For Novatel, the maker of cellular modems, the introduction of the MiFi wireless router has added a little shine to a fairly unglamorous business, while also insulating the company from the loss of a major customer during the most recent quarter. But will the MiFi luster last? On its third-quarter conference call yesterday, Novatel executives fielded several questions from analysts about a slow sales cycle and a backlog of the devices at major carriers. If the MiFi is Novatel’s fairy tale goose, the financial community seems to wonder how long it can lay golden eggs.
The MiFi is a slim router that converts a cellular signal to a Wi-Fi signal, allowing folks to connect their WiFi-enabled devices to the cellular network under a 3G data plan. Introduced in May, it managed to generate $13.5 million for Novatel in the six weeks it was out during the second quarter, comprising 16 percent of Novatel’s revenue for the April-June time period. During the third quarter ended Sept. 30, the MiFi brought in $37.9 million, or 40 percent of Novatel’s sales.
That jump offset the loss of about $28.1 million in revenue in Novatel’s embedded business caused by a large customer dumping the provider. But sales for the device have apparently been sluggish and competition from Huawei and Sierra Wireless is looming. On Wednesday, Sierra Chief Executive Jason Cohenour said the company was planning its own personal hotspot.
Analysts also wanted to know how well Novatel was doing when it came to recruiting developers — because like all gadgets, web sites and services released in the last few years, the MiFi is a platform. Sure, it’s primarily seen as a convenient way to get online using a variety of devices or as a way to share a connection with friends and colleagues, but this credit-card sized router is supposed to also tie into applications such as online storage, video caching and anything else developers can think of. It’s trying to be an App Store/iPhone combo for enterprise mobile broadband access.
That’s an uncertain strategy that requires Novatel to get the devices out into the market in large enough numbers to attract developers, and assumes that people want a router that’s also a gateway to services provided by their wireless carrier and other companies. The results will determine if the MiFi is the golden goose or just another commodity access point.
My Verizon/MiFi/iPod Touch was purchased due to Verizon’s poor handset offering. If Verizon’s Droid line proves worthy, I might have to dump the MiFi. Verizon ought to give dual data plan holders a break.
these are pretty cool. but i really see them as only a short term product. when battery life improve it start to really make a lot more sense that this functionality should be a service built into smartphones not a separate device. WiFi tethering will become common and there will be very little need for these. at least as mobile devices. i could see them being around for while as stationary device that never get used on battery power for situation where a wired connection would be either unavailable, pricier, etc. for example maybe for a transient business that is no more than a booth at a flea market a real phone line or cable connection may not be practical.
This is a pretty good idea, but i was looking at them at Best Buy and the only plan you could get was 5gb a month. after that they charge you 10 cents a kilobyte… that is worthless for just about anything.
Hopefully novatel will get on the ball and give us a Sprint/Clear MiFi integrated with 3g/4g built in.