Onset Technology

began its life working on voice and handwriting recognition software.

Onset began its life in 1991 named Shonut Probabilistic Solutions. The company was founded by Gadi Mazor and Ron Maor to develop software solutions for voice and character recognition. At first the company carried out projects for American companies, which it met through the auspices of the Bi-national Industrial Research and Development (BIRD) Foundation. Proceeds from these projects, augmented by funding from BIRD, helped the company survive without placing equity with investors.

In mid-1997 Mazor and Maor decided to delve deeper into R&D. They knew it would be costly and incur losses. They set out to find investors.

First to hop abroad was Taiwanese hardware manufacturer MAG, which in 1997 invested $1 million. Products developed at this time were sold through OEM agreements to optical scanner producers, such as Hewlett Packard and Agfa.

From recognizing voices to recognizing all voices

At that stage Onset leadership decided to change focus. They chose to get into unified messaging.

The central concept of unified messaging software is to create a single "mail box". The box can store all types of messages, for the user to retrieve.

The sphere was very promising. The company decided to approach it from its own unique angle, using OCR technology - optical character reader.

Mazor clarifies that the company did not intend to build the actual UM box. It meant to provide value-added peripheral services, without which the promise of UM would be pretty meaningless. But create a UM box it did.

Not just a message retrieval box

Onset's development team wanted to enable enable the user to search for retrieve any kind of message using any kind of communication device. To date, most services in the UM arena enable all messages to be routed to a single box, but that's it.

The development problems were not trivial. To be able to store, search through and retrieve all messages, all messages had to take the form and characteristics of email.

This meant that the messages were to be assigned with specified fields, such as subject, time and date, sender, receiver, and so forth. Thus the messages could be stored in a database format, sorted though, and organized according to specific categories.

Converting text to speech, for starters

At first, the company got busy developing the technology that was to enable faxes to be retrieved by the unified box. This technology was dubbed ThruFax. In essence it facilitated the conversion of fax to voice messages and fax to email format. If a user wanted to receive a fax through an audio device such as a phone, the appropriate application was text to speech. ThruFax also allowed users to edit faxes and receive them in word-processor application format, a major added value.

Today's mobile community can view email through numerous applications and devices, such as PDAs and cellphones. But these devices are limited to the skeleton section of the message. Neither can display attachments or show added content.

That was exactly the problem that Onset wanted to solve.

The comprehensive solution: METAmessage

Onset did it. Its comprehensive solution, completed recently, was dubbed METAmessage, Message Enabling for Transmission and Action.

METAmessages are format-independent, and are accessible from any device. They can be transmitted via fax, e-mail, Web browser, voice mail or WAP device, and can be received by any other device. They can contain attachments such as Word documents, Power Point presentations, PDF files and so forth. The messages can easily be printed from any fax machine.

The next stage for METAmessages is to integrate voice messages in the UM box, so they too can be sorted, prioritized, and retrieved from any device.

"No one actually knows were UM profitability lies. It could be with the telcos, or with the communication infrastructure providers, or even with the ASPs," Mazor says.

Reluctant to gamble the house on one guess, Onset chose to release three versions of the product: one version for the enterprise environment, one for ASPs, and one for the telecommunication carrier server farm environment.

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In September 2000, Onset completed the acquisition of an Israeli firm called CMR. CMR specializes in fax over IP networks. At the time the deal was estimated to be worth $5 million, mostly in equity. But the final cost was apparently much less.

One round at a time

The merger with CMR brought Onset 20 more software professionals. It also received a fax gateway network spread over 20 countries. Onset uses the network to offer its customers access to hard copies of the faxes they receive on their portable devices.

Apart from the original $1 million invested by MAG in 1997, Onset raised an additional $2.5 million in 1998 from Dutch FLV fund. Mazor added that in 1999 FLV was able to open several doors for Onset, among which were

Cisco Systems

(Nasdaq:CSCO), and The Intel Communications Platform Program, with whom Onset maintains a fertile relationship.

Towards year-end 2000 Onset completed another financing round, securing $9 million from

Hollinger International

(NYSE:HLR), the Intel Communications Fund, and Israeli venture funds Poalim Electronic Communications and Challenge.

Among the company's strategic partners are

Lucent Technologies

(NYSE:LU), which attaches Onset's solution to its voice message boxes,

Intel Dialogic

(Nasdaq:INTC),

Jfax and J2

,

TelePost

, and all the leading fax-server manufacturers.

Financial results for 1999 showed a meager $1.5 million in income. In the past management expected 2000 sales to reach several million dollars, based on sales of ThruFax products and services. But the company will close 2001 on sales of only about $10 million. Evidently Onset doesn't expect to grow like a weed just yet, only when UM systems finally penetrate at the enterprise level.

A beautiful friendship with Lehman Brothers and Credit Suisse

Meanwhile, Credit Suisse and Lehman Brothers have adopted Onset's METAmessages system. It is safe to assume that Onset hopes this is merely the beginning of a beautiful friendship with major corporate clients.

In any case, Onset does not intend itself to provide UM service to end users, but to supply the infrastructure for doing so to UM providers.

The company employs 65 people, 40 of whom are based in headquarters in Herzliya, Isarel. The rest work at a facility in Santa Cruz, California.

The U.S. office is where most of the business development and sales activity takes place. By end of 2001, management intends to employ 100 people, half of whom would be based in the U.S.

For the moment, unified messaging seems to have turned tail and headed for the doghouse. But Mazor believes the industry is just starting to penetrate large organizations, a process that will take a few years. He has every intention of gaining a leading share of the message conversion market, including the nonexisting one. With an eye on the future, Mazor is eyeing the conversion of message types such as video.