Microkey has entered into a Strategic Association with 3Com, a world leader in computer adapter hardware, which has opened up many very exciting, new business opportunities for the company. This issue of Keynotes is devoted to describing these new opportunities. It also outlines how the company is planning to exploit these opportunities in a world that is on the brink of a revolution in the conduct of business, professional, educational and personal communications.
The revolution in communications is being sparked primarily by the extraordinary growth of the "World Wide Web" (WWW or simply "The Web"). The Web is rapidly transforming the global Internet computer network into a user-friendly tool for the vast population that is already proficient with the dominant "Windows" interface to the Personal Computer (PC). The educational and personal communications aspects of the Internet are already well established and growing rapidly. The Web has created a capability for performing both academic research and business marketing research that is so vastly superior to anything previously available that it is now commonly accepted that academic institutions and businesses that do not provide Web access are at an increasingly growing disadvantage. An even larger, added growth component is projected in the stampede to exploit the business potential of the Web. For example, it is already economical for even small businesses to take orders from an "illustrated", full color electronic catalog of their products and to shop for supplies in a similar manner over the Web. Within the next year, a consortium of major banking organizations are planning to add the capability to also receive and send "electronic checks" over the Internet to complete transactions. The Internet has not yet reached the critical mass to become the ubiquitous business communication channel. However, it is growing at such an unprecedented rate, both in terms of users and in business applications, that it is only a question of just how many months it will take until efficient Web access by telephone becomes an essential requirement for businesses to remain competitive.
A second set of forces driving the communications revolution are the competitive, social and environmental pressures for employees to "telecommute" to work from their home locations. It is projected that for businesses of almost every size to maintain competitiveness, they will soon need the capabilities to "connect" telecommuters to their voice, FAX and data resources as though they were on site. The speed of information transfer that is possible by modem with the normal, "analog" phone service is insufficient to make most of these telephone-computer "Telecom" applications practical in a business environment. This has finally led to the long awaited, growth in the deployment of the digital phone service (ISDN). With ISDN adapters (sometimes called "ISDN modems"), PCs can more than quadruple the highest speed of information transfer that is possible with the most advanced analog modems. The ISDN service also enables incorporating the advanced voice telephony features required to support telecommuter operations (such as multiple, shared call appearances, call forwarding to telecommuters, call transfer and conferencing) into existing PCs without incurring the high cost of Private Branch Exchange (PBX) equipment and of digital feature phones.
Microkey's business focus is the development and the distribution of the software that is required to implement combined computer access and voice telephony capabilities within a consistent, user-friendly, Windows-based interface. We firmly believe that the preferred means for meeting most business communications needs is through the integration of the Internet capabilities with those of advanced voice telephony capabilities. This integration of capabilities is extremely challenging since developers require an in-depth knowledge of the PC operating system (e.g. Windows), the telephone system and of the telephone-PC adapter hardware, as well as the complex protocols for their inter-connection. Microkey has demonstrated its ability to successfully address this challenge, as is outlined below. We believe that the company is positioned to emerge as a significant supplier of ISDN-based software and as an integrator of ISDN-based telecom solutions within the next two years, during which ISDN-based Telecom is projected grow into an enormous market.
Under the Strategic Association with 3Com Corporation, Microkey and 3Com are considering the co-marketing of complete ISDN solutions that include Microkey software and 3Com ISDN Access hardware. Microkey is developing an initial software package to facilitate Web data access and retrieval (known as a "Web browser"), to send and receive a FAX by computer, and to provide high speed data transfer through the PC serial port to an external 3Com ISDN adapter box. It will only require plugging into this box the cords from an existing phone and PC and loading a single Microkey disk to implement the "ISDN solution". 3Com will be offered the right to bundle this Microkey software with every ISDN adapter box for a per box royalty to Microkey with an exclusive bundling right for one year. The companies are also working together to coordinate future hardware and software developments to implement a sequence of other features, including advanced voice telephony.
Microkey also receives deep OEM discounts for the entire line of 3Com ISDN Access hardware in return for having assigned its intellectual property rights for certain ISDN technology to 3Com. The company believes that these deep discounts will enable it to compete aggressively in making bulk sales of ISDN hardware/software solutions through collaborations with Internet access providers, regional phone companies (many of whom are also expected to soon become Internet access providers), large corporations setting up ISDN/Telecommuter systems and similar channels.
Through this combination of royalty-based indirect software distribution and the direct marketing of bundled hardware/software solutions, the company expects to rapidly establish a broad installed base of Microkey software. The company expects to offer a continuing sequence of upgrades to this customer base to establish a long term source of increasing revenues. Microkey shares intellectual property ownership of the Multimedia Call Management System (MCMS) with NYNEX, one of the Regional Bell Operating Companies (RBOC's). MCMS was conceived by NYNEX Science and Technology to implement advanced telephony features with ISDN service and was jointly developed by NYNEX and Microkey to NYNEX specifications. MCMS enables the capabilities of a full-featured, digital telephone to be emulated on a PC connected to any existing phone receiver. MCMS also emulates many of the features that were previously only available through a private branch exchange (PBX).
These capabilities include logging all calls, implementing the phone company EKTS facilities for "sharing" multiple call appearances (i.e. incoming phone calls) with a simulated "Message Desk" operating on a PC. In the MCMS Windows environment, the Caller ID of an incoming phone call is looked up in a database to retrieve caller information which is then displayed in a "pop-up window". This enables the person called to decide whether to "take the call" or direct it to the message desk by simply clicking on the appropriate "button" - without affecting other ongoing computer usage. Calls can be automatically forwarded to telecommuters who are effectively connected to their company's "switchboard" with "caller ID", "call waiting" and conferencing features implemented.
The company expects to install a working prototype of an Electronic Catalog on the Web as part of a paid business system development for one of the world leaders in the distribution of classical sheet music. The system design allows customers to search for, view and order sheet music over the Web. Microkey expects to obtain the right to use this application to remotely demonstrate the entire flow of an Internet business transaction. This will enable the company to demonstrate comprehensive ISDN/Internet solutions within an actual business setting.
The company also plans to enter into strategic associations with companies that offer complementary, "high density" ISDN information management systems in order to provide Total ISDN Solutions to business clients. Microkey believes that within the next two years, a large market will develop for packaged, ISDN-based telecom systems that integrate advanced data and advanced voice telephony features under a consistent Windows interface. The company believes that it has demonstrated its ability to design or develop certain aspects of such systems and to establish relationships with companies that complement Microkey capabilities in providing the remaining aspects of total ISDN solutions.
Microkey is focusing its present efforts on preempting the ISDN/Internet-driven telecom market in its infancy. The company believes that it has an excellent chance to establish a significant software presence early on in this market. The company plans to build up to a fully compatible product line of ISDN-based telecom solutions under the "Switchboard 7" (SwB7) trade name. For all products, the company intends to offer periodic software upgrades on approximately an annual basis. The working names of the product offerings and their anticipated contents and release dates are as follows:
The company expects to shortly relocate to larger facilities in Manhattan where it plans to display and demonstrate its products and from which it will conduct its marketing and management activities. The company is also planning to move its development activities to an office in the vicinity of Holmdel, New Jersey, where the company believes that it can attract top level telecom developers. The two locations will be linked with state-of-the-art voice, data and video communications equipment. These links will utilize the company's product line and will also act as one of the operational test beds for these products.
Demonstrations of Microkey products in this manner will intend to show how businesses can easily set up "satellite offices" from almost anywhere and point out the benefits of this decentralization.
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