VeriLAN, a Portland, Oregon based start-up targeting the municipal wireless market has decided to throw in the towel, mostly because the company figured it could not make money. The advent of free model based on advertising (MetroFi, Google) had caused some of the distress, according to this report.
After reading the reports it seems that VeriLAN was a loser in most project bids – which could be interpreted two ways. One, that there was someone was always ready to undercut them. From the other side of the looking glass, it also means someone was willing to lose money on the project just to show they won a project.
Esme Vos of Muniwireless points out that since the projects are getting increasingly complex, it is hard for smaller players to make money. She notes the entry of IBM, SAIC and Cisco into the already crowded market as projects get bigger and larger in scope. Of course, we would love to know how much profit these projects are pulling in, or even likely to pull in the future.
The MuniFi hardware business cannot be an easy place to be right now, and only a handful of players – you could count them on one hand – are getting traction. If all was well in the muniworld, then why would companies keep going back to investors for just a little bit more? There are six companies we could come up with, and they are all going after a market that will be $1 billion in 2008. That doesn’t sound like all that much gravy to be shared amongst various players.
Somewhere there is a lesson for those who are funding or going to fund a whole slew of online video start-ups.