Magellan/23″/mike1st/mark2nd

By DANIEL TAUB

Staff Reporter

Imagine you’re the chief executive of a software company and on vacation. Not the type to merely relax poolside, you’re sailing your boat and unreachable by cellular phone or radio.

Back home, your company has received a takeover offer from a large Silicon Valley competitor. Even though you’re miles offshore, your colleagues back home are able to send you an e-mail letting you know about the offer.

How is it possible? With a device made by San Dimas-based Magellan Corp. that is now hitting stores.

The handheld device the Global Satellite Communicator 100, which retails for about $1,000 uses communications satellites owned by Magellan’s sister company, ORBCOMM, to send and receive messages. It also uses the U.S. Department of Defense’s constellation of 24 Global Positioning System (GPS) satellites to provide coordinates, and then transmit those coordinates via e-mail anywhere on earth.

The device is the latest wrinkle in the fast-growing market for GPS technology still dominated by military, aviation and mapping uses, but rapidly shifting into the consumer sector. By 2000, 60 percent of the market will be in consumer applications, such as car navigation and mobile communications, according to the U.S. GPS Industry Council, a trade group.

The use of the GPS in car navigation systems computers mounted next to drivers telling them where they are and how to get to their destinations has become widespread in rental and luxury cars.

Those systems are made by Magellan, Monrovia-based IVS Inc. and other companies. But analysts say the technology is finding its way into additional uses, such as the GSC 100.

Even in the short time Magellan’s global communicator has been on the market (it hit retail shelves in August), it has attracted attention.

“It’s a product I’m afraid to put on the shelf because there’ll be fistfights in the showroom,” said Ken Englert, owner of Maritime Communications in Marina del Rey, which supplies radios and other communications devices to professional and recreational boaters.

Englert said he has only sold a few of the backordered GSC 100s as many as he has been able to get and that he has a waiting list of about a dozen people eager to buy one. Englert said he has made a point of not mentioning the devices to too many customers, given how hard it’s been to get them in stock.

“I’m planning on beating the drum when we’re getting closer to a speedier response on orders,” said Englert.

Magellan spokesman Don Meyer said about 1,500 of the communicators have been shipped so far, and another 500 are on backorder. By December, Magellan will be shipping about 1,000 communicators a month, he said.

The handheld device is powered by a rechargeable battery and comes with a small alphabetical keyboard and an LCD screen for reading and composing messages. It weighs two pounds and can store up to 100 messages and 150 addresses. Unlike a pager, which can receive messages constantly, the GSC 100 only checks for new messages when told to do so by its user.

Revenues come from two sources: sales of the devices themselves and user fees paid to ORBCOMM. Users pay $29.95 a month to send or receive up to 10 messages and up to 30 message checks. Additional messages and checks cost extra.

Chuck Boesenberg, Magellan’s president and chief executive, said he expects his company to sell about 10,000 of the devices in 1999, and even more when the price for the communicators drops by as much as half in the next 12 to 18 months.

“You start reaching a $499 price point and I think it will become much more of a mass market of hunters, fishermen, people who need to communicate and communicate positions,” he said.

Boesenberg said Magellan is also looking to market the electronics of the GSC 100 without keyboard and display screen to shippers who would mount them on packages and containers. The devices then would be able to e-mail messages indicating exact location.

Boesenberg said he expects Magellan to sell about 10,000 of those devices in 1999 as well. “It will be a nice, profitable business for us,” he said.

Paul Nisbet, president of Newport, R.I.-based JSA Research Inc., an investment research firm that follows Magellan’s parent company, Orbital Sciences Corp., said the market for GPS devices is very competitive and not always profitable.

“It’s just a highly price-competitive business anytime you get into the markets for goods of that sort consumer goods,” he said. “You sell things for profits measured in tenths of a cent at least that’s what the supermarkets do. This is not quite as drastic at that, but it’s not a highly profitable business.”

Nevertheless, Nisbet said the GSC 100 is a unique device and could generate significant revenues for Magellan sister ORBCOMM. “It’s a little expensive to get into $1,000. But I think those prices will come down.”