I can’t claim to be a UBNT expert, but I’ll take a stab at your questions.
can someone give the Cliff’s Notes version of what it is they do, why they are the low cost alternative to traditional wifi delivery
Their equipment isn’t for your normal home wifi router, but rather for internet service providers that are offering long-distance wifi to reach their customers over the “last mile” rather than leveraging traditional physical infrastructure such as wires or cables. Because these ISPs use wifi, they’re referred to as Wireless ISPs or WISPs.
WISPs provide an important service in areas that either lack significant wired infrastructure (3/4 of UBNT’s revenue is derived internationally) or in areas where that infrastructure is tightly controlled by uncompetitive incumbents. Where I live, for example, the phone company controls all the fiber and won’t let anybody else have access to it, while offering only slow plans at high cost. So the only meaningful competition comes from our local WISP.
When it comes to the WISP industry, UBNT’s big advantage comes from their community-based design, sales, and support model. UBNT is very good at involving and leveraging the community, and that allows them to deliver products that are a great match for what the market needs (since the market had a lot of input) while skipping much of the traditional overhead like a large sales and support staff, since the community largely serves those roles. The result is the ability to sell high quality equipment at very low prices relative to the competition while maintaining much fatter margins.
Is there a chance there will be future regulation in the RF space that puts UBNT out of business or cuts into their market?
There’s always risk, of course, but UBNT’s revenue is largely derived internationally where it’s much more efficient to offer internet access wirelessly than to build out all the physical infrastructure needed to wire everyone up. We largely saw the same phenomenon with wireless phones versus wired landlines in many of these countries for the same reasons. Here’s how revenue was broken out in the latest quarter:
North America: 24%
South America: 20%
Europe, Middle East, and Africa: 42%
Asia Pacific: 14%
Here in the U.S., there’s always the risk of special interests crushing things that are best for consumers (prime example: cable companies convincing some state lawmakers to outlaw municipal ISPs). On the flip side, there’s also the possibility that large incumbents get their act together (or are forced to through regulation) and begin offering better internet service at competitive prices, making WISPs less relevant – though the wireless technology will also keep improving, of course.
Finally, I think it’s possible to view this business as one with a disruptive, community-based business model that happens to be leveraging that model in the WISP space. One could speculate that the company could take their expertise in community-driven design, sales, and support and disrupt other spaces as well in the future. Kind of like Amazon started as company with a disruptive business model that happened to sell books, but have since expanded into many other lines of business. Again, though, that’s all just speculation.
I hope that helps a little bit!