With Mobile Computing Vendors
Interviews Steve Simpson, CEO Extended Systems
Extended Systems is a company based in Boise, Idaho and has
research and development offices in Europe. It's core offerings are
Bluetooth SDKs and mobile data management software for mobile applications.
We interviewed Steve Simpson, CEO of Extended Systems in February 2001 to
get an insight its their products strategy..
Please give us a 5-minute introduction to Extended Systems – its
mission statement and vision giving highlights of its progress during the
past two years. Are you essentially on track from inception or has the
economic climate slowed your progress?
Extended Systems was formed in 1984 and went to the public market in
1998. We entered the mobile computing market with lots of experience very
early in 1990 with our short-range infrared expertise. Soon after in 1991,
we introduced software that allowed HP 95LX to communicate with printers.
We have also supplied software for Palm and 3-Com devices in the past.
Since our early days of mobile computing, we have learned a lot of the
good, bad and ugly of this field. As such, we have extensive engineering
experience in building robust solutions.
Given our experience and background with infrared short-range
communications experience, we entered the Bluetooth field with the
acquisition of Counterpoint Foundry. In 1997, Extended Systems acquired
Verta Software because it was complimentary to what we were doing. In
1998, we acquired Rand Software Data Systems and Van Bristol in the UK. We
intend to continue this strategy by bringing other teams on board to build
a strong base of engineering talent.
The Mobile Data Management program evolved later and has now become our
core offering. The result is that we offer solutions in short-range
capability coupled with data management infrastructure software.
Extended Systems is a strong viable vendor with $56 million in revenue
and 400 employees (185 in Boise, Idaho, 25 in Corvallis, Oregon and 35
R&D team in the UK). We also have developed sales and marketing
presence in France, Germany, UK, Singapore, Italy and Japan.
Originally, all of Extended Systems founders were from HP.
The wireless and mobile computing market is quite large. It consists of
a number of companies in diverse fields of IT and networking fields. It
touches on almost all aspects of business endeavor – front-end customer
service, backend application integration, server application development,
wireless infrastructure, networking and systems management. Please describe
your core competency and services – starting with your short-term goals
and how will these goals evolve into your long-term vision.
Our core competency is data management infrastructure software and
application development. This is coupled with our expertise in short-range
communications capability, especially in Bluetooth.
We are network–agnostic. We are not hung up on wireless alone. We
believe that all you need is an IP network to perform communications. It
is for the wireless network providers to provide an airlink.
Extended Systems supports all device platforms – PalmOS, Windows CE,
WAP, EPOC, and RIM Blackberry.
At the back-end, Extended Systems supports Microsoft Exchange and Lotus
Notes for office collaborative applications. We also support various DBMS-
based transaction systems, as long as there is ODBC support for these
We intend to provide an API (bridge set) to most popular application
Extended Systems goal is to continue to meet the challenges of device
reliability, security and application robustness, which represent the key
concerns of IT management.
Can you paint two or three futuristic scenarios utilizing your core
technology but integrated with customer applications?
We think that the ‘Future is Now!’ We want to enable mobile
smart telephone devices a capability to get at the corporate information
for sales force automation applications in both wireless and wireline
mode. Sometimes, it is in a "periodically connected’ mode, whereby
a salesperson could get updates in the morning on their Pocket PC, PalmOS
device and then resynchronize in the evening. For other applications, it
is in an "almost always connected" mode through wireless
networks. We say, "Almost always connected" because no wireless
network can guarantee always being connected.
For PDA and handheld communication, Extended Systems not only allows
communication from the smart phone through Bluetooth, but also facilitates
Our software restarts the synchronization process where we have left off
in a wireless communication – allowing checkpoint restart capability.
Extended Systems intends to develop a "persistent message recovery
engine" which is a sophisticated functionality. IBM’s MQSeries did
not meet our needs. On the other hand, IBM is using our XTNDConnect Server
under the cover, in WebSphere application server.
Our strategy has three points of focus – customer, enterprise IT and
strategic relationships with OEM, e.g. IBM and strong relationships with
application developers through the provision of SDKs, etc.
How big is this market? Who are the four major players? How many user
seats do you claim to have? What is Extended Systems’ market share?
The Bluetooth and XTNDConnect Server related markets are quite strong.
Growth expectations suggest that there will be an increase from $480
Million today, to 2.2 billion in 2004, based on IDC data using corporate
IT environments. We have already sold 60 Bluetooth licenses.
As far as number of seats, it will increase from pilot implementations
of hundreds of seats, to several thousand seats, in each enterprise.
(Declined to give information on the total market size).
We expect rollout orders from customers like Daimler Chrysler, British
Airways and banking firms in thousands.
Aether Systems, Pumatech, RiverRun, Waveware and Synchrologic are our
What sets Extended System apart in the market – key differentiators?
Imagine that you are pitching to a team of experienced consultants advising
a client on selecting asset management and application development software.
Can you support these claims as demonstrated in competitive situations?
Extended Systems’ customer and market focus.
We are not in the portal business like our competition.
Our technology sets us apart – that is why IBM selected our
XTNDConnect Server, under the cover. Palm recommends our server software.
We have extensive support of various device operating systems.
We understand the needs and requirements of IT corporations.
Synchronization of personal and business information at all times across
all devices that one may use is a difficult task. A professional may work on
a desktop, laptop and handheld device at different times. Your software
attempts to address this important need. Nobody questions the requirement.
Yet adoption is relatively slow. Why?
Adoption has been slow so far, but predict rapid increase in 2001and
Turning our attention to systems management – asset management
(hardware, operating software applications and database versions updated at
all times) is still another problem that you address. If IDC research states
that it costs 2500 per year per mobile device, why are we unable to sell
millions of seats?
Against these estimates by IDC, rule of thumb costs for our software are
in the $100 per seat range. These software costs will go down soon as the
adoption rate increases.
Remember that asset management is still a leading edge implementation.
Consequently, it will take time for widespread adoption.
Is enterprise market in asset management bigger than the consumer and
professional market (XTNDConnect Server) in your space?
It is true that the consumer market is bigger in numbers, however, the
revenue potential is smaller. This creates one of the best opportunities
for portals. We intend to supply to the portals.
Although the B2B market is bigger in the short run, the real opportunity
is in the Corporate Space.
Question # 9.
Are you trying to become a Wireless ASP or you will let the customer
manage its own infrastructure?
No, we are not going after this market.
Give us a sense of your sales success.
We have sold 60 Bluetooth licenses. WindTunnel is our nearest
We probably deploy more seats from direct sales and OEM sales.
Our revenue is split between Bluetooth and XTNDConnect Server - 1/3
Bluetooth and 2/3 XTNDConnect Server Business.
We have licensed XTNDConnect Server to a number of prominent OEM
You have gone into Bluetooth software development kit market. Is this
strategic and how does this tie together with asset management?
Bluetooth hardware costs are still too high. This is holding Bluetooth
technology back. There are two critical factors - availability of radios
and cost of these radios.
Bluetooth costs will decrease. Silicone Wave expects much lower costs by
the end of 2001. High volume shipment is close to the cost point; we
expect our costs to be 10-15% of the total implementation cost.
How do you stand in terms of financial stability? When do you expect to
We entered the public market in March 1998. From 1984 we have been
historically profitable. We are not profitable right now due to current
R&D and acquisition costs.
We do not need cash from the market. We have no debts; have $ 5 Million
in cash and a $10 million line of credit. Therefore, we are
Wireless & mobile computing market is hot right now. Every day new
forecasts come in from respectable market research companies and indicate
even greater numbers for wireless data. Yet, most of these forecasts have
not come true in the past except for the number of cellular phones sold in
Europe and Japan. Do you think that these forecasts are going to come
through even when we had an egg on our face with lots of dot com startups
and dismal track record of forecasts including those from established market
research companies. If our caution is unwarranted, what is so different in
the wireless and mobile market that history won’t be repeated?
Yes, we recognize a wide variation in forecasts. But generally speaking,
we do expect strong growth in this space.
Finally our industry has more startups than established companies. There
is an inherent danger in picking the right startup for a lasting and
reliable relationship. What advice can you give to our subscribers and your
customers while selecting their suppliers of core technologies?
When choosing a vendor, pick one that you feel is competent, one that
has longevity and a good track record.
Choose a vendor with strong endorsements from major systems integrators
e.g. IBM, Compaq and Microsoft who can legitimize the technology behind
Look at the vendor’s customer references to find out what their
experience has been with the vendor.
If you are multi-national, find out if your vendor can meet your needs
on a multi-national level?
MobileInfo Comments and Advisory
We have watched Extended Systems with interest during the past two years
as the company has been establishing a strong presence in the mobile
management and information synchronization space. Lately, Extended Systems
has announced a series of OEM relationships with several important players
like IBM, Intel, HP, Ericsson, Microsoft, Motorola and Symbol. With Extended
Systems’ engineering heritage beginning with a short-range infrared
communication, it was very appropriate that it delved into Bluetooth,
another ‘hot’ technology of 2000. Selling 60 software licenses in the
first year is a pretty impressive record, even though there are over 1800
vendors in the Bluetooth market.
It appears to us, that Extended Systems has a wider product coverage and
deeper engineering talent than many of its competitors. Extended Systems’
XTNDConnect Server series has a number of products. XTNDConnect Server is
the core offering in this suite, providing synchronization and asset
management functionality for operational applications. Its XTNDConnect View
product allows secure real-time access to groupware information for
both IBM/Lotus Domino and Microsoft Exchange from several wireless devices
- RIM and Palm VII handhelds, WAP and HDML mobile phones and more. Extended
Systems strategy to employ Certicom’s SSL security technology gives the
company a strong 128-bit encryption over the Internet to the wireless
network provider's access point. For those enterprises that have large
development shops, Extended Systems offers XTNDConnect RPM (Remote Procedure
Middleware) allowing developers the ability to create enterprise
applications. Extended Systems’ Bluetooth and IrDA expertise provides a
distinct advantage in developing SDKs, synchronization and device management
products for short-range communication.
We would encourage Extended Systems to enhance its asset management
products with problem diagnostic capability by building smart SNMP alerts in
client devices and to also building interfaces for enterprise systems
management tools like Tivoli, CA and HP. We see significant value in this in
the future. Another opportunity would be in the device management of smart
phones that wireless carriers and portals would need as m-commerce takes off
in the future. One requires nimble in-expensive management and configuration
information. It may come via SS signaling but it must serve a richer
functionality that business PDAs need rather than simple voice handsets. The
conceptual design for this technology should not come from
telecommunications carriers – who have a handset mental block and do not
understand PDA management requirements. From a software-engineering point of
view, we believe that engineering companies like Extended Systems can do it.
Extended Systems prides itself as an ‘engineering company’, first and
a ‘marketing company’, second. A company with software engineering as
its core strength finds it easier to deal with companies like IBM who have
more marketing expertise in terms of dealing with enterprise customers. It
is, therefore, not surprising that they have struck a number of impressive
OEM arrangements. Similarly, large systems integrators like EDS, and
Anderson (Accenture now) will find them good partners. However, Extended
Systems future success in selling directly to large enterprises is dependent
on the strengthening of its marketing team for enterprise customers.
We feel that large enterprises with development staff, systems
integrators and wireless portals should seriously evaluate Extended Systems
products, especially when selecting products and tool kits for building
Finally, our business intuition suggests that Extended Systems will
become a very attractive acquisition target for its larger OEM customers.
Extended Systems could fit in very nicely being a division of some of these
companies. In the interest of the mobile computing industry at large,
MobileInfo.Com would hate to see that happen because their engineering
creativity would be utilized to the benefit of one company rather than the
industry at large.
MobileInfo.Com thanks Steve Simpson, CEO of Extended Systems for this
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