Sybase Hot to Leverage Exploding Mobile Growth
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SAN FRANCISCO - Having hit the headlines by offering mobile messaging for the iPhone and Lotus Notes, Sybase is continuing to bank on its mobile offerings.
And why not? According to Sybase chairman and CEO John Chen, mobile will be a $400 million business for the company in 2009.
Sybase (NYSE: SY) offers mobile messaging, banking and mobile middleware, and Chen said these areas will see a 30 percent profit margin before tax.
Speaking at a media event here at the Ritz-Carlton hotel this week, Sybase, Chen predicted the company's mobile technologies would see a 20 percent growth rate compounded year over year.
The mobile market accounts for about 36 percent of Sybase's $1.1 billion annual revenues, and its database business accounts for the rest, Chen said. "By our own measurements, we have 45 percent of the worldwide mobile messaging market, and have links with a thousand mobile operators worldwide," he added.
Sybase's mobile business consists of two components, mobile messaging, including banking, and mobile middleware.
For mobile messaging, Sybase transmits messages on behalf of mobile phone operators. It transmitted 200 billion mobile messages this year, Chen said.
In mobile banking, Sybase lets consumers transmit payments or remit money by mobile phone instead of using PayPal or Western Union, or going to the bank. "People in India, Pakistan, Philippines, Malaysia and a big part of China, where they don't have fixed telephone line infrastructure, are using it," Chen said. "People from the Philippines working abroad send money back home using SMS which is free, instead of paying to use Western Union (NYSE: WU)."
Sybase's mobile messaging business is expected to grow 20 percent in 2009, according to Chen, but he said the real money is in mobile commerce. "There's not enough money in mobile messaging and the telephone companies will squeeze every drop of money out of their suppliers," he said.
Mobile messaging will morph into mobile commerce, Chen said. "You can add value on your phone and it will then become your wallet," he explained. "This is already happening in Europe and parts of Asia." Sybase will take a small percentage of each mobile transaction.
Moving towards mobile commerce
As part of its drive towards mobile commerce, Sybase signed up 30 bank customers this year, Chen said. "To make mobile commerce truly work, we need relationships with wireless carriers, banks and Visa," (NYSE: V) he explained.
Government involvement will also be required. The sticking point will be cross-border transactions, Chen said, and governments will need to legislate at which point in the transmission the ownership of money will transfer from the sender to the recipient in case of disputes. Another issue for governments is taxation.
Sybase is looking to invest in companies that bolster its move towards mobile commerce. "We are looking for companies that can provide us mobile commerce technology faster than we can build it ourselves," he said.
Sybase will likely buy companies that create application development platforms. "Our philosophy is not to build applications because that's a huge area," Chen said.
Sales of mobile middleware, which lets enterprises link up to mobile users equipped with a variety of smart phones, were flat year over year, and Sybase sees great potential in the explosion of new hand held devices, including the Apple (NASDAQ: AAPL) iPhone, in the enterprise, Chen said.
"When there are a lot of different phones in the enterprise that's good for us because we connect everything together," Chen said. "The iPhone did us a big favor because it showed enterprise workers they don't have to stay with BlackBerry."
Sybase's database business will grow more slowly than its mobile offerings, by seven to eight percent a year, Chen said.
Here, he plans to move into complex events processing (CEP), incorporating more feeds from television and blogs. This is in line with the notion of continuous business intelligence (BI), a burgeoning trend in the BI field.
Chen claims the recession has had no effect on Sybase's database market, which has a strong presence in the financial industry.
"Mergers and acquisitions require us to create new technology for them," he said.