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Magic Mirror

Is there an IPO in DataRover's future?

By Dan Hanttula
October 1999, issue 30

Remember how much excitement surrounded General Magic's IPO (Initial Public stock Offering) in the winter of 1995? The media blitz around the technological geniuses that escaped from Apple Computer and captivated Sony, Motorola and AT&T to back them had investors begging to get in on the ground floor of General Magic (GM). And the enchanting and friendly interface of Magic Cap made many followers that believed the company was poised to make it big. Well, we all know how this story ends. GM spun off the Magic Cap group to become an expert in the "Virtual Assistant" field. And their stock, which once lingered in the upper twenties per share, is now one-tenth of that price.

Readers, prepare yourselves for an encore. It looks like DataRover Mobile Systems might be making the same play. And, while I would never forecast the same gloomy future for the DataRover group, I know the times ahead might get tough. Allow me to present the evidence.

On August 11th, DataRover issued a press release announcing record quarter revenues. While the quantitative revenue numbers were not disclosed, the press release did mention that it tripled previous quarter results. The press release continued with "...and obtained a major round of investment funding to fuel expansion into North America, Europe, and Asia." It is the announcement of investment funding that made me remember General Magic's past IPO adventure.

Silicon valley seed money
The old adage "there's no such thing as a free lunch" goes a long way in Silicon Valley. While venture capitol and good intentions are as free flowing as the San Francisco Bay water, every investment banker's handshake often foreshadows a tight grasp on the future of the company. Until now, DataRover Mobile Systems hasn't had to report to anyone; with private announcements of profits and design wins, the company has been plodding along like every start up in the valley. But with investors behind the wheel, there will be new pressures to overcome and more people to please.

Furthermore, a business teacher once told me, "you don't get investment funding unless you're taking a company public, or planning to be acquired." This alone is cause for alarm, as we recall DataRover's spin off was caused by the need for focus and the problem of management's lack of support for the Magic Cap team. Supporting and perhaps compounding this problem is the fact that the company leading the funding (Dot Com Ventures) has (a company past its IPO) and Internet Devices Inc. (a company pending acquisition by Alcatel) as previous clients.

Playing it close to the vest?
Not surprisingly, at press time, DataRover Mobile Systems was not immediately available for comment.

Can the DataRover group focus on providing solutions while pleasing investors and considering a possible stock market venture? Is DataRover doomed to follow in the footsteps of General Magic? Whether or not my intuition is correct, one thing's for sure; covering Magic Cap has never been a boring ride, and I expect it is about to get quite a bit more exciting!

"Free phone call feature"
Last issue, we covered the "Virtual Assistant" services General Magic (GM) offers, including the magicTalk service; an "over the phone line" email service that reads a user's Internet correspondence. While convenient for users that spend long periods of time away from the desk or will only carry a cell phone, the free service wasn't that compelling for an everyday user to subscribe to. Well, GM has upped the ante. Last month, General Magic expanded the free service to include free phone calls (of up to two minutes) anywhere in the United States. While the author found it perfect for leaving a reminder message on a phone machine, or calling someone from a phone where you don't want to make a long distance charge appear on the bill, it is also useful to notify family and friends of a safe arrival after travel or make other quick phone calls.

Like the rest of the magicTalk service, the phone calls are initiated by voice. Stating "dial a number" followed by the desired telephone digits initiates a phone call. Before the call is put through, users must listen to three recorded advertisements, and at two minutes, you are cut off from your conversation without warning. If you finish your business quicker, you can end the call early by pressing the # key twice.

According to General Magic, the magicTalk service is enrolling thousands of users every week since its launch on June 15th. "We've received very positive comments from our members about how easy and valuable the myTalk service has been for them," said Linda Hayes, senior vice president of Marketing at General Magic. "With the addition of the free phone call feature, we're making it even more convenient for members to stay in touch. We're also giving them more incentive to use the service, which translates into more opportunity for advertisers. This new feature is just one of the many ways that we plan to expand myTalk to bring together the best of the Internet and the telephone."

Dan Hanttula the platform editor for Windows CE and Magic Cap operating systems and the president of HomeRun Advertising. He can be reached via e-mail at

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