Seeking Alpha
Long only, value, special situations, newsletter provider
Profile| Send Message| ()  

In March of 2011 CommerceTel Corporation, now Mobivity (OTC:MFON), acquired what may be a key patent in the telecommunications and internet sector. The patent covers a system for using telephone numbers as a key to address email and online content without the use of a lookup database. The system uses a phone number to access a website, or an email address, in exactly the same way it is used to dial a telephone. As phone numbers, via texting, have become a key element of mobile marketing and customer loyalty programs with database retention involved, U.S. Patent number 6,788,769 B1 may position the Arizona firm with a piece of highly relevant intellectual property (IP).

Along with the telephone number keyed addressing, the patent details the use of application-based directory systems utilizing telephone-keyed addressing to bridge between the existing numbers and addresses of any of the owner's communications devices.

A look at how major technology firms such as Apple (AAPL), Microsoft (MSFT), and Google (GOOG) are using this type of technology, brings to light a very significant possibility that Mobvity may be sitting on a very relevant, powerful, and valuable piece of intellectual property. How this plays out in terms of benefiting the Arizona firm depends on how management exercises its options in the future. Regardless, the company is building an impressive list of clients in niche industries and adding strong revenue numbers as the quarters move along. Mobivity is a $6 to $7 million dollar Market Cap firm, barely trading one and a half times the revenue, a good definition of a ground floor opportunity for investors.

A look at how other powerful industry firms are using like technology provides an indication of some value. Google Voice provides users with one number for all phones; essentially a phone number that is tied to an individual, not a device or a specific location as with previous telecom-like systems. Google PR would tell you it's a simple way for consumers and business to use phones, access voicemail, email, customize calls, etc. To be clear, Google's voice is not a specific phone service, but more of a management system that runs on all types of phones, mobile and desk type, VoIP etc. It is conceivable that this management system uses proprietary routing technology, not developed by Google, in order to function and reach all devices. Specifically, the product uses smart technology to route these calls to the multiple devices users opt into their network of devices. Taking a look at Apple's recent iOS release, the system enables the user to now have their text messages routed. Messages route over iMessenger so if someone sends another user a text, and that user is on iMessenger, and has a phone number registered with a iMessenger account, that text message will show up on any Apple client device that is using iMessenger such as a laptop, iPad, and iPhone. Users can receive these text messages to all of the devices, as well as, being able to send text messages out to phone numbers from any of those devices.

Microsoft is reportedly using this same type of technology in Windows Mobile versions and has cited the patent frequently in its IP filings.

Some evidence of how important this patent may be could be how others in the industry cite it in subsequent patent filings according to CEO Dennis Becker. Patent number 6,788,769 B1 reportedly has upwards of 60 some odd subsequent patents that cite it. Some of the firms include Microsoft (over 20) Facebook (FB) (19), AOL (AOL)(7), Verizon (VZ) and on and on.

The convergence of phone number information in an internet address is essential in how systems like this work and are managed. When an individual sends a text message to another person's phone number and it routes to a destination such as a computer, which does not have a phone number, but rather an internet address , smart technology has to intercede to assist that phone number to load up the internet address or vice versa. That patented smart technology provides for the novel directory system and that directory system is essential with any telecommunications transaction because a phone number does not provide for where the destination is or that contact end point.

Reportedly companies like Apple, Google, and much of the telecommunications industry as a whole, route information in this manner using patented technology to do so. Keeping an eye on, and developing an understanding of what large players in industry are producing with key technology, can provide insights into small cap opportunities as often their IP assets will surface in time.

Mobivity's 52wk Range is $0.20--$1.50, almost nowhere to go but the obvious as a trickle of goods news about partnerships and new contracts continues to flow. It seems clear that management is opting the route of building on their IP assets rather than chasing others with litigation who appear to using their technology. The constant citing of their patent may build into a great value later. Management is building a business one contract and strategic agreement at a time and expanding their user base and reach in multiple industries. While this does not represent a quick path to riches, it does represent a solid path to a good company and a long game.

Mobivity CEO Dennis Becker was interviewed in January of 2013, and he reflects on the IP issue, and long term plans of company building.

Source: Google, Microsoft, And Apple Are Likely Using Technology Held By Mobivity Holdings