The word niche has an image problem.
Selling software designed for Lebanese restaurants in Alberta? Definitely niche. Expanding to service Turkish restaurants in the same province? Yep, still niche.
But sometimes niche can mean something much, much bigger. Take the case of Siyata Mobile (TSXV:SIM). The recently listed company plays in the “Push to Talk” cellular space, updating 2G CDMA or GSM systems or even two way radio devices with robust and affordable 3G solutions. Admittedly, this isn’t a market that Jeff Bezos or Tim Cook are planning a sexy, splashy entry into. But to call it a niche market seems to seriously underestimate the opportunity.
According to market research firm Research and Markets, the push to talk cellular market has a bright future.
“A simple yet potent communication technology, push-to-talk, has over the years earned a reputation of being a truly value added voice-based communication service, largely because of its ability to allow cellular subscribers to communicate without having to dial the destination number,” says the firm in a recent research report on the space. “The technology is expected to find huge uptake among the younger mobile subscriber base given their tendency to maintain closer social communication ties. Growth in the global push-to-talk technology market is led predominantly by increased customer demand for customized, and personalized services, a trend that is largely influenced by service provider’s push to popularize IP enabled services, such as, instant messaging, video telephony, file sharing, location based services and PTT.”
Siyata Mobile CEO Marc Seelenfreund says the company is staring down an immediate market opportunity of at least $150-million, with more and higher margin products such as fleet management tools, specialized navigation, and time logging systems resulting from a growing hardware installations base. Cantech Letter sat down with Seelenfreund to talk about the company’s big “niche” opportunity.
Marc, can you tell us a bit about the history of Siyata Mobile?
Siyata was started in 2011 when Motorola was bought by Google who closed down their business related cellular division. Although this business segment was doing north of $100M per year in revenue, they were only interested in cellular for retail consumers. This left a large void in the market and an opportunity to pick up where Motorola left off allowing us to enter the market with innovative cellular devices for the professional drivers, corporate vehicles and fleets.
Why did Siyata go public?
We decided to go public in Canada as we launched our North American activities and felt this was a good way to raise our profile and get access to investors in this market.
For tech companies, the markets love growth. Why do you think your revenue will grow faster in the next decade than it did in the previous one?
We are confident that we will achieve strong growth in the coming years as we have very large scale markets we are penetrating in Canada and the US and believe that we will be a market leader in our category. However, as we continue to build on 30 – 40% growth, we plan to launch next generation devices and other products that could double or triple that growth if they are well received in the markets we are targeting.
Siyata removes the clutter of drivers dealing with two-way radio, multiple tablets for fleet management, multiple cellular phones all in one cabin. It’s a safer, more cost effective, more innovative solution than anything else out there.
Would you characterize Siyata as a hardware company?
Siyata is currently a hardware company but we are building with our hardware installations a lucrative piece of real estate within corporate vehicles. Once we reach a critical mass we plan to offer software packages in the fleet arena such as fleet management, specialized navigation, time logging and more that will run over our hardware and allow us to achieve recurring revenue from software. The beautiful thing is, as we build up the real estate, we generate strong revenue with good margins and build a large customer base. To date we have sold over 150,000 phones to different clients around the world so we know how to build devices that customers want to use and believe we can leverage that at the right time.
When Siyata wins business what is it typically replacing?
Currently we replace Motorola 2G CDMA or GSM devices as we are a perfect upgrade for these aging units. We also are installed in vehicles where fleet managers need to have clear cellular connectivity with their drivers as well as integrated software apps in one device. It removes the clutter of drivers dealing with two-way radio, multiple tablets for fleet management, multiple cellular phones all in one cabin. It’s a safer, more cost effective, more innovative solution than anything else out there.
What do you estimate the size of Siyata’s market to be?
Although its niche, its enormous. There are currently hundreds of thousands of 2G Motorola devices that need to be replaced with a total market opportunity of $150M as well as over 15 million commercial vehicles in North America, which addresses a multi-billion-dollar market with very few direct competitors. We don’t launch or bring on a device that doesn’t have the potential for the company to sell 100,000’s of devices a year with strong gross margin.
You have done recent deals with defense contractors and rail companies. Is there a “typical” Siyata Mobile customer?
Truthfully there are no typical customers in our market. As you mentioned we sell to defense contractors and rail companies but we also sell to police, busses, logistic companies, oil and gas, municipalities and more so there are multiple markets and customers that we address. If your business has a corporate fleet, we are going after you.
We continue to see a very large opportunity in North America for high impact niche cellular products within the commercial vehicle and blue collar worker markets and are diligently focused on delivering.
Your gross margins climbed 14% in over Q1 2016. What is behind that rise?
As our sales in North America grow this directly effects our gross margins. As we see more and more sales in North America, we should see our margins grow in Q3 and Q4 and believe we can keep them there.
What do you want to accomplish in the next 12-18 months?
Our goal is to continue growing the company between 30– 40% per year, reach profitability and launch new products within our portfolio where we see potential to sell 100,000 devices ($400-$600 per device) per year or more. We continue to see a very large opportunity in North America for high impact niche cellular products within the commercial vehicle and blue collar worker markets and are diligently focused on delivering.