By ADAM GIFFORD
Auckland company Jungle Drum's development of applications using SMS (short messaging system) protocols has led to a merger with United States company BulletIN, which makes SMS gateways for telephone companies.
Jungle Drum chief executive and founder Michael Buisson, who takes a seat on the three-member board, said BulletIN would move its research and development from Atlanta to New Zealand.
This would mean staff numbers would double this year from 12 to 24.
BulletIN provides the text message server used by Vodafone New Zealand.
"We figured out how to use their gateway to connect text messaging to the internet, and they got interested in us," Mr Buisson said.
BulletIN invested in Jungle Drum last year, with the intention of building up to a 50 per cent stake, but realised a merger would benefit both companies, while preserving cash.
Jungle Drum shareholders end up with 10 per cent of BulletIN, which roughly equates to their relative sizes. Mr Buisson said Jungle Drum's revenue last year was about $2 million, while BulletIN turned over around $20 million.
Jungle Drum will remain as a product suite within the BulletIN product range. In New Zealand, the combined company will operate under the Jungle Drum brand.
Mr Buisson said it was a good match.
"We become part of a high-growth wireless internet company with excellent prospects, particularly in the emerging Asian market," he said.
"BulletIN gains new text messaging applications to fill out its product offering, and beefs up its research and development capability."
He said BulletIN owned text messaging gateway patents which would protect the merged company from direct competition.
Jungle Drum brings to the party its patent for one-touch reply capacity.
When someone sends a message by email to a mobile phone, the Jungle Drum application retains the information needed to keep the reply in context.
"If someone sends you a message saying 'Lunch today?' it makes it that much simpler if you can just reply 'Yes' or 'No'," Mr Buisson said.
Mr Buisson started Jungle Drum five years ago after returning from Australia, where he had worked for Telecom Australia developing wireless communication.
"SMS is an accidental technology. It comes through a signalling channel used by mobile phone companies to send messages to subscribers," he said.
"Companies like ourselves and BulletIN came along and said we can use it for something else. Telcos generally ignored it - they only started to take notice about two-thirds of the way through last year, once the volumes got high enough."
Jungle Drum started out supplying software to sit on company servers. It now works as an application service provider (ASP) running its own server, which has a direct connection to the SMS gateways.
Customers include IBM, Defence, Police, Chubb Security, Transfield, Indeserve, Sky Television, Lion Breweries, Datacom, Farmers, Harcourt's, Tranzrail, Contact Energy, Qantas and HortResearch.
The application is used for monitoring servers, job dispatch to field engineers, contact managing and scheduling.
Ford has linked it with a database to allow dealers to use their mobile phones to check the lease details of vehicles being offered for sale or trade.
"Companies start using the product, and when we meet up with them we find they're using it for all sorts of things you'd never think could be done with web messaging," Mr Buisson said.
Typical Jungle Drum customers are up and running in a day, at a cost of a few hundred dollars, with ongoing costs of about $35 a month per user, plus messages.
He said that because the US telecommunications environment was still a confused mess, the merged company's main focus would be on Asia, particularly mainland China and Japan.
The development priority would be to expand the application to support double byte characters, needed to support Mandarin and, other non-Roman character languages such as Kanji.
Mainland China has 21.6 million mobile phone users, a figure expected to increase threefold over the next four years.
The number of email users in China is expected to increase from 4.66 million to 27 million over the same period.
Japan's 37.8 million mobile phone users are expected to double by 2005 and its 12 million email users to reach 45 million.