Online and mobile services are reaching the profit-tipping point, writes Karlin Lillington
It's been a longer road than expected but Irish mobile payments company Valista believes the tipping point is fast approaching for the mobile and online payments market to take off - and for the company to go into profit.
"For the first time, we're actually seeing a pull in the market," says Mr John Hurley, Valista's vice-president of marketing.
He is predicting the company will go into profit sometime next year, carried along on a new consumer enthusiasm for and acceptance of mobile and online services and micropayments, largely kick-started by Apple's iTunes online music service, he says.
Valista - founded in 1999 as Network365 by long-time technology entrepreneur Mr Raomal Perera - is considered by both Irish and international industry observers to be one of the most promising young Irish companies.
In the past 18 months, the company has taken the top business application award from the Wall Street Journal Europe, has made US technology magazine Red Herring's list of the top 100 private companies and, for the second year, been awarded best mobile application developer at the annual 3GSM conference in Cannes.
Founder and chief executive Mr Perera - who last year was invited to be one of 40 global experts on the World Economic Forum's technology panel - is a Sri Lankan native who has roots that stretch back into the early days of the Irish technology industry.
He was also a founder in the early 1990s of pioneering Irish software company Isocor, an email applications company that created one of the key elements of the internet's email handling architecture. Isocor was sold with a valuation of $450 million (€369.8 million) to US company Critical Path.
Valista was formed in 2003 after the merger of Network365 and US payments company iPIN - though more properly, iPIN became an acquisition for Network365 that has given the company a needed entry into the US market.
Now with an office on the US east coast as well as in Silicon Valley, Valista is hungrily eyeing the vast US market. It already has done significant deals in Europe and east Asia, where it partners with Japan's DoCoMo, Vodafone, Orange, Wanadoo, 3, Tiscali and T-Online.
Perhaps because of Mr Perera's low-key management style, and the fact that the company's big wins are outside of this country, neither Network365 nor Valista ring a bell for many people in the Irish business world - despite the company's impressive awards list and deal-making.
One suspects the company was also wary of making big claims for a mobile and online services market that has been slower to build than initially expected in the heady dotcom days when Network365 was formed.
Mr Hurley is the first to acknowledge that Valista and Network365 before it have not seen the rapid growth that many in the sector hoped for, although it can boast that 150 million subscribers across 28 countries have access to its software.
"Yes, it has been slow but we've also managed our funds very frugally," he says.
Investors include Trinity Capital Partners and Enterprise Ireland here, and Amadeus Capital Partners , Accel Partners, Advent Venture Partners, Sutter Hill Ventures and Japan's JAFCO internationally. Valista's most recent round of funding raised $12 million in mid-2003.
Ringtones and game downloads helped create a mass mobile and online payments market, but it's not just teenagers any more, says Mr Hurley.
"The iTunes thing [which lets computer users download individual songs or full albums for a fee\] has really put a match to it."
He sees iTunes and Apple's iPod music player as "all about a lifestyle".
"That's how I like to position Valista - it's about a mobile lifestyle".
Valista's just-released software offering, OffersPlus, is meant to capture that notion of a lifestyle rather than once-off purchasing by enabling mobile and online operators to bundle together packages of services or products from different vendors in the way real-world merchants have done for years. Mr Hurley calls it "the Happy Meal marketing solution".
An operator could offer not just a J-Lo ringtone, but a coupon to buy the CD and an MP3 music download, he says, all of which might come from different vendors.
Valista hopes to capitalise on its software to enable consumers to buy what they want - and operators to sell it through a single billing point - meaning offers of content and services can be aggregated.
Operators will also be able to offer such services and products across geographies as mobile users roam into different networks, Mr Hurley says.
"Owning the customer" in this way is a holy grail for operators, who are eager to place themselves into the management and delivery of transactions rather than just be the "dumb pipeline" for them.
Mr Hurley points towards signs that one big hurdle for the payments market might finally get resolved: global technical standards are being negotiated for both the financial and delivery side of transactions through industry alliances such as Simpay and the Liberty Alliance.
And you can practically hear the company smacking its lips at predictions from Visa International that the transaction market will reach $397 billion by 2007. If Valista can position itself as a key supplier of transaction software into that vast market, Ireland may have its next major home-grown success story to hand.
Growth Sector
Transactions for online and mobile services will be worth circa $397 billion by 2007:
Source: Visa International
