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As the car commercial states, wider is better. That is the rationale behind the recent reorganization at Winfire Inc.
Founder, chairman and CEO Chad Steelberg has created a new parent corporation, Steel Holdings Inc., to oversee the existing Winfire Inc. digital subscriber line service and a new software licensing business dubbed Octive Technology Inc.
Creating a new subsidiary to handle software licensing was necessary to get the business off the ground, Steelberg says. Here's why:
The Winfire DSL service-known mostly for its FreeDSL service as well as a menu of pay DSL offerings-now has about 45,000 digital subscriber line customers. In the process, it has developed its own network operating system, which handles automatic provisioning, network interface, billing, Internet browser software, e-mail and technical support. It also can work with satellite and cable networks, Steelberg notes.
In September, a group of ISPs and network operators approached Winfire with the idea of licensing this all-in-one software. But the arrangement hit a snag because of Winfire's status as a competing ISP, according to Steelberg. So separating the company into two subsidiaries with Octive handling the software licensing will solve that snarl.
It appears to be working-less than a week after announcing the restructuring, Octive landed its first software licensing deal with FIRETAP Communications, Inc., a service provider catering to the real estate market.
Setting up the software business diversifies the business beyond simply providing DSL service. "With the parent company overseeing the subsidiaries, the company will stratify all of the value in the supply chain," Steelberg says.
"Just to be an ISP doesn't work," he adds. "You can't just make money on service."
Meanwhile, Winfire expects to become cash flow positive in the second or third quarter this year, Steelberg says. The company also hopes to log in 450,000 to 500,000 customers by the end of the year.
Strategic partners will initaially fund Octive, and Steelberg expects to close a round of funding soon. He estimates Octive will need an additional funding round before it becomes profitable-if all goes well, that will be sometime in early 2002.
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