AvantGo Angles for Wireless Shoppers

A few days after reporting lower-than-expected losses, AvantGo Inc. — which
said it sees wireless services as the second coming of the Internet —
unveiled some options for avid users to buy wireless services and hardware
directly from its Web site.

San Mateo, Calif-based AvantGo, which boasts 2.5 million customers, said it
has made shopping easier for wireless consumers by putting hardware,
software and services options in one convenient place. Wireless
communications specialist Sundial Marketplace Corp. worked with AvantGo on a
shopping “wizard,” which helps users decide on what services to pick based
on their location.

New York City’s Sundial has agreed to provide the configuration engine,
product and service inventory, as well as taking care of any backend
fulfillment. Wireless solutions featured on the site include CDPD modems,
dual versatility mobile phones and serial cables, as well as wireless
service from most of the major providers — AT&T Wireless, Cingular, Sprint
PCS, Verizon Wireless and Voicestream.

Wireless device users have long been able to access the AvantGo mobile
Internet service with Web-enabled cell phones, PDAs or wireless pagers to
track flight updates, e-mail, stock quotes, directions or maps. With the new
offering, AvantGo has essentially made it extremely easy for new users who
don’t want to go to say, Palm’s site for products, or Sprint PCS’ to get
hooked up with a service plan.

“By working with Sundial to fulfill orders, we have created a new revenue
stream for AvantGo without having to take inventory risk or incur
fulfillment costs,” said Mike Aufricht, general manager of AvantGo Mobile
Internet. We are now generating incremental revenue while continuing to
focus on our expertise, which is software that delivers content and
applications to mobile devices.”

AvantGo, and others of its ilk such as Omnisky and GoAmerica, targets the
business consumer — in particular, executives who are on the go that rely
on their Palm Pilots or Blackberry pagers to keep in touch with the
goings-on at offices. While AvantGo may try to lure business execs to shop
for wireless equipment and all that goes with it, the jury is out on
whether the same people will shop with their wireless devices,
according to a recent Cahners In-Stat study.

A survey of current wireless Internet users found that only 45 percent had
purchased products using their wireless Internet service.

While Cahners said it sees a future in m-commerce, as it has come to be
called, the research firm believes as next generation wireless services —
such as the elusive 3G arena — go, so too will mobile shopping. Apathy to
m-commerce, Cahners said, is taking its toll on development of that sector
as well.

“Much of the hype surrounding m-commerce, from potential revenue to the
number of people that will become m-commerce users, is just that — hype,”
said Ken Hyers, senior analyst with In-Stat’s Mobile Commerce Service.

“Users are not enjoying a wireless Internet experience that even remotely
compares to the wired one that millions experience every day,” Hyers said.
“More to the point, very few of the people that are currently linking to the
Internet via wireless devices are buying books, CDs or computers.”

No, Hyers explained, consumers still make e-mail the killer app for wireless
devices, with the availability to view stock quotes and sports scores as
other uses for mobile devices.

Despite a bear market, AvantGo this week reported a loss of $9 million, or
29 cents per share, less than the 35-cent prediction by analysts listed with
FirstCall/Thomson. The company lost $10.6 million in the previous quarter.

To run an even tighter ship, the company laid off 50 workers Wednesday
despite the lower-than-expected losses. AvantGo will take one-time severance costs of $400,000 and a restructuring charge of $2.5 million in the current quarter.

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