The reluctance of businesses to jump into wireless technologies during the economic slump is hurting leading wireless application companies.
724 Solutions, which targets financial institutions with wireless applications, recently laid off 350 workers. OmniSky recently cut its work force by 100, and other players have also had to reduce their numbers.
Wireless application developers must prove a near-term return on investment or they can't make a sale, leading industry sources said.
"The nature of what is driving investments is a shift from the desire to get wireless as a strategic breakthrough to leveraging mobile technology to make me more efficient and profitable," said John Sims, CEO of 724 Solutions. His salespeople now focus on showing potential customers how wireless can save them money.
Industrywide, "we are seeing a shakeout happening," said Warren Wilson, wireless practice director of analyst group Summit Strategies. "Some of that is healthy in that it weeds out the bad ones that need to go, but probably some good ones are going down, too."
Aether Systems, a wireless solutions developer, believes it can weather the storm because it serves a variety of markets. "We don't want to be a slave to any downturn in any one vertical," said Bill Davidson, senior vice president of corporate affairs and carrier relations. Aether recently cut 280 workers, but Davidson said those cuts reduced redundancies after a series of acquisitions.
Markets such as transportation, which can recoup a clear return on investment from wireless, may actually feel more pressure to pursue mobile solutions. "The worse things get, the more pressure they get to deploy," Davidson said.
For example, Oester Trucking last week said it implemented an Aether solution that allows drivers to use computers in their trucks to communicate information about pickups and deliveries to the dispatch center. The market downturn didn't affect Oester's need to improve its communication system. "It was still a priority to put it in," said Doug Mayle, head of dispatch of Oester Trucking.