Smith Micro Software Inc. is looking to be a player in the next generation of wireless networks that promise to speed up and add features to cell phones and handheld devices.
The Aliso Viejo maker of cell phone software has landed deals recently for a program that runs on a PC or mobile device and al-lows for a wireless connection to the Internet.
Smith Micro, which sells other types of software to wireless service providers, is angling to be a frontrunner when new, faster networks roll out in the U.S. through 2010.
The networks are known as WiMax,short for a technology standard called worldwide interoperability for microwave access.
They’re based on technology that helps devices connect to the Internet and send data at speeds that rival cable and digital subscriber line connections.
“As it’s rolled out over the next year or two, I think you’ll see it will become a competitive threat for companies offering DSL modems and cable connections,” Smith Micro marketing chief Robert Elliott said.
Some industry watchers refer to WiMax as 4G, for the fourth-generation devices that will be made to access it.
Smith Micro struck a deal with Kirkland, Wash.-based Clearwire Corp. in January for connection management software.
The deal allows cell phones to connect to Clearwire’s mobile WiMax services, which launched this year in Portland, Ore. Other test markets are set to follow.
A group of heavyweights joined in May to form Clearwire, which backs a particular set of industry standards and owns a set of airwaves.
Founders include Sprint Nex-tel Corp., Intel Corp., Comcast Corp., Time Warner Inc. and Google Inc.
Sprint Nextel has been investing in WiMax since 2006, when the company said it would commit some $5 billion to build out the equipment needed to upgrade its network.
Smith Micro’s connection manager allows wireless providers to connect to Clearwire’s mobile WiMax service, which is sold under the brand name Clear.
“Clearwire is the major win in the U.S.,” Elliott said. “They will probably be the predominant player in WiMax here.”
Smith Micro’s connection management software is what’s known as “multimode,” meaning it can connect to a WiMax network or Sprint’s existing wireless network.
It simplifies the process of connecting a device to a wireless network by cutting down setup time and having fewer steps, according to Smith Micro.
Later this year the company plans to announce a WiMax deal with a cell phone maker that is set to build Smith Micro’s software into its mobile devices.
Elliott declined to name the customer but said it’s one of the top five cell phone makers designing 4G phones.
Faster networks are expected to drive up demand for Internet offerings on mobile devices, Elliott said.
“With 4G speeds you will be able to do a lot more things,” he said.
Making a Name
WiMax is getting attention from big corporations that pay for their workers’ cell phones and wireless Internet connections.
It can allow cell phone data traffic to be “offloaded” onto a secure wireless network that runs in an office.
“It’s a huge initiative,” Elliott said. “It will seamlessly offload my cell phone call to a secure Wi-Fi network when I’m in the office. When I walk out of the office, it will revert back to the carrier network.”
Such features lower costs for the companies that pay for cell phones for employees.
“That way the company isn’t paying the fees for sending e-mails or texts that are in the context of the office,” Elliott said.
Connection management software is a fast-growing part of Smith Micro’s business.
The unit, which also includes security software, did roughly $16 million in sales in the third quarter, double from a year earlier.
For the current quarter, analysts are expecting Smith Micro to see $60 million in profits on sales of $28 million.
Smith Micro’s shares are off about 20% in the past year on recent market value of around $140 million.
