Siyata Mobile Inc. (CVE:SIM) CEO on Profitability, Market Penetration
Siyata Mobile Inc (CVE:SIM) CEO Marc Seelenfreund joins James West in-studio to discuss future cash flows and business outlook for his company.
James West: I’m joined now by Marc Seelenfreund; he is the CEO of Siyata Mobile, trading on the TSX Venture under the symbol SIM. Marc, welcome back. It’s been five years since we had this conversation.
Marc Seelenfreund: Thank you very much. Nice to be here.
James West: Yeah. Okay, Marc, so give us an update: What has happened over the last little while for Siyata Mobile? You seem to be making some great progress.
Marc Seelenfreund: So we’ve been working with a Tier One US carrier to launch our key product, which is the UV350. That is the first smart phone that was made specifically for commercial vehicles. Just to give you an idea, there are over 13 million commercial vehicles in North America; those could be buses, trucks, ambulances, police cars, RCMP vehicles. We’re about to launch in the United States. We launched with Bell about three months ago. We started sales already in Canada of this product, and we’re very excited that now we’re going after the largest market in the world, which is the United States, and we’ll be doing that with AT&T, which is obviously one of the largest operators in the United States and in the world.
The market opportunity for us there is tremendous, and we think that it’s going to be a game-changer for the company going forward.
James West: Okay. What is the difference between a cellular device for a commercial vehicle versus a normal one?
Marc Seelenfreund: So if you want to use your iPhone or your Samsung phone in a truck or in a bus or in a police car, first of all, it’s illegal, but second of all, it won’t work well; the noise cancellation is an issue, so the person on the far side picks up all the noise that’s in the background in that truck in that vehicle, and therefore, regular consumer devices are not appropriate for commercial vehicles. Not to mention that they’re not legal.
We’ve created a device that replaces land mobile radio, so really what we’re doing is, we’re not replacing a cellular handset per se; we’re replacing a land mobile radio, which is used by millions of fleets around the world.
James West: Okay. So it’s essentially a cell phone based on two-way radio bandwidth and technology?
Marc Seelenfreund: So it’s a cell phone that is based on something called Push to Talk Over Cellular.
James West: Oh, okay.
Marc Seelenfreund: Which is the cellular version of land mobile radio, and that’s really where we see the market moving. We think that that’s going to be the market going forward. land mobile radio has been around for about 50 years; the next generation of land mobile radio is Push to Talk Over Cellular. This is something that all the major North American cellular operators are very focused on, so whether it’s Bell, Telus, Verizon, Sprint, AT&T in the United States, and we are the only device that is made specifically for commercial vehicles. And as I said, there’s about 13 million commercial vehicles in North America, so there’s a very large-scale market for us.
James West: Sure. How much of that market can you capture over time, do you think?
Marc Seelenfreund: We think that we can certainly sell, you know, hundreds of thousands to millions of devices. One thing that I didn’t mention is that [inaudible] We think that we can sell anywhere from hundreds of thousands of devices to millions of devices. The US government recently set up a network together with an AT&T called FirstNet, which basically allows first responders to use Push to Talk Over Cellular using cellular phone technology. We are going to be the first, and probably the only, device in the near-term that has a specific device for commercial vehicles. So for the FirstNet network, obviously, so that means that police cars, ambulances, fire trucks, even yellow school buses, will be able to use our device. And again, it’s millions of devices that can potentially go into these types of vehicles in the United States and Canada, so it’s a very large market.
James West: Right. What have you got to deal with in terms of competitors who might be targeting the same audience?
Marc Seelenfreund: So we started the company about seven years ago, and we’ve already sold over a quarter of a million devices that are 3G devices, cellular devices, for commercial vehicles. We don’t have any competition; we don’t know of anybody that has made a smart phone that has Push to Talk Over Cellular capabilities. There’s nobody else out there that’s doing it at the current time, and we think that we certainly have a two to three year edge or lead over any competition that would want to come into this market and do something similar.
James West: So are you expecting to expand into global markets at some point?
Marc Seelenfreund: We’re going to be very focused over the next year, certainly, in the United States and Canada, but we do expect to also go into additional markets. We’re already in trials in markets in Europe; we plan to also start in South America. But clearly, the main market for us is going to be in North America.
James West: Okay. And do you manufacture your devices?
Marc Seelenfreund: We manufacture all of our devices, correct. We develop the devices, we manufacture them, and then we sell them to the cellular carriers.
James West: Oh, interesting. And so what kind of margin business is that?
Marc Seelenfreund: So the margins are very healthy; I can’t say specifically what the margins are going to be, but it’s clearly going to be much healthier than the margins that we’ve had until now, and I think that there’s going to be a dramatic change in the company, both in our top line numbers and our bottom line numbers simply because we’re going into much larger markets with a device that’s going to cost, you know, the end customer around $1,000. The devices that we’re selling until now cost the end customer around $300, so the ASP is about three times the price of what we were selling until now, and the gross margins are very healthy.
So we think that for a company like Siyata, which is a small micro cap company, going into the United States with a large carrier as partners, we think that it’s going to be very dramatic for the company.
James West: And is this something that the major carriers would ultimately see as a valuable offering for their product line?
Marc Seelenfreund: Oh, I can assure you that the carriers would not be launching our product if they didn’t feel that it was very valuable for their customers.
James West: Okay.
Marc Seelenfreund: All of these carriers only range products that they feel they can sell large quantities of the products and bring value to their customers. So certainly, this is going to be a valuable product for the carriers.
James West: Interesting. So how much time and how much more money are you going to need to get to a state of profitability?
Marc Seelenfreund: We believe that, already in the coming quarters, we’ll be profitable.
James West: Oh, great.
Marc Seelenfreund: And we think that the company is going to be a very different company simply because we have much larger markets that we’re going after, that we didn’t have until now. We’ve spent about two and a half years working to get approval at AT&T and at FirstNet; that’s what I was saying. The barrier of entry is extremely, extremely high, and I think that all of the work that we’ve done until now will allow us to bear the fruits in the coming years from this product and from future products that we plan to launch in the coming years.
James West: Okay. So when you say ‘future products’, is there an R&D effort that continuously develops and rolls out new products?
Marc Seelenfreund: These are technology products, and there’s always R&D efforts that are ongoing. Of course we’re going to be launching a 5G product, probably sometime at the end of next year or in 2021. So that is in the works. We always want to stay ahead of the market.
Having said that, we believe that the current product, we’ll be able to run with it for many, many years; three, four, five years at least, similar to our 3G product which we launched in 2013, and has been working until now. So we’ve been selling that product for about six years, so it’s not like a regular handset that you switch every 18 months; these product sit in a truck and you can sell that type of a product for many years. So we’ll have a 5G product next year, and we’ll have additional products that are currently in development, for sure.
James West: Is it conceivable at all that this will ultimately become a consumer product?
Marc Seelenfreund: We don’t believe so. Our products are made for commercial vehicles specifically. Everything in our world is hardwired, so unlike, you know, every consumer likes to have everything Bluetooth and wireless and whatnot, because these devices are mission-critical devices, you have to be able to reach a police car. You have to be able to reach the bus. It has to be connected to the battery; it has to always be charged. It has to be connected to an external antenna so that you have better connectivity and better coverage.
Because of that, our devices are very focused on commercial vehicles and on enterprise customers, and not necessarily on consumer customers.
James West: So I’m just curious, when you say 5G devices – does that mean that you’ll be competing with the likes of Huawei and all of those big 5G infrastructure providers?
Marc Seelenfreund: No, definitely not.
James West: Do you need to rely on them for your devices to work?
Marc Seelenfreund: No, no, no. We work on the infrastructures that are in place from the cellular carriers. So if Bell has an infrastructure from Nokia or from Motorola or from any other infrastructure company, of course we’ll be working with their infrastructure. We can work with any infrastructure; we’re not dependent on Huawei or any other Chinese vendor. But our products are, in essence, neutral, and we can work with AT&T or with any of the US carriers on any infrastructure that they may be using.
James West: Okay. Finally, what are the big milestones you hope to hit in the next six, 12, 24 months that are really going to transform the company?
Marc Seelenfreund: Revenue, revenue, and profit.
James West: [laughter] That’s a good answer! That’s a great answer. All right, Marc, we’re going to leave it there for now. We’ll come back to you in a lot less than we did last time. Thanks very much for joining me today.
Marc Seelenfreund: Thank you very much, I appreciate it. Thank you.
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