I-mate is stepping into the spotlight

Over the years, the Seattle area has been home to a number of successful wireless carriers. More recently, it has developed an expertise in building software for the mobile phone.

But surprisingly, and more quietly, the industry has begun to carve out a small pocket on the Eastside for manufacturers that develop, design and market cellphones for markets around the world.

I-mate, a company with significant cellphone sales in the Middle East, has been working behind the scenes here for more than a year on plans to launch its phones in the U.S. market.

With offices in Redmond, i-mate is the second phone manufacturer with a significant presence here. The other is Taiwan-based HTC, which has a regional headquarters in Bellevue.

Both of the phone makers are here to maintain close partnerships with Microsoft as they emphasize devices with the Windows Mobile operating system.

I-mate is planning to make a big splash this week in San Francisco at the CTIA Wireless IT and Entertainment show. Tuesday, it is expected to announce that its new line of phones, called Ultimate, will be sold in the U.S. within the next couple of weeks.

In addition to i-mate, dozens of local companies will participate in the annual show, which centers on wireless technology for the enterprise and the entertainment industry. Tuesday, events will kick off with a keynote address by Microsoft Chief Executive Steve Ballmer.

Facebook co-founder Dustin Moskovitz will take the stage Wednesday , and Atish Gude, senior vice president of Xohm, Sprint Nextel's wireless broadband division, will speak Thursday.

The Microsoft connection is key to i-mate. Nicole Buchanan, i-mate vice president of sales and marketing and head of the Redmond office, said the company was started by Jim Morrison, a telecom veteran from British Telecom, where he worked with Microsoft on early mobile devices running the Windows CE operating system.

Based on that experience, Morrison founded i-mate in 2001, specializing in Windows Mobile products. He established headquarters in Dubai, a country northeast of Saudi Arabia that's slightly smaller than Maine. Today, i-mate has about 200 employees, of which about 30 are in Redmond.

Morrison saw wealthy pockets in the Middle East where there could be strong demand for higher-end mobile phones. The Middle East, in fact, continues to be i-mate's largest market, along with Australia and Asia.

In the U.S., i-mate phones have been available for the past couple of years, but only on the company's Web site and with virtually no marketing.

I-mate is trying to change its image by establishing a brand identity here and not just in far-flung countries. So far, few in the wireless industry know much about i-mate.

The image many wireless people have stems from trade shows, where women trying to draw visitors to the i-mate booth wore T-shirts that read something like, "i-mate, do you mate?"

Novel route

The company is also taking a somewhat untraditional route to the U.S. market.

Buchanan said the phones will be sold on i-mate's Web site and through third-party distributors, but not through carriers — the way most people buy mobile phones today.

The i-mate customer will buy an "unlocked" phone that allows it to run on any GSM network, the technology that AT&T and T-Mobile USA use. It's up to the customer to find a cellphone plan.

Most carriers lock the phone because they subsidize the cost of the handset, which also makes it difficult for the consumer to leave one company and go to the next.

John Jackson, an analyst with the Yankee Group, said this sales approach will make things difficult for i-mate. Although many phones are sold this way in international markets, the business in the U.S. is mostly controlled by the carriers.

"Their challenge is obvious, and it's the channel," Jackson said.

"They don't have a tier 1 carrier lined up, so they're looking at an uphill distribution, marketing, branding and awareness-generation battle."

The one phone that recently began chipping away at this cycle is the iPhone. Although it was locked, its initial $500 to $600 price tag was not subsidized by AT&T.

Buchanan said her company thinks customers will start to buy phones this way in the U.S. so that they won't be limited to a carrier's offerings.

"We are going to see more and more of that now while people are looking for true freedom and flexibility."

Four new models from the Ultimate line are set to be launched this week, two of which are making their international debuts. The other two have been available in the Middle East.

All of the phones, which cost between $600 and $700, will run Windows Mobile 6, the latest operating system, and include cutting-edge hardware.

The phones run on the fastest GSM networks, called HSDPA, and have Wi-Fi, Bluetooth and a 2-megapixel camera.

They also come with an advanced service called XGA, which allows the phone to connect to a projector, plasma screen or TV. With that hookup, images on the tiny mobile can be viewed on a full screen at a desktop-monitor resolution.

The video capability can replace the need for a laptop. A business user, for example, can connect her phone to a wireless keyboard and mouse, as well as a TV, to type out e-mail or connect to her office computer remotely.

In a demonstration, i-mate showed how a 3D-modeling application could be pulled up as if the user were at a desktop computer.

On the consumer side, the user could load a movie on the phone's external memory and play it on a full-size TV at a friend's house.

"No one is doing it. This is truly a differientator for us," Buchanan said.

Besides Windows Mobile, i-mate phones offer a layer of software that enables various services, including one called Custom i-Q.

It allows a user or the user's IT manager to configure the phone with Web tools. It can adjust e-mail settings, for instance, or call up individual applications.

Picture frames

Beyond the phones, the company sells a digital-picture frame called the Momento, a product of A Living Picture, a Seattle and United Kingdom company i-mate acquired.

The Momento has a wireless connection that enables the frame to display digital photos and has an online service called Momento Live.

I-mate partners with Microsoft to develop this product into a device that could be used as a remote control for futuristic services in the home.

Despite the feature-loaded devices, the company has a long way to go in the U.S. to build its identity. It didn't help that some of its products sold here over the past year proved to be poorly manufactured.

The company, which trades on the London Stock Exchange, said because of a product recall, i-mate lost $2.9 million on revenues of $195.5 million in the year ended March 2007. That compares with the year-ago period when it made $21.5 million on revenues of $206 million.

"A year ago we had some quality issues, and some [devices] slipped through the cracks. We are now being more stringent," Buchanan said.

Tricia Duryee: 206-464-3283 or tduryee@seattletimes.com