto has very recently secured $30m in funding, and says acquisitions are on its list to fill gaps in its technology. Notify's GroupWise and Wi-Fi support could very well make an excellent fit for Visto.

The451 assessment: Notify must quickly create visibility for itself. Gaining traction in the GroupWise space, in particular, will be a first key measure of viability. The company is starting from zero in mobile sales and it is a serious question whether Notify will be able to weather consolidation, gain traction and find viable avenues of recurring revenue. If – and it is a big if – Notify can make inroads into the 34 million-seat GroupWise user base it may be able to turn the corner and create a mobile business revenue stream it can really build on.

The451 is an analyst firm that provides timely, detailed and independent analysis of news in technology, communications and media. To evaluate the service, click here.

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