Apr. 22, 2004 20:10
The first Sabra cellphone

Well over six feet tall with the build of a football player, Eli Reifman is a big guy. And that's a lucky thing, because as the CEO of Emblaze Group, the manufacturer of Israel's first homemade cellphone, he will be taking on some big competition.


If the 34-year-old founder of Emblaze has his way, the new Alpha 8, unveiled last month, will beat out Siemens and Ericsson to take the top spot at the high end of the global cellular phone market.

While "classic" cellphones concentrate on communication, Emblaze's revolutionary smart phone will allow you to send your grandmother in the States the latest video from you daughter's bat mitzva, take pictures of your family on your next vacation, watch video clips, read your e-mail, and more.

The first Sabra phone has the largest color screen available 6.25 cm. (2.5 inches) making it first and foremost a visual device. The phone includes a video camcorder and camera, movie screen, Internet, e-mail and video gaming capabilities, making it a mobile entertainment center.

The smart phone also becomes a point of sale. Not only can companies advertise on it but users can see the offered merchandise and buy directly through it. The device will even allow viewers to see ads only for products in which they are interested.

However, due to its small size this next generation of cellphone is still far from exercising its full potential and content must be specially tailored for them. It is shorter because the device is be handheld and has a short battery life. There should also be less movement which is more suitable to a small screen.

Reifman, who founded Emblaze at the age of 24, says that smart-phone technology is the next technological revolution.

According to Reifman four things are needed for a modern smart-phone network: a new breed of network, new switchboards, new terminal handsets (from voice only to color screens) and new mobile-related content (movies, Internet, etc.). He believes that some 80% of that infrastructure exists today.

RA'ANANA-BASED Emblaze entered the cellular market in 1998. In the beginning the company was oriented towards rich media over IP (Internet protocol) but didn't know at first how to make money out of it. In 1996

Emblaze developed its first prototype and began looking for a business model. It first thought of retail but quickly abandoned that.

Next it considered the professional market but rejected that as well. Only on its third model did they hit it right high-end cellular phones.

"In business, when you start the journey you have no idea where you are going to end up," says Reifman. "Nokia started out as a cable and rubber company and almost went bankrupt getting into cellular phones. 3M started out as a mining company. When we started out developing the next generation of communications we didn't know what we would use it for," Reifman said. "But this is not unusual. Some 70% of start-ups change their business model."

Six years ago Emblaze started selling its multimedia technology, mostly infrastructure and chips, and in the first two years sales jumped from $3 million to $30m. But just when sales were starting to take off the global recession hit, and for the past three years the company has survived on its vast cash reserves including the $179m. it raised on the London Stock Exchange. It has also used the time to work on its R&D.

But Reifman believes that the end of the slowdown is close. "We're seeing a noticeable upward trend frozen tenders are being reopened and postponed, commercial launches are finally going forward, he said.

"Within eight to 12 months I expect things will be back to normal and we'll return to growth."

Emblaze is divided into four companies active in the two middle fields of the smart phone technology switchboards and handsets.

Two are involved on the infrastructure side: Emblaze Systems, which provides end-to-end solutions for wireless multimedia, and Orca Interactive, which provides fixed line solutions for broadband TV. The other two companies are active on the handset side: Emblaze Mobile which designs smart phone handsets, and Emblaze Semiconductor which manufactures the control processors unique to smart phones. Samsung is one of its main clients for this product.

The Alpha 8 places Emblaze among the top leaders in the field of smart-phone technology, said Reifman. "We make up for our small size by doing only this. We also started much earlier than our competition." He predicts that in a year or two they will see who will come out on top.

One of Emblaze's competitors is also a partner Swedish giant Ericsson which cooperates with Emblaze on its MMS (multimedia messaging service) technology but competes in tenders in other areas.

THE EMBLAZE mobile phone is almost completely blue and white everything from the mechanics to plastics is made in Israel. In all, some 100 Israeli companies contributed to its development. Only the assembly is foreign performed by an Austrian company called Flextronics. But even this is temporary and the manufacturing is slated to be moved to Israel. Once this happens Israel will become part of an exclusive group of countries making mobile phones including Japan, Korea and Finland.

Only 30 companies make cellular phones of which only a third are capable of producing smart phones, said Reifman. "Cellular phones are very complex and therefore difficult to build.

They require at least 400 different components which all must fit into a very small space," he said. "It's a high-risk business as it takes tens of millions of dollars to develop a cellular phone."

At NIS 1,000 each, the price of the Alpha 8 is a bit steep, but Reifman said that this is half the price of the competition. For now Orange, which distributes the phones here, is concentrating on 16- to 25-year-olds, as they are the fastest to adopt new technologies. The phone is also being offered to providers in 30 other countries mostly in Europe and Asia.

The US uses a difference frequency but it will eventually be offered there too.

Reifman is especially confident about Emblaze's prospects locally. "In the next 10 years no one in Israel will use a foreign cellphone or they'll lose their citizenship," he says jokingly. "In Finland everyone uses Nokia and in Korea its all LG it's a matter of national pride."

But Reifman is quick to deny expectations of grandeur, saying that Emblaze does not see itself as the next Nokia. "We know we are light years away from them. We're very small and can't compete with prices resulting from mass production. We'll be a tier 2 or 3 player."

This does not worry him. "Even if we are the smallest of the cellphone manufacturers we can still make a nice profit. Some 500 million cellphones are sold globally every year and the smallest manufacturers sell between 2 million and 4 million. If Emblaze sells a similar amount we will still bring in a billion dollars in revenues annually."