Tech start-up targets emerging corporate mobile mkt

HELSINKI, Sept 19 Mon Sep 19, 2011 6:13am EDT

HELSINKI, Sept 19 (Reuters) - Venture capital-backed telecom gear startup SpiderCloud Wireless aims to tap into the emerging market of small wireless networks which can be used inside offices, shopping centers and stadiums.

Telecom operators around the world are struggling with a shortage of network capacity as the use of video on smartphones and tablets proliferates, and are seeking new solutions to the issue.

Many of them have added new sites to manage the growing problem, but the technology just for a large base station can cost up to 40,000 euros ($55,000), while site and tower costs in towns could be much larger.

By comparison a basic small cellsite costs as little as $100. Such sites can then by linked together with SpiderCloud's technology, to be rolled out later on Monday, replacing the need to buy additional large base stations.

"We are seeing growing demand for ultra cheap, operator owned and managed small cell solutions for creating high speed mobile data coverage and capacity in enterprise environments," said Pal Zarandy, a partner at Helsinki-based consultancy Rewheel, which advises operators on data strategy.

Research firm Mobile Experts has forecast the market for such small cells to reach 7 million units in 2013 and grow to 15.5 million by 2016.

"There is a huge macro trend towards smaller cells," said Mike Gallagher, chief executive of SpiderCloud. "We can build a very big franchise here."

Analysts said the demand for solutions like SpiderCloud's was growing, but warned it could still be a tough sell to large operators.

"It would fit the job, but getting operators to buy in on it is still tough," said Earl Lum, founder of research firm EJL Wireless.

SpiderCloud said it was working with a few major operators already, but declined to give any names.

CEO Gallagher is a former president of Flarion Technologies, which was sold to Qualcomm for $600 million in 2006, and has worked for several technology firms which have been sold over the years to bigger players like Nortel Networks.

SpiderCloud is trying to find a niche in a market dominated by major firms like Ericsson (ERICb.ST), Nokia Siemens Networks , Huawei and Alcatel-Lucent , but Gallagher said there was no plan for quick sale.

"It would be nice to take one public," said Gallagher.

Founded in 2008, SpiderCloud Wireless has raised around $70 million from Charles River Ventures, Matrix Partners, Opus Capital and Shasta Ventures. ($1 = 0.725 euro) (Editing by David Holmes)

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