Polaris Wireless success may lead it back to its roots
Apr 06, 2012
Source: Silicon Valley Business Journal
The ability to accurately pinpoint a person's location is crucial for a firefighter searching for an injured victim in the rubble of a building, or an investigator trying to catch a criminal.
It's also big business for Polaris Wireless Inc., a Mountain View-based company that makes software used by emergency responders, law enforcement and app companies to track the locations of cell phones.
"We believe that we tackle very important markets," CEO Manlio Allegra said. "Public safety is very relevant, and so is location surveillance to combat crime and terrorism."
Polaris was originally focused on consumer applications, and analysts say to fully hit its potential, the company may have to return to that target market which it elected to shift from more than a decade ago.
But back then, that decision, which happened thanks to a pivotal meeting, showed Allegra was willing to change direction when opportunity came knocking. He may do so again.
Change in model
Polaris originally set out to make location-based software for cell phones, like apps that allow people to locate their friends. But an early meeting with a vice president of business development at Sprint Nextel Corp. turned the company's business model on its head.
The Sprint exec said he saw a much bigger opportunity in actually transforming how locations are found. The U.S. government had just passed laws requiring carriers to add location capabilities for 911 calls. But the solutions available, GPS and triangulation, were expensive and labor intensive because they required hardware to be added to either the phones or the network. The man from Sprint said he wished software could be used to deploy the location capabilities, without any hardware at all.
"I went back to the team and said hold on," Allegra said. "We need to invent, innovate, because this is what the customers really want."
The technology they developed can identify the location of any cell phone, even if it's a basic phone without GPS capabilities, with accuracy within 50 meters. It's able to identify characteristics of the network where the cell phone is, like how the signals bounce off buildings, and match it against an algorithm to find the unique place that matches all of those characteristics.
Revenue expected to triple
The company brought in $21 million in revenue in fiscal year 2011 and expects that to nearly triple to at least $60 million this year. Founded in 2001, it was initially backed by $5.7 million in funding from investors including Draper Fisher Jurvetson and Palisades Ventures, and says it has been profitable since 2005.
The company now has 120 employees worldwide.
In the U.S., Polaris sells services for public safety to wireless operators like Verizon Wireless and Cellular One LLC. Abroad, it has government clients in the Middle East, Africa and Asia that use its technology for surveillance by law enforcement and intelligence agencies. Its technology can also be used for location apps, which could, for example, automatically send coupons to a potential customer's smartphone as they walk by a store.
Moving into that consumer market could be the company's challenge going forward, said Annette Zimmermann, an analyst with Gartner.
The public safety and surveillance markets combined create a $4 billion opportunity. This is where Polaris has focused so far. Consumer-oriented location services could be as much as an $8 billion market.
"Polaris and the other vendors who offer similar services have the same issue: their business model works very well in the U.S. and they are making a lot of revenue with this as carriers in the U.S. are required by law to have their solutions installed," Zimmermann wrote in an email. "But they will all struggle very much to get any foothold in the consumer (location-based services) space outside the U.S."
In the consumer market, they compete with systems that are already built into cell phones, like Google's location-based services that use GPS and Wi-Fi data to pinpoint locations. Allegra said his company will "continue to seek out opportunities" in the consumer space.
Investor Josh Stein, managing director at Menlo Park-based Draper Fisher Jurvetson, said the company's success with little funding comes down to its technology, which he compared to a "secret formula."
"It shows you what a company with really core intellectual property can do," Stein said.