I thought I’d post the following article on FB’s potential purchase to compete with the GOOG “Loon Project” and UBNT in providing internet to rural areas.
I am actively looking to enter into an UBNT holding (maybe should’ve yesterday) however have been on the road that last two days and prefer to me at my desk when making an investment.
While UBNT certainly is a first mover and has a strong communitiy of users, it appears that the long term prospects of this sector are attracting some of the bigger fish. I think these are positives validating the potential market opportunity however at the same time the “runway” (to me) appears to be getting smaller. My guess is that it would take at least 1-2 years for either GOOG or FB to deploy a meaningful product to compete with UBNT but I’m interested in other people’s opinions regarding the encroaching competition and my interpretation of the shortening of UBNT’s rapid growth potential.
I spent some time on the IT discussion boards discussing UBNT. I didn’t understand much of what they said technically, but it was clear to me that the IT people and engineers LOVE Ubiquiti’s products. They are easy to use, reliable and cheap. Do you think they will run out to base the future of their business on an untried product from Facebook instead? Would you if you were in their places?
You are worrying too much.
If you think it will take 1-2 years for Google or anybody else to compete, go ahead and buy now, don’t wait
I would suggest reading some of Andy’s UBNT posts on this board. Andy did a very good job of explaining the business. Start here:
(This one is solid, so I would suggest this as a must read on UBNT.)
Now, to your questions, yes on the surface it would appear that others can compete with UBNT.In fact, they did have issues with some counterfeits etc coming from China and being sold in South America. This was in 2012, I believe, and the stock had taken a hit at that time. Further, there are indeed many competitors. SonicWall (owned by Dell), Cambium Networks (a Motorola spinout), Aruba, are Meraki some of the competitors.
The thing that sets apart UBNT from the competition is how this company is run. They don’t have a humongous sales team. Instead, they focus on prompt email support. They believe in engaging with the IT folks deploying their products and word of mouth publicity. They have a very active online community, where their tech staff and users interact. See here:
Not having a large sales team is disruptive. They save money, have more monies R&D, and have more left to go straight to the bottom-line. This also allows them to price products aggressively. Gaining market share by actively engaging with IT folks making decisions is also disruptive. Geeks like geeks and UBNT is much more geeky than its competitors. I think their business model sets them apart from the crowd.
There’s another thing to like about this company. Its founder led. The founder is only 35 years old and this is his baby. He’s bent on growing UBNT and he’s disruptive at that.
I 'm yet to actually figure out how much Pera or insiders own of UBNT. According to CAPS, 88M shares are out and float is only 24M. Someone here, may be Andy?, can help us out.
Addendum: According to Form SC 13GA filed 02/12/14 Pera owns 65% of the company.
“Percent of class: 65.31%, based on 87,739,935 shares of Common Stock outstanding at December 31, 2013 as disclosed in Ubiquiti
Networks, Inc.’s quarterly report on Form 10-Q filed with the Securities and Exchange Commission on February 7, 2014.”
Thats some great information Anirban. You gave a great summary of UBNT. I think Google and Facebook just want to make sure that everyone can get on line. While they will give everyone access just how fast will that access be? I am thinking maybe about Wimax speed at the most so from 0 to 8 mbps. While UBNT can give a customer, off of their Wireless access points, up to 300 mbps. Most of these people will go with whatever is cheapest at their homes and its hard to beat free, but, I think business’s will want the speed over free. Eventually even the people will want faster internet. I think UBNT has alot of room to grow because they have been having problems with keeping up with demand. If you go on the boards you will hear people complaining about being able to get the product. One tech even recommending people buy as much as they think they will need at the start of the year. They doubled the inventory this last quarter and we will see how much demand they have with a look at the next quarter. There is alot of people that do not have internet access and they can use UBNT to get on line cheap.