Ontela. Perlego. Opanga. Gist. Zumobi. Swype. Impinj. Geopage. Motricity. Medio.
Sounds like the dessert menu at an upscale, tropical bistro or an indie rock weekend lineup. Actually, these names are mobile and wireless businesses that reflect a vibrant and uniquely symbiotic slice of the Northwest economy.
Like the constellation of software enterprises that coalesced around Microsoft, the still-rising Northwest mobile and wireless ecosystem creates a regional specialty. At the same time, it spices up the area's economy.
All the ingredients blend like a masterful soufflé: large anchor companies spinning out skilled entrepreneurs, venture capital, an environment conducive to innovation and incubation. The result: new wealth and local jobs in the midst of tough times.
Consider:
- Clearwire Inc., founded in Kirkland in 2003 by cell phone pioneer Craig McCaw, provides approximately 1,700 jobs, and posted $68.8 million in revenue for the third quarter of 2009 and offers high-speed wireless internet services to about 475,000 consumers and businesses in the United States and Europe.
- Bellevue-based Snapin Software, which provides instructional software for smartphones to customers such as Bellevue-based T-Mobile, sold itself last year to Nuance Communications for $180 million.
- Seattle-based QPass, which handled billing for small web purchases before seeing revenues plunge during the dot-com bust, reinvented itself as a mobile billing and digital content distributor. In 2006, it was sold for $275 million to Amdocs, where its technology processes mobile transactions.
The Puget Sound region's success in the wireless sector has been driven by the unusual concentration of wireless and software talent that migrated here over the years as well as the large number of local companies in the full spectrum of technologies that play strategic roles in this rapidly expanding industry.
If you were to look for "the confluence of carrier DNA, software expertise and internet business experience," you would have to go to London to find a more dense contribution than Seattle, says Thomas Huseby, managing partner of SeaPoint Ventures, a venture capital firm that has invested heavily in the wireless sector. "You can't find it in any other city in the U.S."
Huseby has co-founded or managed several wireless companies and now serves on the boards of half a dozen startups. He is currently chairman of three wireless startups, including Ontela, which makes photo software for camera phones, and Zumobi, which creates social networking applications for smartphones.
The Puget Sound region is a particularly strong beneficiary of a relatively new trend: growing use of the cell phone as an all-purpose computing and communications device.
Apple's iPhone and Research in Motion's BlackBerry deserve the lion's share of the credit, and much of the profits, for igniting the trend. But the global adoption of wireless telecommunication plays nicely to the strengths of the Puget Sound tech sector with its extraordinary mixture of software companies, cell phone operators and venture companies. Today, there are about 4 billion cell phones, and four times as many people have access to cell phones as have access to personal computers. As a growing number of those phones are traded in for smartphones, the number of customers for software and various web services will explode.
"Everyone is talking about the mobile internet and we are right here at ground zero," says Huseby.
"Mobile technology industry has grown substantially," notes Ken Myer, president of the Washington Technology Industry Association. He says about 75 companies in his association are involved in the wireless sector, running the gamut from large companies like Microsoft to small iPhone app startups. Myer himself is a former executive vice president at Active Voice, a Seattle company that provided telephone system software and services; it was sold to Cisco Systems in 2000 for $296 million.
Anchor Tenants
Anchoring the wireless sector are several world-class companies including Bellevue-based T-Mobile, the German Deutsche Telekom subsidiary that is the fourth largest wireless carrier in the United States, and Kirkland-based Clearwire, which received $3.2 billion from a consortium of cable and tech companies to build a broadband wireless network.
HTC, the $8 billion Taiwanese mobile phone company, has its American marketing headquarters in Bellevue, where it also operates an "innovation center" run by former Microsoft designers. Microsoft, of course, has long had a large presence in the mobile space with its Windows Mobile operating system, although it has recently lagged behind its competitors.
Around those anchor players, a constellation of small and large companies have emerged, providing an array of products and services including games, dining guides, billing services, traffic information, keyboard input systems and travel guides. (See graph at right; click to enlarge). Virtually any software that was developed for the personal computer or the internet is now being adapted for the smartphone.
Supporting this cluster of wireless companies is a specialty cast of lawyers, accountants, marketing pros, venture capitalists and investment bankers who have hitched their wagons to wireless business pioneers. These professionals provide the expertise wireless companies need to protect intellectual property, raise money, tap new markets, establish strategic alliances and deal with all other ingredients necessary for a fertile ecosystem.
"There are just a few places where the legal ecosystems have grown in a fairly narrow geographic area," says Jim Judson, a semiretired senior partner at Davis Wright Tremaine who specializes in wireless legal issues and is involved with more than a dozen wireless-related firms. That includes, he says, 10-15 large law firms highly focused and experienced with startups and technology. Maybe the Bay Area and Boston can compete with that density of service companies, but Portland, Ore., Boise, Idaho and Salt Lake City can't.
That business environment is important because emerging companies usually need legal advice from conception through public offering or sale, explains Judson. As companies grow, success or failure can hinge on how well they're represented in mergers and acquisitions and technology licensing transactions, not to mention securities and corporate finance.
These experts also provide important connections. "Because many of us have had experience with each other over time, we reach out to each other. There is a lot of access to capable, smart people and that results in a cross-fertilization of ideas," says Judson. His own personal connections are broad and deep. A former longtime personal counsel to Craig McCaw, he is on the boards of China UniCom, a wireless long-distance and internet service provider, and Nextel International. He is also chairman of Eden Rock Communications, a Bothell wireless communications system design and software house, and Opanga Networks, a Redmond startup with a new internet delivery technology under development.
The McCaw Connection
Indeed, much of Seattle's telecommunications success can be mapped to Judson's former boss, cellular phone pioneer Craig McCaw, who stitched together the first truly national cellular system here. Kirkland-based McCaw Cellular Communications, which was sold to AT&T in 1994 for $11.5 billion, laid the foundation for the burgeoning wireless communications industry.
Former employees of McCaw Cellular played central roles in launching companies like XO Communications, Nextel Communications and Clearwire. John Stanton, the former chief operating officer at McCaw, launched Western Wireless Corp., which in turn spawned 
VoiceStream Wireless. VoiceStream was acquired by Deutsche Telekom and became T-Mobile. Stanton, meanwhile, continues to invest in wireless companies as a founding partner at Bellevue-based Trilogy Equity Partners.
Dave Gibbons, a 20-year veteran of Seattle-area telecommunications firms and CEO of Opanga Networks, says many of the area's startups are driven by people who sharpened their skills working for the big operators like T-Mobile or AT&T Wireless. "For those of us in the wireless industry, there is not a lot of reason to leave Seattle," Gibbons adds.
Why is it so important to have all this expertise in one place? Doesn't the wireless revolution mean we can reach anyone, anywhere, anytime? Turns out face-to-face communications are still crucial.
"The ability for us to just go next door and talk to someone at a large carrier like T-Mobile about some technical issue is huge," says a wireless executive at Microsoft, who requested anonymity.
And SeaPoint's Huseby says it's absolutely critical in the startup sector to have local talent available that you can instantly mix and match to create new teams and new products in an industry where opportunities swiftly come and go. The region's wireless companies, he says, are "a big merry-go-round mixing of DNA-an incestuous, rotating carousel of job opportunities and friendships."
That powerful wireless ecosystem is something that mobile internet services provider Motricity, for example, definitely considered when it weighed business plans, according to Jim Ryan, chief strategy and marketing officer.
"Through the growth of Microsoft and other strong companies in the software space, combined with the heritage of Seattle being one of the centers for wireless since the days of McCaw Cellular and evolving to T-Mobile and AT&T-there is a tremendous base of talent and innovation focused on the many opportunities in wireless," Ryan says.
"Ultimately," he adds, "Motricity decided to move its corporate headquarters from Durham, N.C., to Bellevue, Wash., to fully leverage the opportunities to recruit and retain top talent in the wireless space."
But not all wireless roads lead to the shadow of Mount Rainier. The big national mobile operators that got their start in the Pacific Northwest now don't have as big of a local presence, and they won't be expanding in the region, says Elliot Drucker, president of Drucker Associates, a wireless and technology business consulting firm in Kirkland.
"Because of the influence locally of Microsoft and associated enterprises, it is easy for us in the Seattle area to view the technology world through the prism of computer operating systems, IP networking and applications software," Drucker says. "These are indeed important to wireless in general, but they are not central. The cutting edges in the development of wireless are more in the areas of user devices, RF [radio-frequency] network deployment and management, and basic radio technologies." And with Microsoft Windows-based mobile devices losing heavily to the BlackBerry, the iPhone and perhaps soon new Google Android devices, the region's strength may sometimes appear as if it is on the wane.
But the fact that companies outside the Northwest are leaders in the smartphone arena may be less of a problem than one might think. That's because, says Ed Lazowska, the Bill & Melinda Gates Chair in Computer Science & Engineering at the University of Washington, "It's all about software, and we're the software capital of the world. ... We're leaders in systems. We're leaders in productivity applications. We're leaders in media. We're leaders in games. We're leaders in online retailing and in online services. We're leaders in cloud computing-essential in the mobile world."
Lazowska has a point. In games, Nintendo and Microsoft (through its Xbox console) have planted solid stakes in Washington soil. Amazon.com, Microsoft and F5 Networks are invested heavily in cloud computing. Amazon, REI and Nordstrom contribute online retailing and services DNA to the mix.
"The question is: Where are cool apps built? We have a strong position there," Lazowska notes. Dozens of local startups, for example, have popped up that are developing applications for Apple's iPhone.
"These aren't even phone apps. They are web apps," Lazowska says. "One of the many elements of Apple's genius was putting a fully functional web browser on a phone, rather than the klutzy thing that masquerades as a web browser on BlackBerrys and Windows Mobile phones. A huge proportion of all web accesses from mobile devices come from iPhones, even though iPhones still represent a small share of the total smartphone market."
The market for smartphone software will accelerate not only as a result of growing sales of internet-capable phones, but also as a result of an expected decline in the fees carriers can charge for the phones. Today, carriers generate $116 billion in revenues largely for allowing customers to make phone calls. But as more phone traffic moves to the internet, thereby sidestepping the networks of the big carriers, carriers will find it harder to support the high prices they currently charge for simple telephone calls. Increasingly, revenues in the wireless industry will come from hundreds of software products and services provided by third party companies, creating huge new opportunities for incumbent software businesses and startups alike.
Indeed, the region seems uniquely poised to gain from the march of more and more technology to the wireless realm.
Ontela. Perlego. Opanga. Gist. Zumobi. Swype. Impinj. Geopage. Motricity. Medio.
Early Microsoft programmers dreamed of a computer on every desktop; the new mobile entrepreneurs and engineers see microprocessor-equipped and network-connected devices in every hand-anytime, anywhere. That's a massive market, and the region is perfectly primed to exploit it.