Escher Group plans joint venture in the UK
Postal counter automation software vendor Escher Group plans to set up a joint venture in the UK with a leading Japanese IT vendor to address what they think is a huge opportunity in “topping up” pre-paid mobile phones.
According to Escher CEO Michael Murphy, the joint venture, which is expected to get off the ground towards the end of Q1, will leverage Escher’s flagship WebRiposte software.
Besides making it easy for consumers to buy more talk time or “top up” pre-paid mobile phone services instantly without having to buy cards and punch a series of numbers into their handsets, the venture will also provide other transactional services. Murphy said it would enable customers to establish credit.
Most British mobile phone users pay their bills with pre-paid cards. The joint venture plans to work with postal organizations to co-brand the service.
To fund the adventure, Cambridge, Massachusetts-based Escher is looking to raise $50 million in the near future.
Meanwhile, the company continues to build up a customer base for its core WebRiposte peer-to-peer messaging, data management and content distribution product suite.
WebRiposte can be used for a variety of postal activities including counter management, network management, track-and-trace, staff management and money transfer. It has been sold to 23 postal organizations so far with 18 currently implemented.
Escher’s customers represent a Who’s Who of the world’s postal organizations including An Post, Royal Mail, Australia Post, Singapore Post, Deutsche Post, Post Denmark, Namibia Post, Greece Post, Austria Post and Portugal Post.
Having earned its spurs abroad, Escher is now turning to the large market opportunity in the US. It recently teamed with IBM to slice off a piece of the US Postal Service’s plans to upgrade its technical infrastructure.
Besides providing its core software, Escher is also eyeing consulting opportunities should the USPS pick the IBM/Escher bid. If the team wins the contract, Murphy reckons Escher’s revenues will jump to $50 million.
It’s not clear when the USPS will make a decision. “The USPS is not known for making the most expeditious decisions,” Murphy said.
While focused on WebRiposte, Escher has been testing new products such as StampStudio for creating personalized stamps, MicroMeter, a software-based postage meter, and Subscription Mail so customers can select a monthly mail plan based on the number of items they expect to send every month. According to Murphy, the new offerings have yet to generate huge amounts of revenues. “Everything we’re doing here is exploratory from a business point-of-view. We are not betting the company,” he said.
Escher plans to push the new products beyond their current test markets once they’re stabilized.
This year, Murphy expects Escher’s revenues to be flat at $28 million. “The last two years have not been boon years for the tech industry,” he intoned matter of factly. Still, with margins of 35 it’s doubtful that Murphy has many sleepless nights.
