LONDON -- If the success of a product depends on having a snappy acronym, then the WISMO card could turn its creator,
, a little-known French technology firm, into the
of the wireless world.
The WISMO, or wireless standard module, is a small device based on the
wireless communications standard. The WISMO incorporates all base-band digital and radio frequency hardware and software needed to turn any device into a digital wireless terminal.
Apart from enabling wireless voice and Internet handsets, the WISMO can also be used in a variety of devices, including vending machines that can automatically call suppliers when product runs low, video machines that can beam signals to different rooms, and devices in car dashboards that can tell the driver when the next restaurant is coming up on the road.
"Everything in the future will be a communicator. We will be surrounded by products that communicate," says Michel Alard, Wavecom's chairman, who founded the firm back in 1993, although the company didn't start making WISMOs until three years ago.
Alard likens the role of a WISMO to Intel's microprocessor. Computer companies in the old days used to make everything themselves. Now firms like
all use the same technological heart, usually an Intel-manufactured microprocessor, leaving the other computer firms to concentrate on design, branding and marketing.
"We believe the same thing will happen for the wireless market," says Alard. "The way the market evolves, the life span of a product is shorter and shorter, so it is impossible for a company to build and develop everything at the same time and stay ahead."
Alard says it can take a new entrant to the wireless market up to two years to develop the necessary GSM technology. But if a market entrant can outsource the software to makers of wireless technology like Wavecom, all the company has to do is make the ear set, the keyboard, the battery and the plastic casing.
And that's exactly what companies like the Japanese electronics giant
Riding the Wavecom
In February, NEC announced it was buying 600,000 WISMOs to develop its new mobile phone. That announcement was followed by the news that Wavecom had sold another 100,000 of the devices to the German phone company
This caused a measure of excitement in the market. Wavecom's share price rose nearly 10% on the news of the Funkanlagen agreement, and the price has risen 800% since the company floated 30% of its shares last June, giving it a market capitalization of around $1.6 billion. The shares closed Friday down 8.2 euros at 107.
Future growth prospects look especially good in the Far East.
"The WISMO is especially important for Asia," says Randy Abrams, analyst with
Credit Suisse First Boston
, which is among Wavecom's bankers. Abrams has a buy rating on the stock.
In Asia, especially in South Korea, mobile phone vendors are gradually switching to the GSM standard as opposed to the CDMA and TDMA U.S. standards. "If
the phone companies wanted to come to market with their products quickly, WISMO would be a good idea." Abrams said, adding that he expected to see some more WISMO deals in the region in the near future.
The main problem for Wavecom is that to become widespread, the manufacturers of such products as television sets and vending machines will have to make them WISMO compatible. And having a good product -- and indeed a catchy name -- does not necessarily guarantee this. For example,
found to its chagrin that it took five years and three major revisions before its Windows technology gained acceptance.
Yet Florence LaGrange, an analyst with
in Paris, is hopeful.
Wavecom did with NEC and Funkanlagen were great. They show their product has been accepted," LaGrange argues. ABN has no investment banking relationship with Wavecom and LaGrange has no rating on the stock
For investors in Wavecom there is a more short-term concern. The number of traded shares is small and, therefore, the shares are not very liquid and are prone to volatility.
Perhaps the hope that Wavecom will become the Intel of the wireless world is a little optimistic. Yet with the advent of third-generation mobile phones and no competitor to speak of, the company's prospects look good.