As a hotel guest, I am always annoyed when I am required to pay extra for WiFi. But thanks to WiFi service from a Thousand Oaks, Calif.-based startup, lets a Las Vegas casino charge an even higher price premium to grant convention goers wireless access to the Internet.
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And the reason for that price premium is that the startup lets the casino block marketing messages from the competitors of a convention’s primary sponsor.
The casino in question is The Sands Hotel and Convention Center in Las Vegas and the startup is Xirrus — a commercial WiFi provider tapping iPad growth — that I first spoke with back in December 2011.
In June 2012, its then-CEO Dirk Gates replaced himself with Shane Buckley. Serial entrepreneur, Gates, decided that if he wanted Xirrus to grow from $100 million to $1 billion, he should hand over the reins to Buckley.
And now Xirrus is offering customers — such as trade show producers — the ability to turn WiFi from a cost center to a profit center. How so? Imagine you are producing a business technology trade show in Las Vegas sponsored by a big technology company with deep pockets — say, Microsoft.
And imagine that Microsoft wants the people who attend the trade show to receive marketing messages from Microsoft on their smart phones. But let’s say the trade show sponsor wants to block marketing messages from competitors like IBM and Oracle who may not be the lead sponsor for that trade show. That WiFi service is also available to sponsors like Microsoft — at a price.
As Justin Herrman, chief technology officer of The Sands Hotel and Convention Center in Las Vegas explained, “Xirrus has enabled us to deliver a raft of new wireless services for hotel visitors and convention goers. Now, The Sands has made wireless service profitable.”
Xirrus allows The Sands to get a return on its investment in WiFi services. Noted Herrman, “We can get WiFi to pay back in 90 days or in one trade show — for example, in San Francisco, the Moscone Center can accommodate 120,000 visitors. And we can sell advanced connectivity with 60 gigabits/second worth of bandwidth at a price premium. And we can enable conference sponsors to communicate in a tailored fashion to each attendee.”
Xirrus is growing rapidly by delivering such profitable WiFi services and expanding its addressable markets. As Buckley explained, “We have introduced new products that are turning WiFi from a cost to a profit center. Our addressable market has increased four-fold. Our products are simple for customers to evaluate and use and we are growing 35% year over year and our customers include hotels, healthcare providers, carrier and managed service providers.”
To keep up with Xirrus’ growth, its headcount is rising. “We are growing from 150 to 200 employees and we did a $23.5 million Series E round of financing in 2012 and a $10.5 million Series F round in February 2013.”
There is challenging news for Xirrus though. Annual growth in the WiFi market is slowing down — from 41% in the second quarter of 2013 to 26% in 2013′s third quarter, according to IDC.
Moreover, Xirrus faces considerable competition for that slowing growth. For example, Cisco controls 55% of the Wireless Local Area Network deployments in Australia, notes IDC.
However, a new technology, 802.11ac, is an opportunity for Xirrus. But competitors Aruba, HP, Ruckus, Motorola and Aerohive also have the potential ”to change the status quo through more competitive products and more deliberate customer engagement,” according to Tafadzwa Marasha, Networking Analyst at IDC Australia.
The pressure is surely on Buckley and his team to grow faster than the market in 2014 — Xirrus’ tenth year in business. It remains to be seen whether they can lead Xirrus to a successful exit for its patient investors.