While the world’s carriers have wallowed in misery, IPass has used their networks to meet the growing need amongst corporate customers to ensure that employees do not lose access to their networks once they are out of the office. Revenue, just $3.9m in 1999, reached $53.2m in 2001 when the company made a net loss of $27.8m. Growth shows no sign of abating. Revenue climbed 74.6% to $92.8m in 2002 and the company reported net income of $29.7m. This includes a $23.7m tax credit but, even if this is ignored, the company still managed to make net profit of $6m.
IPass claims to be the leading provider of software-enabled enterprise connectivity services for mobile workers. It uses over 200 network service providers and more than 15,000 network access points in around 150 countries.
This is a good time to be a virtual networks provider as the poor carriers have been frantically slashing their rates to maintain income. Though network access expenses rose 19% to $23.3m in 2002, an increase of 19%, this was due to the number of minutes used on its virtual network as it occurred at a time when access rates were falling. Network access expenses, which represented 37% of revenue in 2001 has fallen to 25% last year.
IPass sees huge growth opportunities ahead for its 269 employees. It quotes estimates by market research firm IDC that the number of mobile workers in the US will increase from 91.8 million in 2001 to 104.6 million in 2006, almost twice the rate of the growth in the total workforce.
The major doubt over the company’s future is the growth of broadband. Most of its revenue is currently derived from the use of narrowband technologies such as dial-up via modem and, while it has been trying to tap the broadband market, it has yet to generate significant revenue from this source.
Broadband is a huge challenge. IPass says that due to the early stage of its development, there are currently many wired and wireless broadband service providers that provide coverage in only one or a small number of hotspots. It has therefore to develop relationships with many providers. It also warns if wireless broadband providers consolidate, its negotiating leverage with providers may decrease.
IPass also has the problem that it uses the networks of companies who offer competing services and who could one day pull the plug on its operations. One of its biggest access providers is Equant NV, the data network arm of France Telecom SA, who provide it with services in around 40 countries.
Cisco Systems Inc already holds more than 5% of IPass’ stock and Cisco promotes iPass as a participant in its mobile office program. However by raising its profile with a stock market listing, IPass’s growth record and early profitability is sure to attract imitators.
Source: Computerwire
