April 20, 2009

Coveted Software, Early Break Spur Maker of Cell Navigation Software
Finding the Way
By Sarah Tolkoff
Orange County Business Journal Staff

Aliso Viejo-based Networks in Motion Inc. has something the Verizons and AT&Ts of the world want.

Networks in Motion, or NIM, designs and sells software that does what industry insiders call "location based services" for wireless phones.

The software gives users access to maps, as well as helps them look up traffic conditions, get driving directions and search for local businesses and events.

NIM has seen growth as wireless service providers seek ways to boost what industry insiders call the "average revenue per user" on their networks.

"Carriers want to sell data plans, because pricing for voice only plans continues to shrink," NIM Chief Executive Doug Antone said. "The carriers want to increase the number of applications that consumers are willing to pay for. Navigation is really the shining star in this area."

NIM has grown from a startup just a few years ago to the top maker of navigation software for phones by users, according to Antone.

The company projects sales of more than $50 million this year, up from about $43 million in 2008.

Customers include Verizon Communi-cations Inc., Sprint Nextel Corp., AT&T Inc., United States Cellular Corp. and MetroPCS Communications Inc.

NIM's software also powers AAA Mobile, a navigation and trip-planning program used by the American Automobile Association, and YellowPages.com Mobile, a local business search program used on AT&T's phones.

The company has been adding to its lineup as the navigation software becomes more complex than just finding directions.

"This is becoming all about search," Antone said. "It's not just where the movie theater is; but what movies are playing at what time. All of that stuff is relevant."

Lately, the focus has been on what industry watchers call "storefronts"-sites where mobile device users can purchase and download software for their phones. Think Apple Inc.'s iPhone App Store (part of iTunes) and Research in Motion Inc.'s BlackBerry App World.

A few weeks ago NIM came out with its first direct-to-consumer application, called Gokivo, for the BlackBerry.

An application for the iPhone is likely in the works. Antone wouldn't elaborate.

NIM History

NIM was started in 2000 by husband and wife team Michael and Angie Sheha, who were electrical engineers at California Institute of Technology's Jet Propulsion Laboratory.

"What we saw was this phase coming up where every single cell phone everywhere would have GPS integrated into it," Chief Technology Officer Michael Sheha said.

Angie Sheha is NIM's vice president of strategic projects.

NIM launched with a small angel round of funding from Stephen Petilli, cofounder of Pasadena-based Pivotal Technologies Inc.

Petilli, who knew the Shehas from the Jet Propulsion Lab, now is vice president of business development at NIM. Irvine's Broadcom Corp. bought Pivotal for about $243 million in 2000.

Initially NIM focused on using GPS in mobile devices to help manage fleets of delivery trucks.

It made the switch to mobile navigation geared toward consumers in 2003, a time when the territory still was undeveloped.

"It was still very nascent at the time," Sheha said. "From 2000 to 2004, the market was dropping and carriers were slow to roll out any type of infrastructure. It was a very tumultuous time in trying to get users that had all the pieces in place."

The Shehas had lean early days, common to many startups.

"The Internet bubble at that time was very fragile," Antone said. "These two had never raised any money before, had never started a company before and they were trying to do it in a very difficult environment. A lot of other people would have quit and gone back into corporate life. But they hung in there."

The Shehas were working off their savings and weren't taking any pay, going so far as one of them filing business documents while the other was circling the block to avoid paying for parking, Sheha said.

In 2004, the scrappy company-then with just a dozen workers-got a break.

It beat out 60 other companies in a contest run by Chicago-based digital map maker Navteq Corp.

Navteq issued an open call for companies with any kind of location-based software for wireless devices that had a revenue-producing business model.

"Navteq was looking for a breakthrough application," Sheha said.

NIM entered its offering, then called "Atlas Book."

The win got the company additional startup money as well as free use of Navteq's map data for a time.

The win also helped NIM get a foot in the door with its first major customer-Verizon Wireless, a unit of New York's Verizon Communications.

Verizon's VZ Navigator uses NIM's technology. The application costs about $10 to download and requires a data plan.

The company-which at that time had fewer than 20 workers-beat out Motorola Inc. and MapQuest Inc. for the Verizon deal.

"People said, ‘If you won Verizon, you must be a pretty good company,'" Antone said. "It was a huge litmus test we were able to pass and we got a lot of credit for that."

NIM recently expanded to Europe and won a deal with Sweden's LM Ericsson Telephone Co.

Antone sees a fast-approaching "tipping point" for navigation.

"People now know navigation exists, whereas two years ago, they didn't," he said. "We see the next couple years as an interesting time for continued, very rapid growth as more and more people begin to know this technology."