 | |
 |
Foxcom's founder stays in the lab
(October 31) -- Howard Loboda focuses on engineering challenges as his two
companies launch their most promising fiber optic products --
When US immigrant Howard Loboda set up Foxcom in 1993 his goal was light
years away from the stock market millions that drive the start-up
entreprenuers today. A recent arrival to Israel, he was horrified by the
poor salaries and concluded that the only way he could live here was by
setting up his own operation. His primary aim was simply to earn enough
money to get by.
For the first year or two the company - a specialist in broadband fiberoptic
access solutions for the residential telecommunications marketplace - was
purely project-based, bringing in money so that Loboda could begin R&D; on
his own products. Since then, however, things have taken off. Four product
families have been developed and Foxcom is now two companies after a sister
company, Foxcom Wireless, was spun off a year ago. Together the companies
employ 135 people and their combined value is some $70 million.
Though the two companies are now pursuing different paths in the field of
fiber optic technology, they are at a very similar stage in their
development. Both have promising products that Loboda says could be on the
verge of a major breakthrough in markets that are worth some billion dollars
each.
Now aged 41, Loboda is still very much the engineer. Originally he was chief
executive of Foxcom but decided, when the company divided in two, that the
only way to maintain his links with two companies was to take on the role of
chief technology officer at both.
The first product he developed for Foxcom was Sat-Light which was launched
in 1994 and began selling immediately. Sat-Light enables broadcast
transmission from satellites to relay stations in a range of 50 to 100km. In
1995 the company, which is based in Jerusalem, held its first private
offering, raising a modest $700,000 from Israel Seed Partners.
In 1997 Foxcom introduced RFiber, a point-to-point product that enables the
extension of cellular and other wireless services into urban and shadow
areas such as tunnels, railway stations, subways, valleys, and canyons which
are hard to reach. The product has sold well to companies such as PanAmSat
and GlobalStar, the latter of which has purchased $3.4m., of equipment from
Foxcom.
It was in 1997 that Loboda began to recognize a need to divide. That year
Foxcom began developing its two most promising new products: SDTV for the
DBS (Digital Broadcasting Satellite) market, and Litenna which was aimed at
cellular providers.
Though both products are based on similar technologies they are aimed at
completely different markets. If Foxcom wanted to continue along the same
path it would have had to try to cater to both these highly individual
markets at the same time.
Loboda and his management team realized it wouldn't work. "If you want to
make it big and create an impact then you have to be market-driven," he
says. "We wanted to create companies that were focused on their markets and
could grow independently.
"It was a difficult decision but I think it was the only decision we could
make at the time," he adds. "At that point we employed just 35 people. We
were very small and were trying to handle multiple markets at the same time
which wasn't possible in a serious way."
IN JULY 1998 Foxcom Wireless was spun off as a separate entity with RFiber
and Litenna as its two main product offerings. Sat-Light and SDTV remained
with Foxcom.
Since the break up both companies have seen tremendous growth. Foxcom
Wireless now employs 50 people and is valued at about $40m. In March it
raised $4.25m. in a private offering by Apax Leumi, Genesis, Israel Seed
Partners, and the Korea Technology Bank.
Its sister company now employs 85 staff members and in September raised
$8.5m., in a second round of financing led by Canadian fund CIBC, Genesis,
and the Orion AIG Fund. The company was then valued at $30.5m., though
Loboda says the value has risen since then.
Foxcom Wireless has sold products to companies such as Southwestern Bell,
PanAmSat, Lockheed, Scientific Atlanta, Alcatel Telspace, Astra, British
Telecom, and Singapore Telecom. Both companies have opened marketing and
sales offices in the US.
What is undoubtedly fueling this growth is the promise of both Litenna and
SDTV, which are positioned in two important emerging fields.
Litenna is a fiber optic technology that brings radio frequency (RF) signals
inside buildings, enabling wireless service providers and integrators to
offer customers complete cellular coverage inside high-rise towers, shopping
malls, airports, and convention centers.
At present in large buildings it is often impossible for users to make or
receive calls on the cellular phone because the building is creating a
shadow where radio frequencies cannot be picked up.
This lack of 100 percent coverage isn't just a minor inconvenience, it's one
of the major problems facing the cellular communications industry today.
"Coverage is one of the biggest issues among cellular operators," says Eyal
Levy, chairman of Foxcom Wireless and managing partner at venture capital
company Orion Israel Fund. "Today their main focus is on improving quality
of service and this means ubiquitous coverage. People want to talk anywhere
at anytime. Cellular operators provide good coverage outside, but inside
buildings the coverage is poor."
He also points out that the range of new services planned for cellular
phones, including data calls and access to the Internet also requires
complete coverage if they are to work successfully.
Foxcom Wireless, which is based in Lod, has just completed beta-testing the
product in the US, Canada, the Far East, and Israel, and sales are now
beginning.
Loboda believes the potential market for such a product is in the region of
$1 billion. We expect it to be a much bigger hit than RFiber," he says.
SDTV, Foxcom's latest product, addresses another significant problem - the
need to provide communication and entertainment services such as cable TV,
Internet, DBS, off-air TV, voice, and data to multiple dwelling units
(MDUs), which include apartment blocks, high-rises, and garden-style
communities.
Until recently individual service providers offered all these different
services separately. Now, however, convergence is occurring and service
providers are fighting over each other's turf. Cable providers want to offer
voice and data services, and vice versa.
The problem, however, is that most other systems on the market enable
transmission over copper wires only. These are old and do not have
sufficient bandwidth to cope with the variety of services that homeowners
demand.
SDTV is a high-capacity broadband access system that carries multiple
services to the MDU over a single fiber backbone. At present it only
delivers DBS, Internet, and off-air programming to households but in six
months or so it will also include voice and data services to the platform.
The product is being sold through distributors to service providers, who in
turn sell it on to property owners seeking to attract tenants by offering
the service.
"Convergence is our next frontier," says Loboda.
In the US alone there are over 25 million MDUs and projections show that by
2007 there will be nine million MDU subscribers to DBS services alone. All
will expect wide bandwidth services including satellite TV, advanced HDTV,
high speed Internet, and telephony.
Loboda predicts that the potential market for such a converged product is
well over a billion dollars.
Squeezing details of current sales figures out of the company is virtually
impossible. Loboda will say that the combined sales of both companies this
year will be in the region of $5-$10m., while Levy adds that sales at Foxcom
Wireless have risen by over 100% this year and predicts that they will leap
by 300 percent next year.
If sales were in the millions of dollars this year, he says they will be in
the tens of millions next year.
Loboda says he has no idea when either company will become profitable but
says he isn't particularly bothered. "It's not our dominant concern," he
says. "Our concern is to get good products to the market and we will reap
the financial rewards later."
THOUGH Foxcom and Foxcom Wireless may have promising technologies they are
not alone in their respective fields.
Foxcom's main competitor according to Loboda is Israeli company Orckit
Communications, which sells data and voice solutions to telephone companies
with copper wire infrastructures. But Loboda dismisses copper wire, however,
as an aging infrastructure and says that fiber offers a much higher
bandwidth.
US company Ortel, where Loboda led a fiberoptic design team before leaving
for Israel, used to be an important competitor, but Loboda says that in
recent years the companies are moving in different directions.
"The MDU market is a difficult niche. Not everyone can break into it and we
feel we have a good foothold," says Loboda. "From there we will see if we
can break out into larger markets. We are definitely the leader in the video
world and are now on the verge of entering the convergency world. Our goal
is to be leader of that world too."
"Foxcom has a tremendous opportunity to create a leadership position in the
convergence market," adds Levy.
Foxcom Wireless's main competitor is US company LGC Wireless. This company
was founded earlier than Foxcom Wireless and is better known, but neither
Loboda nor Levy think it has a stronger hold on the market. "We offer better
price performance than LGC," says Loboda.
There are many plans for the future but Loboda, who describes the two
companies as his children, is unwilling to do more than just hint.
In the case of Foxcom he believes that in a year or two, when the market is
ripe, the company will start marketing the SDTV solution to the
single-family-home market.
In a month or two Foxcom Wireless will set up a number of test installations
with 10 major operators in Europe. These include Deutsche Telekom, France
Telecom, and UK company Vodaphone. If these are a success they could lead to
some large-scale deals.
"Foxcom Wireless is on the verge of becoming a leading provider in building
coverage to cellular providers," predicts Levy. "The market is out there.
There are a huge number of high rises in the world and they are all going to
need Rf installations at some stage."
"There are a lot of good markets and not enough time," says Loboda. "This is
a very good time in the communications world. There are many tempting
opportunities in front of us. We have the luxury of choosing."
|
