A new industry survey says wireless in British Columbia is now a $1 billion sector, but also identifies several potential problems that could curtail that growth.
Prepared by PriceWaterhouseCoopers for the Wireless Innovation Network Society of B.C. (WINBC), a wireless industry group, the survey estimates annual revenues at $1 billion based on reported revenues of $649 million, up 27 per cent from the last survey in 2001.
The industry is also growing, with wireless employment estimated at over 5,100 people. That's up 39 per cent from 2001, and a further 33 per cent increase is predicted by 2006.
"What really struck me was the amount of growth many companies have experienced," said WINBC president Caroline Lewko. "Some of the smaller ones are getting reference customers and starting to bring in customers."Vancouver is expensive compared to Manitoba, but we're comparable to Toronto and people coming from the U.S. think it's quite cheap here.
Caroline Lewkopresident, WINBCText The market is also maturing, with more companies moving from the start-up stage to become stable, mid-level companies. That's reflected in the revenue figures with the top ten companies accounting for 80 per cent of the total, compared to 95 per cent in 2001.
However, as the industry matures, so do the kind of employees it needs. Lewko said a provincial government program to double the number of university spaces should ensure the continued availability of new graduates, but finding the mid-level people could become a challenge.
"They also still have a hard time finding people with technology management skills and business development people to help manage and drive growth," said Lewko.
To further complicate the attraction and retention of skilled workers, the survey also identified B.C.'s cost of living, level of personal taxation, level of compensation and perceived lack of professional opportunities as impediments. However, Lewko said a lot of that is misconception.
"Vancouver is expensive compared to Manitoba, but we're comparable to Toronto and people coming from the U.S. think it's quite cheap here," said Lewko.
Lewko said B.C.'s wireless industry is much more then just cellular, with companies developing solutions around emerging technologies like Radio Frequency Identification and WiMAX.
Marina Amoroso, an analyst with Yankee Group in Boston, said WiMAX is probably a few years out at this point, but the increasing capabilities of wireless networks will drive strong growth in wireless applications going forward.
"Canadian providers will be moving from 2.5G to EvDO (Evolution Data Only), which is what we're seeing in the U.S. with providers like Sprint and Horizon," said Amoroso. "It offers faster up and down speeds, and that will enable new data offerings and applications, such as faster Web browsing, downloading of video clips and even streaming video."
Cash flow and sales continue to fuel most of the industry's growth at 37 per cent of funding, followed by friends and family and government funding. Venture capital investment lags behind at 10 per cent but Brent Holliday, a partner with Vancouver technology venture capitalist Greenstone Venture Partners, said that number isn't surprising.
"If you broke it down for any industry, expect maybe biotechnology and semiconductors, which are very capital-intensive, you'd see the same thing," said Holliday. "You can bootstrap a lot of wireless companies." Greenstone is looking for wireless investments, though, and Holliday said he's pretty excited about the B.C. wireless market. VCs like quality teams with lots of experience, and he said B.C. has that in spades.
A good example is Vancouver up-and-comer Tantalus Systems, which under former Sierra Wireless president and CEO Glen Brownlee designs and manufactures wireless, two-way, real-time data communications networks for utilities, and has attracted investment from a U.S. venture capital firm. "Going back to the mid-1980s...many of the early pioneers here have gone on to start new companies," said Holliday.
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