Ericsson-Synergy; changing, not drowning

Synergy chief David Irving will not entertain talk of the demise of the Ericsson-Synergy (ESL) mobile business joint venture. "This is a change," he says.

Synergy chief David Irving (pictured) will not entertain talk of the demise of the Ericsson- Synergy (ESL) mobile business joint venture.

“This is a change,” he says.

The change sees the joint company, not yet two-years-old, stripped of its staff and its further development and marketing effort reorganised as a “business unit” of Synergy. The ESL entity will remain as a holder of intellectual property and a marketing vehicle and will continue to have its own board, of which Irving is a member.

ESL was set up on what was perceived as an “emerging market” in mobile applications, founded on the concept of “third-generation” (3G) use of radio spectrum Iriving says.

“History shows that market hasn’t emerged quite as expected and the telcos haven’t implemented much in the way of 3G.”

In the face of that shortfall in growth, it simply makes sense to restructure the relationship with Ericsson as a partnership rather than a joint venture, he says. If the market had allowed the promised company of 120 developers to emerge, then a discrete entity would make sense; but present staff levels of 20 simply do not justify the overheads of a separate operational company.

“We have developed successful products and applications, and will be selling them through Ericsson-Synergy,” Irving says.

The market is two-fold; ESL has developed middleware to buffer mobile applications from changes in telecommunications services, giving them a consistent interface to "plug into". This has been successfully marketed to state-owned Chunghwa Telecom in Taiwan.

“There are a number of other opportunities in the market and some of these, we hope most of them, will materialise.”

Irving says ESL is actively involved in a “handful” of opportunities.

The other side of the picture is a repertoire of applications directed at corporate clients and their staff on the move. That corporate market will be the direction of the partnership's future.

Irving as Synergy chief is, naturally, concerned about the negative effects in the market of the impression of a failure.

“That’s why we’re spending time with influential people like [journalists] to get the story straight. Of course we’ll be accused of being ‘in denial’, and we have to say ‘no we’re not’.”

Synergy itself was the subject of rumours in recent months, that management had consulted a merchant banker to ready it for sale. Those stories were worrying and have no foundation, Irving insists.

“In fact, if you can get your sources to firm up the story and tell us what merchant bank it was supposed to be, we’d love to have a talk with them; because we don’t understand where the rumour came from.”

Does the restructuring of ESL signal the beginning of a deflation of the m-commerce bubble?

“I don’t think there was an m-commerce bubble. It’s still a market that’s not yet emerged. If it never comes to fruition, then some telecommunications companies have spent billions of dollars for nothing.”

He doesn't believe that is the case.

“The capabilities that mobile internet allow will offer some [fruitful] applications at some stage.”

There is a need for companies to disseminate information to their people in the field, and to allow them to process that information with applications. As bandwidth increases, the sophistication of that information and those applications will increase, he says.

As far as ESL is concerned, “we’ve been in existence for just under two years; we made a loss the first year and a profit the second. We’ve turned over $7m and we’re just about at break-even,” he says, declining to say which side of break-even the company will reach after the two years. It has accumulated considerable assets in the form of software and international contacts, “and that’s not bad.”

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