Let me see if I can explain how a technology "enabler" works. I used to work for a Nasdaq listed company, first established in 1981, that develops and sells 2 things. One is a programming language and the other an enterprise quality database ( those who know the industry will already have guessed who it is). Their business model is very similar to that being put in place by Brainchip. The company recruits partners who use the development environment to create application packages; (accounting, MRP, membership, Telco billing, etc.) and sell them to various commercial and industrial enterprises. Concept sound familiar?
Currently the company turns over about $US700M and the share pprice is around $US60. Most of the revenue is recurring license fees from applications that have been deployed by the partners. Invoicing to the partner is typically calculated on an initial fee plus a per unit (in this case its often per end user) license and includes support. There is a relatively modest cost associated with the supply of the development environment and other income is derived from training.
Sale of the database portion of the application is typically done by the partner except where the end user wants the technology originator to deal with them directly. I'll give you an example. A large, national retail chain retained a systems integrator to deploy a complex new system that covered both in-store and back office. There were numerous vendors involved so the SI was responsible for ensuring it all knitted together correctly. One of our partner's packages was chosen for the instore deployment so they worked with the SI and the other vendors involved. The end-used client however wanted to deal with us directly for supply and support of the database. The sale took a couple of years to finalise but in the end was one of the better ones I had managed. We provided pre-sale support but were not involved in the integration itself (thankfully as it was an SAP back end) so our involvement was long winded but otherwise painless. When the in-store deployment was ready to go ahead I gave the client a DVD containing the product and a list of 200 serial numbers - 1 for each store. We banked around $A750k for the sale and the support fee was in the vicinity of 12% of the sale price per annum. A very nice business model and one that BRN are clearly pursuing.
I tell this story for two main reasons. Firstly, to make the point it takes a long time to close major sales and there are typically many moving parts to be addressed along the path - even with relatively mature technologies. We used to have a saying that there was only one party that could say "yes" but there were many that could say "no". People are very wary of new things, which is why there was an old saying that went "nobody ever got fired for buying big blue (IBM)".
Secondly, pretty much no-one knew that it was our technology "enabling" the whole system to function as desired. The users in the retail store had no clue what was inside the box except perhaps for the name of the POS application. Any problems they would call their internal help line and the techs would either fix or escalate as required. In all my years working there I don't remember a single announcement about our involvement in these types of deployments.
A story to keep in mind when considering where BRN currently sits. I have been critical of our lack of commercial success in the past and stand by those comments. In my view they were a result of management not being realistic and holding out false hope for quick adoption. They have not delivered what they said they would and that is my problem with the company ATM.
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