Navy Deal Expands Aether Systems' Reach

Navy Deal Expands Aether Systems' Reach

Ken Whitehead

By Jennifer Freer, Staff Writer

There is no more paperwork piling up or waiting in line to use the computer for the sailors aboard the Navy's U.S.S. McFaul. Not since the Navy's Atlantic Fleet Surface Force reached an agreement with Aether Systems Inc. and Palm Inc. to purchase 150 hand-held devices that provide mobile computing capabilities to the ship's sailors.

Sailors can access e-mail accounts, applications for training and evaluations, consolidate checklists and databases and coordinate daily and weekly schedules through the devices, said Ken Whitehead, director of federal operations for Aether, Owings Mill, Md.

Although the contract for the software, installation and devices is a modest $65,000, company officials said the project should help open up a rapidly expanding government market for mobile data products, which they estimate could reach 3.7 million users and more than $1 billion in products and services by 2003.

Since the Navy agreement was announced July 24, Aether and Palm have received more than 50 calls from the General Services Administration, other government agencies and commercial businesses expressing interest in the same types of services, said Whitehead.

In addition, the Navy plans to purchase 115 more devices and expand its use of the services throughout other parts of the Navy, company officials said. Navy helicopters also are using the devices for equipment and pilot testing.

"There are applications for this type of service in other government departments," said Kevin Plexico, an analyst with Input Inc., a Vienna, Va.-based market research firm." It can be used anytime you have a field office and need to communicate with another office and help reduce equipment costs."

Plexico expects more government and commercial enterprises to use these devices. "This is a case where the government may actually be ahead of the curve a bit on technology," he said.

Aether, a wireless application provider, had 1999 revenue of $6.3 million and a net loss of $31 million. The company, with 291 employees, is working with other government customers such as the Department of Defense and the U.S. Postal Service.

The company recently sought to expand its reach into the state and local government market with the acquisition of Cerulean Technology Inc., a wireless software provider to the government, for $150 million. Up to 50 percent of the purchase will be in Aether stock, the company said.

More than 45,000 users at 700 public safety agencies such as police and fire departments use Cerulean's mobile applications, according to Aether. By combining forces with Aether, Marlborough, Mass.-based Cerulean will be able to expand its product line with new hand-held products and Web-based services.

"Together we plan to make mobile government a reality across the public sector by making it easier to deploy and maintain wireless mobile systems," Aether Chairman and Chief Executive Officer Dave Oros said in an Aug. 14 statement announcing the intended acquisition.

The company also announced the formation of Aether Capital, a new venture division that will invest in and manage start-up wireless companies.

Under the terms of its agreement with the Navy, Aether used the existing infrastructure of the U.S.S. McFaul to provide the sailors with mobile computing solutions and 32 infrared ports on the ship to connect and transmit data wirelessly. The U.S.S. McFaul, a guided missile destroyer based in Norfolk, Va., is one of the newest ships in the Navy, staffed with more than 330 crew members.

The devices have simplified sailors' lives by providing them with their daily plans first thing in the morning, Whitehead said. Prior to the devices, sailors had to go to the few computers on board and print the schedule or continually check bulletin boards around the ship for updates ? an expensive and laborious process.

"We are loving them," said Fire Controlman First Class Jim Meeker. "No more waiting in line or fighting for computer time, and I haven't had a problem yet."

For the Navy, it means retention of sailors will increase, Whitehead said, adding that the return on investment is very high.

Another appealing aspect for the Navy is the quick implementation process. In the case of the U.S.S. McFaul, the deployment took less than two days, said John Inkley, manager of federal sales for Palm Inc., maker of the hand-held devices.

Palm saw revenue in 2000 (fiscal year ends in May) of $1.1 billion and earnings of $46 million. The Santa Clara, Calif.-based company had 632 employees in 1999.

"I see in the Navy replicating this kind capability for ship use across the board," Inkley said. "The Navy was pleased with the implementation process and the capabilities exceeded their expectations."

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