The hits just keep on coming
Canada has a proud tradition of telephone innovation and the trend looks as if it will continue, if the number of fast-rising wireless companies is any indication
Last Updated Nov. 21, 2007
By Peter Nowak, CBC.ca
There's something about Canada and telephone innovation.
It started way back in the late 19th century, when Alexander Graham Bell was experimenting with what would become the first telephone at his family home in Brantford, Ont. While Bell was Scottish born and the telephone was patented in the United States, much of the work that went into it happened on Canadian soil.
Skip forward a century to 1973, when cellphone inventor Martin Cooper made the first mobile call. Although he made the call in New York City, Cooper spent much of his early years tinkering and learning his craft at his family home in Winnipeg.
Research In Motion Ltd. president and CEO Mike Lazaridis, left, and chairman and co-CEO Jim Balsillie, Oct. 29, 2003. (Aaron Harris/Canadian Press)
Just over 20 years later, Mike Lazaridis and Jim Balsillie launched the BlackBerry e-mail device through their small Waterloo, Ont.-based company, Research In Motion Ltd. The duo started a revolution, in which the ability to make a voice call on a cellphone seems to be becoming secondary to its mobile internet capabilities.
In its annual survey of Canada's fastest growing firms, released in September 2007, global tax consultancy Deloitte found that 13 of the 50 rising stars — or more than one-quarter — were telecommunications companies. Wireless firms — Ottawa-based BTI Photonic Systems Inc., and Toronto-based Tira Wireless Inc. and MyThum Interactive Inc. — took three of the top five spots.
The survey measures revenue growth over the past five years. While Waterloo-based Sandvine, which makes tools to manage broadband networks, took top spot, BTI and Tira tied for third with a revenue increase of more than 16,000 per cent, followed by MyThum at almost 14,000 per cent. BTI's main focus is making mobile phone networks more efficient, Tira helps game developers put their products on cellphones, and MyThum creates wireless services such as the popular Punch Much text voting system for videos on MuchMusic.
John Ruffolo, head of Deloitte's telecommunications, media and technology practice and the report's author, says the prevalence of wireless companies on the Fast 50 list can be explained by a number of factors.
A strong Canadian legacy in telecommunications, rooted in companies such as Nortel Networks Corp. and Newbridge Networks, which was purchased by France's Alcatel in 2000, has resulted in a good deal of telecommunications knowledge being dispersed through firms around the country. Toronto and Montreal were also strong centres of innovation in digital media in the mid-1990s, and many of those companies produced people that are now working in wireless innovation.
"They all had legacies in those '90s digital media companies," Ruffolo says. "These are all companies that are taking all that digital media know-how and applying it to wireless applications."
"RIM is building up an ecosystem that is going to be providing the fruit for a number of years to come."
– John Ruffolo, head of Deloitte's telecommunications, media and technology practice
There's also the RIM factor, he says. The BlackBerry maker recently became Canada's most valuable company and there is no end in sight for its growth. It placed 41st on the Fast 50 with five-year revenue growth of 436 per cent. The company continues to attract innovative minds from around the world and has transformed Waterloo into a technical research hub. It's only a matter of time before RIM in turn spawns wireless progeny, as engineers currently working on BlackBerry devices eventually strike out on their own.
"RIM is building up an ecosystem that is going to be providing the fruit for a number of years to come," Ruffolo says.
Michael Carter, president and chief executive officer of MyThum, says Canada is a hotbed for wireless innovation because it is a much easier market to break into, especially when compared to the United States. Having three big national cellphone carriers — Rogers Communications Inc., Bell Canada Inc. and Telus Corp. — certainly beats the regional and fractured nature of the U.S. market.
"The market is much cleaner in Canada," Carter says. "If you're doing it well, there's a tremendous opportunity for you to succeed in Canada and get recognized for that because of the size of the market."
"There is a fear that we can't run with the big dogs."
– Lance Laking, president and CEO of BTI
Canadian wireless innovation is being recognized internationally as well. St. John's-based Consilient, which designs e-mail software for cellphones, was given the Asia Mobile Innovation Award on Nov. 15, 2007, in Macau, China, by the GSM Association, a trade group that represents more than 200 carriers around the world.
With the large number of wireless innovators rising quickly in Canada, it would seem the odds of another success story like RIM happening are fairly good — but that's not necessarily the case, Ruffolo says.
Canadian technology firms tend to sell out early and very few stick it out to become internationally competitive giants, he says. Part of the reason is a lack of venture capital, but a lack of entrepreneurial spirit is also to blame, according to Ruffolo.
"Canadians just don't focus in on building the billion-dollar companies," he says.
The announced sale of Ottawa-based software maker Cognos to IBM Corp. in November is just one example. Cognos could have been an acquirer of other software companies, but instead threw in the towel, Ruffolo says.
"They just got tired and basically said it's too tough," he says.
Lance Laking, president and CEO of BTI, agrees with Ruffolo's assessment — Canadians sell out because of a lack of funding, but also because they're afraid to go global.
"Sometimes there's just no other way to get scale," he says. "There is a fear that we can't run with the big dogs."
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