BusinessWeek’s got a puff piece on Xero Mobile, the second coming of Gizmondo I wrote about earlier this week. It repeats the company’s projections that it will 5 million users by the end of 2007, and will generate $1.5 billion in revenues “in its third year” (2008, I presume, but in any case, good luck with that).
The biggest red flag: Xero says it only needs $190 million to get going, but its customer-acquisition plans this year are to give out 1 million free cell phones to college kids, which BW says will be “equipped with Bluetooth, WiFi, and the ability to run video”. It then plans to give out 4 million in 2007. That’s a hell of a lot of handset subsidies.
The “plan” then is to send kids four video ads per day, and in exchange for watching each ad, they’ll get between one and five minutes of free airtime. So that’s a maximum of 600 minutes, a minimum of 120, essentially — keep in mind it’s pretty easy to find plans that offer 600 peak minutes and unlimited nights and weekends here in the US for about $40. And judging by the way I see students using their phones when I go to the UT campus here in Austin, they’re having no trouble paying their bills.
The kicker here is the last paragraph, where BW quotes a startup adviser who says Xero’s shares are risky. That’s quite a revelation, considering they note in the first graf that Xero has gone public with no product, customers or revenue.
[tags]mobile, xero, gizmondo[/tags]
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