Italy’s real deficit? It's a shortage of faithful couples. So NGM, an italian firm based in Tuscany, has conjured up a cheat-proof cellphone (and a fortune) featuring dual SIMs, concealed text messages and real-life background sounds. And then there’s a private address book that vanishes when your partner thinks she’s at last caught you… red-handed
B.V. (age 35), a soccer player, walks out of the hotel where he has supposedly spent a wild two and a half hours of unbridled passion with B.R. (age 24), a showgirl. As he rounds the corner, there's a dramatic turn of events: his wife I.B. (30) nabs him; she abruptly snatches the mobile cellphone from her husband’s hand and furiously starts peeking into his messages and call logs. A few moments later she passionately kisses him on the lips and the two stride away… hand in hand.
"Living happily ever after" can now indeed become reality, especially when it’s based on an Italian company‘s secret : helping the cheaters rather than the cheated-on. On this solemn principle, Stefano Nesi has built his telephone empire, designing mobile phones that can withstand the fury of jealous mates; it’s so unique as to carve out its own market share and make a mockery of many of the industry giants. The winning secret? NGM, his brainchild, now prides itself on a range of as many as 29 "dual-SIM" models that are capable of handling two phone numbers at once and are endowed with special features -- very special. This market niche is a businessman’s dream: the company posted a 350% growth and revenues of € 31 million in fiscal 2010, and is slated to surge towards € 70-75 million this year. According to the latest Italian statistics, NGM has overtaken LG and now firmly holds third place in the free market (i.e., where there are no commercial constraints on operators) of mobile phones, just behind Nokia and Samsung. And that’s not all: it has loads of TV commercials and sponsorships of Italian soccer teams in Serie A (Bologna) and Serie B (Empoli), and of motorcycling, volleyball, water polo and music events.
It's so impressive that, while crossing the Tuscan countryside on a ramshackle local train, we expect to see a mammoth HQ, hyper-technological and spaceship-like, lurking over the horizon, complete with towers on asteroid watch. But as our train puffs into the village of Ponticelli below the town of Santa Maria a Monte, near Pisa, all we find is a semi-detached construction, devoid of any signage; inside, mobile phone packaging and office desks vie with each other for space. At the office threshold we're welcomed not by a comely secretary but by Stefano Nesi in the flesh, a jovial manager with a Tuscan accent, dressed casually and with the demeanor of someone who handles his success with discretion and charm.
An air of rational chaos suffuses the premises. Once inside, the boss tells us how NGM -- an acronym for New Generation Mobile -- was born, literally by a fluke. After a master's degree in international economics in London, Nesi partnered with an Indian classmate in importing carpets. Carpets! Not microchips, motherboards or electronic gadgets. “After filing for a bank loan,” he recalls, “I knocked on the doors of various textile stores to offer my wares.
In order to appear credible, I pretended I was the son of the company’s owner. Actually, the whole enterprise was me.”
The business ran well and started growing; in a few years “Nesi Textiles” (no connection with fellow Tuscan Edoardo Nesi, a writer and a former textile entrepreneur himself) branched into manufacturing pajamas for the big labels, like Liabel.
The turning point. In 2001, a business transaction between third parties went awry, and Stefano Nesi, as creditor, ended up with a small hi-fi-systems manufacturer in Shenzhen, China, and in a market he knew nothing about. Good managerial common sense dictated that selling out the machinery would not be a cost-effective solution, so Stefano examined the available options. Given that revenues were rock-bottom anyway, he decided to convert the company to mobile phone production. The first step was to bring on board some of the brightest graduates in engineering from the nearby University of Pisa. NGM soon started rolling out cell phones commissioned by third parties. Ever since its inception, the underlying philosophy has always been: design in Italy, build in China. Certainly, in this overcrowded field, it wasn't easy to stand out. But Italian marketing savvy intertwined with Chinese industrial management allowed Nesi to cut costs, increase revenues and, most importantly, grow.
The final breakthrough arrived as a result of Nesi’s friendship with the owner of a nearby factory in Shenzhen that specialized in researching dual-SIM systems; the two joined to set up “Tinno,” of which Nesi holds 55%; the company has manufactured all NGM handsets ever since. After briefly consulting with staff, it dawned on Nesi that the dual-SIM mobile market was basically virgin territory – and there lay the company's future. “We could not wage war against the giants with models like theirs -- given our lower production levels, the components would cost us more.” So NGM specialized in dual-SIM mobiles, and the gamble has paid off, with millions of phones sold in Indonesia, India, the Philippines, Pakistan and Russia. “The devices are all exclusively ours, but the handsets feature the logo of the largest phone operators in each country,” says Roberto Ciompi, the company’s marketing manager.
The challenge ahead for Nesi is how to attain success with his brand. Italy will be the litmus test: it's a tough playing field, but also the easiest one for this company that designs its models amidst the rolling hills of Tuscany. In Italy, dual-card phones hadn’t yet been successful, both because they were deemed too complicated and because prospective clients hadn’t yet figured out what their use might be.
So NGM flopped badly with its launch model, the DG689, which was manufactured in 2008 with an initial stock of ten thousand items (“the minimum number for viability," explains Nesi while signing a bunch of papers unenthusiastically, "since you also have to factor in software localization and adaptation to the Italian market”). The big shops knew nothing about the brand and they found it untrustworthy; sales were - at best - spotty. The stage was set for a disaster: by September of that year sales were a meager 250 devices. Only 250.
JUST A FEW MONTHS AFTER INCORPORATION, NGM Italia already had to face a dilemma: either shut down or make a last-ditch effort. Nesi and his associates opted for the latter: they created a second model, called Black Angel, and kept firing off commercials on both radio and TV. And, above all, they made it the official gadget for cheaters. A totally new series of special functions were added, such as the “privé” mode. This offers a menu activated with a secret code that gives access to private phone numbers; special call diversions or call forwarding for “hot” contacts; and false names, automatic answers, and whatever else is needed to manage not only double SIM cards but also a double life. “How did all this come to us? It grew out of lively and amusing team meetings,” reveals project manager Marco Filippeschi, “where everybody brought in their personal experiences and tips.”
They then called back the best known shop chains. “After they learned about us on TV, we got a hearing from all of them, and in a few days we were back on the shelves throughout Italy, with both of our little jewels,” gushes Nesi. Sales shot up in just three months, and NGM closed out 2008 with good results. But when at last things seemed to be going strong, there was another setback: the chronic patent war in the classic tradition of mobile phone manufacturers. At just this moment, Hop Mobile, a company from Brescia, won an injunction against Samsung for dual-SIM technology patent infringement. The reverberations scared distributors away from ordering any more NGM phones. “But actually,” explains Nesi, “when we pored over our electronic and technology diagrams, we concluded that the court order related to technology we weren’t even using.” The blockade lasted a few months, compelling NGM to file a legal suit in order to clear any doubts and win trust. Undeterred by adversity, NGM revenues in 2009 were approximately € 9 million.
The giant leap forward, the one that made it possible to reach 350% growth, came thanks to the introduction of a new technology, called Dual Standby. “Basically,” explains Filippeschi, “the dual-SIM phone was no longer two phones joined together, but a single processor controlling the two SIM cards alternately.” It came with a drastic reduction in the phone’s thickness and cost- the price dropped by 40%, enabling NGM to offer the dual-card technology at practically the same cost as any other mobile.
ThIs affordability is also made possible by the software: NGM models mostly utilize Nucleus, an operating system developed in-house. Here, too, the Italy-China synergy has turned out to be a win-win. “The design happens here, whereas the true implementation is performed by a staff of over 200 programmers in the Shenzen laboratories,” says Nesi, gazing confidently at a showcase full of competitor mobiles. The haphazard display includes several Android-based models. NGM has resorted to Google’s operating system for some of its phones; however, Nesi is skeptical about the system's future: “All manufacturers have run after Android, so by now they’re no longer developing their own software. But what will happen when Big G goes for its own business, creates its own phones and keeps the best innovations for itself?” It's better to rely on home-made software that's flexible, fast and adaptable...perfect features for phones crammed with rather unconventional functions.
Other important services are NGM's customer care, which is polite and always available (“we aren’t Apple: we need to pamper our customers”) and the continuous introduction of new models; these are assets that enable NGM to make inroads in the crowded Italian market. “We have phones for women (the Vanity line is a best-seller), teen-agers, the elderly, steel-plated models, and smartphones,” explains Roberto Ciompi, the marketing manager. Almost all are strictly dual-SIM. Nesi and his staff would want us to believe that customers choose their phones for the economic advantages stemming from dual rates -- and that’s definitely a plus; as a matter of fact, phone operators snub commercial agreements with NGM in order to avoid fighting against a Trojan horse inside the very same handset, or having two complementary phone rates working in the client’s favor -- but clearly the “exclusive” functions are the magnet here.
SUDDENLY, A CALL COMES IN. Stefano Nesi proffers the device and gestures for us to answer: we comply, albeit with some hesitation. At the other end, a NGM engineer greets us from an airport -- or at least that’s what it sounds like, to judge from the roar of aircraft and loudspeaker announcements. “It’s the new 'background noise' function,” declares Nesi while his associates grin. The function adds the typical background buzz of, say, a restaurant, railway station, or sidewalk to the conversation. All recordings are made “on site” by NGM technicians. With it, you can activate some make-believe background noise whilst immersed in the silence of a hotel room. “A function like this one came up during our regular staff meetings - the incubators of all our brilliant ideas - but requests have also flooded in from online forums and call centers, with over half submitted by women customers.”
One of Nesi’s assistants walks in with an odd-shaped model in several colors.
The boss frowns on the red one and asks his staff to tint it “more like Ferrari.” Nesi then shows us what it’s all about: he pops a bulge off of the mobile’s back and hooks it to his ear. This is the Van Gogh, the first mobile with an integrated Bluetooth earphone: it charges with the phone and is detachable if necessary. Brilliant. Roll-out is slated for early 2012, and NGM plans to take over Europe with this model included in its range. “After Italy, our radar is set on Europe. January is when we make the big move,” announces Nesi. New headquarters will be opened, just a few blocks away from where we are now. That building will be huge, modeled on a spacecraft. It’s one of next year’s big bets. Hard to say what the outcome will be. But for a man who can sell both pajamas and hi-tech bunga-bunga mobile phones, nothing is impossible.
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