prospectus

Transcription

prospectus

240361_prosp_opera 25.02.04 22:09 Side 1
PROSPECTUS
Opera Software ASA
Listing prospectus in connection with an application for listing of the
company’s shares on the Main List of Oslo Børs
Share Issue of a minimum of 12,500,000
and a maximum of 16,100,000 new shares
Secondary Sale of 11,844,900 existing shares
Indicative Price NOK 8.00 - 10.00 per share,
each of nominal value NOK 0.02
Application Period from and including
February 26 to and including March 10, 2004
Opera Software ASA
Waldemar Thranes gt. 98
N-0175 Oslo
Tel. +47 24 16 40 00
Fax +47 24 16 40 01
Enskilda Securities ASA
Filipstad Brygge 1
P.O. Box 1363 Vika
N-0113 Oslo
Tel. +47 21 00 85 00
Fax +47 21 00 89 62
ABG Sundal Collier Norge ASA
Munkedamsvn. 45 d
P.O. Box 1444 Vika
N-0115 Oslo
Tel. +47 22 01 60 00
Fax +47 22 01 60 62
Managers:
February 25, 2004
signatur.no
Share Offer and Stock Exchange Listing of Opera Software ASA
Important Information
This prospectus (this “Prospectus”) has been prepared solely for use in connection with the offering of
shares of Opera Software ASA (the “Company”) described in this Prospectus (the “Shares”).
An investment in the Shares is subject to significant risk. Prospective investors should carefully
consider the risks associated with such an investment when reading the information contained in this
Prospectus and be aware of the risk to lose such investment in its entirety before deciding to invest.
Certain risk factors are set out in Chapter 11 - Risk Factors. However, prospective investors should
read this entire Prospectus before making any investment decision.
This Prospectus has been published in an English version only. This Prospectus has been reviewed by
the Oslo Stock Exchange in accordance with § 14-4 of the Norwegian Stock Exchange Regulations No
30 of January 17, 1994 and § 5-7 of the Norwegian Securities Trading Act No. 79 of June 19, 1997.
This Prospectus has been prepared solely for use in connection with the offering of the Shares.
This Prospectus does not constitute an offer to sell, or a solicitation of an offer to buy the Shares, by or
on behalf of the Company, the Managers, any of their respective affiliates or any other person in any
jurisdiction in which it is unlawful to make such offer or solicitation, or to any person to whom it is
unlawful to make such an offer or solicitation. The delivery of this Prospectus and the offer or sale of
the Shares is restricted by law in certain jurisdictions. Any failure to comply with these restrictions
may constitute a violation of the securities laws of any such jurisdictions. Persons who receive or
otherwise acquire this Prospectus are required by the Company and the Managers to inform
themselves about, and to observe, any such restrictions. This Prospectus may not be used for, or in
connection with, any offer to, or solicitation by, anyone in any jurisdiction under any circumstances in
which such an offer or solicitation is not authorized or is unlawful.
Each prospective investor must comply with all applicable laws and regulations (including obtaining
requires consents, approvals or permissions) in force in any jurisdiction in which such prospective
investor purchases, offers, or sells the Shares. The Company does not have any responsibility for any
purchase, offer or sale of the Shares by prospective investors.
INFORMATION AS TO PLACEMENT IN THE UNITED STATES
U.S. Securities Act.
The Shares have not been and will not be registered under the U.S Securities Act of 1933, as amended
(the "Securities Act"), or any state securities laws, and are being offered within the United States only
to qualified institutional buyers ("QIB"), as defined in Rule 144A under the Securities Act ("Rule
144A"), through Enskilda Securities, Inc. and ABG Sundal Collier Inc. on behalf of the Managers, in
reliance upon the exemption from the registration requirements provided by Section 4(2) of the
Securities Act Rule 144A, and to certain non-U.S. persons in offshore transactions in reliance on
Regulation S under the Securities Act ("Regulation S"). Enskilda Securities, Inc. is a U.S. affiliate of
Enskilda Securities ASA and ABG Sundal Collier Inc. is a U.S. affiliate of ABG Sundal Collier ASA.
Prospective investors are hereby notified that the Shares are subject to certain restrictions on transfer
as described in "Transfer Restrictions" below.
Each U.S. person receiving this Prospectus acknowledges that (i) such person has been afforded an
opportunity to request and to review, and has received, all information considered by it to be necessary
to verify the accuracy of or to supplement the information provided herein, and (ii) such person has
not relied on the Managers or any person affiliated with the Managers in connection with its
investigation of the accuracy of such information or its investment decision. No representation or
warranty, expressed or implied, is made by the Managers or any of their affiliates as to the accuracy or
completeness of the information provided herein, and nothing contained in this Prospectus is, or shall
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be relied upon as, a promise or representation by the Managers or their affiliates as to the past or the
future performance of the Company.
In making an investment decision with respect to Shares, investors must rely on their own
examination of the Company and the terms of this offering, including the merits and risks
involved. The Shares have not been recommended by any United States federal or state
securities commission or regulatory authority. Furthermore, none of the foregoing authorities
have confirmed the accuracy or determined the adequacy of this Prospectus. Any representation
to the contrary is a criminal offense.
In relation to the United States and U.S. persons, this Prospectus is strictly confidential and is being
furnished by the Company solely for the purpose of enabling prospective investors to consider the
purchase of the Shares.
Prospective investors may not reproduce or distribute this Prospectus, in whole or in part, and may not
disclose any of the contents of this Prospectus, except as specifically provided below with respect to
the tax treatment and tax structure of this offering, or use any information provide herein for any
purpose other than considering an investment in the shares of Opera Software ASA (the “Company”)
described in this Prospectus (the “Shares”). By accepting delivery of this Prospectus, prospective
investors expressly agree to the foregoing and expressly agree to maintain the disclosed information
contained or incorporated by reference in this Prospectus in confidence. Prospective investors may
not distribute this Prospectus or disclose its contents to anyone without the Company’s prior written
consent, other than persons retained to by a prospective investor to advise such prospective investor in
connection with this offering of the Shares.
Transfer Restrictions
Because of the following restrictions, prospective investors are advised to consult legal counsel prior
to making any resale, pledge or transfer of the Shares.
Prospective investors that are U.S. persons or have a registered U.S. address (each a "U.S. Investor")
will be required, prior to the purchase of Shares, to execute a Qualified Institutional Buyer Certificate
in the form provided to each U.S. Person by or on behalf of the Company.
Each U.S. Investor, by participating in the offering described herein and as a condition to such
participation, hereby acknowledges that the offer and sale of the Shares are being made in a
transaction exempt from the registration requirements of the Securities Act pursuant to Section 4(2),
and Rule 144A of the Securities Act and each U.S. Investor agrees that it will not re-offer, resell,
pledge or otherwise transfer any of such shares except (a) outside the United States in accordance with
Rule 903 or 904 of Regulation S under the Securities Act, (b) to a person who the U.S. Investor
reasonably believes is a QIB within the meaning of Rule 144A under the Securities Act and who is
purchasing for its own account, or the account of another QIB, to whom notice is given that the resale,
pledge or other transfer is being made pursuant to Rule 144A, (c) in a transaction that is registered
under the Securities Act or (d) pursuant to another exemption from registration under the Securities
Act (if available). No representation can be made as to the availability of the exemption from
registration provided by Rule 144 for re-sales of the Shares.
Available Information
For as long as any of the Shares remain outstanding and are “restricted securities” within the meaning
of Rule 144(a)(3) under the Securities Act, if at any time the Company is neither subject to section 13
or 15(d) under the U.S. Securities and Exchange Act of 1934, as amended, (the “Exchange Act”) nor
the reporting requirements under the Exchange Act pursuant to Rule 12g3-2(b) thereunder, the
Company will upon written request, furnish to any shareholder or to a prospective investor designated
by any shareholder the information specified in, and meeting the requirements of, Rule 144A(d)(4)
under the Securities Act.
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Enforceability of Judgments
The Company is a public limited company organized under the laws of Norway. Substantially all of its
directors and executives officers reside in Norway or in other jurisdictions outside of the United
States. A substantial portion of the assets of the Company and such persons are located outside the
United States. As a result, it may not be possible for Shareholders to affect service of process within
the United States upon the Company or such other persons or to enforce, in U.S. courts, judgments
against them obtained in U.S. courts predicated upon the civil liability provisions of U.S. securities. In
addition, the Company has been advised by its Norwegian counsel that there is doubt as to the
enforceability in Norway, in original actions or in actions for the enforcement of judgments of U.S.
courts, of civil liability predicated upon the U.S. securities laws or other laws of the United States or
any state thereof.
Notwithstanding the above and anything else to the contrary contained in this Prospectus, except as
reasonably necessary to comply with applicable securities laws, effective from the date of discussions
concerning this offering, each prospective U.S. Investor and each of its employees, representatives or
other agents may disclose to any and all persons, without limitation of any kind, the United States
federal income “tax treatment” and “tax structure” (in each case within the meaning of Treasury
Regulation Section 1.6011-4) and all materials of any kind, including opinions or other tax analyses,
of this offering that are provided to prospective U.S. Investors (or their representatives) relating to
such tax treatment and tax structure. However, the foregoing does not constitute an authorization to
U.S. Investors to disclose the Company’s identity or the identity of its affiliates, agents or advisers or,
except to the extent relating to such tax treatment or tax structure, any specific pricing terms or
commercial or financial information.
OTHER IMPORTANT INFORMATION TO ALL INVESTORS
No person is authorized in connection with any offering made hereby to give any information or to
make any representation not contained in this Prospectus and, if given or made, such other information
or representation must not be relied upon as having been authorized by the Company or the Managers.
In accordance with section 14-6 of the Norwegian Stock Exchange Regulations, if any new
circumstances or inaccuracies material to the valuation of the Shares emerge between the publication
of this Prospectus and the listing of the Shares on Oslo Børs, it will be included in a supplement to this
Prospectus.
The delivery of this Prospectus shall under no circumstance create any implication that the information
about the Company contained herein is correct as of any time subsequent to the date of this
Prospectus.
Any dispute arising in connection with this Prospectus or the offering of the Shares will be subject to
Norwegian law and to the exclusive jurisdiction of the Norwegian courts with Oslo City Court as legal
venue.
Unless otherwise indicated, the source of information is the Company's management or board of
directors.
The contents of this Prospectus are not to be construed as legal, business or tax advice. Each
prospective investor should consult with its own legal adviser, business adviser or tax adviser as to
legal, business and tax advice.
The Managers are advising the Company and no one else in relation to the offer and sale of the Shares
and will not be responsible to anyone other than the Company for providing the protections afforded to
their respective customers in any of the jurisdictions in which they operate, nor for providing advice in
relation to the offer and sale of the Shares, the contents of this Prospectus or any transaction or
arrangement referred to herein.
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NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements included in the Prospectus may constitute forward-looking statements that involve
a number of risks and uncertainties. Certain of such forward-looking statements can be identified by
the use of forward-looking terminology such as ‘‘believes’’, ‘‘expects’’, ‘‘may’’, ‘‘are expected to’’,
‘‘will’’, ‘‘will continue’’, ‘‘should’’, ‘‘would be’’, ‘‘seeks’’ or ‘‘anticipates’’ or similar expressions or
the negative thereof or comparable terminology, or by discussions of strategy, plans or intentions.
Such forward-looking statements are necessarily dependent on assumptions, data or methods that may
be incorrect or imprecise. The Company can give no assurance that such expectations will prove to be
correct. These forward-looking statements are subject to certain risks and uncertainties that could
cause actual results to vary materially from such forward-looking statements, including, but not
limited to, those discussed in ‘‘Risk Factors’’ in Section 11. Other factors contained in this Prospectus
could also cause actual results to vary materially from the future results indicated in such forwardlooking statements.
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Table of Contents
Important Information ..........................................................................................................................1
Definitions
8
Statements of Responsibility................................................................................................................12
1. Executive Summary......................................................................................................................14
1.1 Description of the Company ...................................................................................................14
1.2 Main financial figures .............................................................................................................15
1.3 The Share Offer and stock exchange listing ...........................................................................16
2. Details of the Share Offer.............................................................................................................18
2.1 The Company’s share capital before and after the Share Issue ..............................................18
2.2 The Share Issue .......................................................................................................................18
2.3 Over-allotment option and stabilization - Greenshoe .............................................................19
2.4 Secondary Sale........................................................................................................................20
2.5 Indicative Price and final price ...............................................................................................20
2.6 Application to purchase shares through the public offer ........................................................21
2.7 Application to purchase shares through the institutional placement.......................................22
2.8 Application Offices.................................................................................................................22
2.9 Allotment of shares .................................................................................................................22
2.10 Payment for shares allotted .....................................................................................................23
2.11 Publication of technical information in respect of the Share Offer ........................................24
2.12 Stock exchange listing of the Company’s shares....................................................................24
2.13 VPS registration ......................................................................................................................24
2.14 Rights conferred by the shares offered ...................................................................................24
2.15 Costs ....................................................................................................................................24
2.16 Managers.................................................................................................................................25
3. Purpose of the Offer and Use of Proceeds ..................................................................................26
4. Company Description...................................................................................................................27
4.1 Company History ....................................................................................................................27
4.2 Business vision Vision and Goals...........................................................................................29
4.3 Strategy ...................................................................................................................................29
4.4 Opera’s Market Segments.......................................................................................................32
4.5 The Opera Product Offering ...................................................................................................33
4.6 Continuous Development & Innovation .................................................................................34
4.7 Revenue Model .......................................................................................................................37
4.8 Legal structure ........................................................................................................................39
4.9 Organization and Management ...............................................................................................39
5. Background and Market Introduction .......................................................................................43
5.1 The Browser Evolution ...........................................................................................................43
5.2 General Market Trends ...........................................................................................................44
6. Opera for Desktop - The Foundation of the Opera Competitive Advantage..........................46
6.1 Introduction.............................................................................................................................46
6.2 Market overview and size .......................................................................................................46
6.3 Operating systems...................................................................................................................47
6.4 Opera’s Solution .....................................................................................................................47
6.5 Competitors.............................................................................................................................48
6.6 Opera’s position on desktop....................................................................................................50
7. Mobile Internet .............................................................................................................................52
7.1 Introduction.............................................................................................................................52
7.2 The mobile Internet and the Handheld Computing Market ....................................................52
7.3 Mobile Internet technology.....................................................................................................57
7.4 Opera’s Mobile Browser Solution ..........................................................................................59
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8.
9.
10.
11.
12.
13.
14.
7.5 Competitors.............................................................................................................................62
7.6 The Mobile Internet Value Chain ...........................................................................................66
7.7 Opera’s position in the mobile phone market .........................................................................67
7.8 Opera’s Position in the Mobile Operator Market....................................................................71
7.9 Product Portfolio on Announced Products..............................................................................72
Interactive TV (iTV).....................................................................................................................73
8.1 Introduction.............................................................................................................................73
8.2 iTV Market .............................................................................................................................73
8.3 The iTV Value Chain..............................................................................................................75
8.4 Competitors in the iTV Market...............................................................................................76
8.5 Opera for iTV..........................................................................................................................77
Verticals 81
9.1 Introduction.............................................................................................................................81
9.2 Vertical Market Opportunities ................................................................................................81
9.3 Vertical Competitors...............................................................................................................83
9.4 Opera´s Vertical Competitive Advantages .............................................................................83
Financial Information ..................................................................................................................84
10.1 Income Statements ..................................................................................................................84
10.2 Balance Sheet..........................................................................................................................85
10.3 Cash Flow Analysis ................................................................................................................86
10.4 Comments to Section 10.1, 10.2 and 10.3 ..............................................................................86
10.5 Product Segment Analysis ......................................................................................................87
10.6 Quarterly Income Statements..................................................................................................87
10.7 Investments .............................................................................................................................87
Risk Factors...................................................................................................................................88
Share Capital and Shareholder Matters.....................................................................................92
12.1 Current share capital ...............................................................................................................92
12.2 Development of the share capital............................................................................................92
12.3 Shareholder structure ..............................................................................................................92
12.4 Listing on Oslo Børs ...............................................................................................................93
12.5 Board authorization to issue shares.........................................................................................93
12.6 Shares and options held by Opera’s directors and management.............................................94
12.7 Employee Option Plan ............................................................................................................94
12.8 Convertible loan......................................................................................................................95
12.9 Warrants..................................................................................................................................95
12.10 Shareholder agreements........................................................................................................96
12.11 Lock-up agreement ...............................................................................................................96
12.12 Own shares ...........................................................................................................................96
12.13 Dividend policy ....................................................................................................................96
12.14 Transfer of shares .................................................................................................................97
12.15 Signatory rights.....................................................................................................................97
Tax and Legal Matters .................................................................................................................98
13.1 Taxation of shareholders.........................................................................................................98
13.2 Taxation of dividend income ..................................................................................................98
13.3 Taxation of capital gains.........................................................................................................99
13.4 Wealth tax ...............................................................................................................................99
13.5 Legal issues.............................................................................................................................99
Other Information ......................................................................................................................102
14.1 Registered address and organization number........................................................................102
14.2 Company legislation .............................................................................................................102
14.3 VPS registrar and securities number.....................................................................................102
14.4 Auditors ................................................................................................................................102
14.5 Transactions with related parties ..........................................................................................102
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15. Norwegian Summary..................................................................................................................103
15.1 Selskapsbeskrivelse...............................................................................................................103
15.2 Finansielle Hovedtall ............................................................................................................104
15.3 Aksjetilbudet og Børsnotering ..............................................................................................105
Appendix 1: Articles of Association.................................................................................................107
Appendix 2: Annual Report for 2003 ..............................................................................................109
Appendix 3: Subscription Form / Tegningsblankett......................................................................120
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Definitions
Definitions
ABG Sundal Collier
Application Offices
Application Period
bn
Board
Company
Enskilda Securities
Greenshoe, over-allotment and stabilization
Indicative Price
Managers
NOK
Opera
-
Enskilda Securities ASA and ABG Sundal Collier Norge ASA
From and including February 26, 2004 to and including March 10, 2004
Billion
Board of Directors of the Company
Opera Software ASA
See Section 2.3 below
Oslo Børs
Prospectus
-
Secondary Sale
-
Securities Trading Act
Selling Shareholders
-
Share Issue
-
Share Offer
-
Stock Exchange
Regulations
Subscription Price
USD
VPS
VPS account
-
Non-binding indication of the price range for the Share Offer
Enskilda Securities ASA and ABG Sundal Collier Norge ASA
The currency of the Kingdom of Norway (Norwegian krone)
Opera Software ASA or Opera Software ASA’s Browser as the case
may be
Oslo Stock Exchange
This Prospectus prepared in connection with the Share Offer and
application for stock exchange listing
The Selling Shareholders’ sale of 11,844,900 existing shares which will
be offered in the Share Offer
The Securities Trading Act of 19 June 1997 No. 79
The shareholders selling shares in the Secondary Sale for a further
details see Section 2.3 below
The issue of a minimum of 12.5 million and a maximum of 16.1 million
new shares, assuming full exercise of the Greenshoe option, which will
be offered in the Share Offer
The public offer for sale of a minimum of 24,344,900 and a maximum
of 27,944,900 new and existing shares, assuming full exercise of the
Greenshoe option, in the Secondary Sale and the Share Issue
The Stock Exchange Regulations of 17 January 1994 No. 30
-
The price to be paid in the Offer
The currency of the United States of America (US Dollar)
The Norwegian Central Securities Depository
An account held with VPS to register ownership of securities
Terms and expressions
ADSL
API
-
Application
ARPU
bps
-
Browser
-
Asymmetric Digital Subscriber Line
Application Programming Interface. The specific method prescribed
by an operating system or by another application by which a
programmer writing an application program can make requests of the
operating system or another application
A program designed to perform specific operations
Average revenue per user
Bits per second. A measurement on how fast data is moved through a
communication channel
Browsers are Software programs that retrieve, display and print
information and HTML documents from the Web
A Software layer that sits on top of the operating system DMSS,
supplied by Qualcomm. BREW enables wireless distribution of
applications to handsets
European Organization for Nuclear Research
BREW
CERN
-
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Circuit-switched
-
Communicator
-
CSS
CET
DOS
-
DVB
EDGE
-
EPG
EPOC
-
GPRS
-
GSM
-
GUI
Hardware
-
ISP
Itron OS
-
HTML
-
IDC
IETF
iTV
KDE
-
Linux
-
Mac OS
-
Microsoft Windows
-
Microsoft Windows CE
-
MHP
MMS
MSR
NCSA
OEM
-
A technique that establishes a dedicated connection between the
sender and the receiver
Handheld computers with built-in communication capabilities and
offline applications. A communicator is often called a Smart-phone
Cascading Style Sheets
Central European Time (which Norway adheres to)
Disk Operating System. A non-graphical command driven operating
system with a simple interface
Digital Video Broadcasting
Enhanced Data Rates for Global Services. A system for mobile
wireless service that is designed to deliver data rates up to 384 Kbps
Electronic Programming Guide
The orignial OS that Symbian used as their OS until they renamed this
to Symbian OS. technology provides an operating system,
customizable user interfaces, color support, fit-for-purpose application
suites, Internet connectivity, Software development kits and PC
connectivity Software, providing key commercial and technological
advantages for manufacturers of Internet devices
General Packet Radio System. A packet based communication service
that shall offer a continuous connection to the Internet and data rates
from 56 to 114 Kbps
Global Standard for Mobile Communications. A digital mobile
telephone system utilizing data compression
Graphical User Interface
The electronic and optical equipment used for computing and
communication
Internet Service Provider
The ITRON OS is a real-time OS that is used by a number of handset
manufacturers, especially in Asia
Hyper Text Markup Language. Codes and symbols inserted in a file in
order to be displayed in a Internet Browser
International Data Corporation
Internet Engineering Task Force
Interactive TV
K Desktop Environment is an open source graphical desktop
environment for Unix workstations
Linux is an operating system designed to provide a free or very lowcost operating system comparable to traditional and usually more
expensive UNIX systems
Mac OS is the computer operating system for Apple Computer's
Macintosh line of personal computers and workstations
Windows is a personal computer operating system manufactured by
Microsoft
Microsoft Windows CE is an OS developed by Microsoft for
consumer electronics applications, and used as an umbrella term for
Microsoft´s non-PC OS’ products
Multimedia Home Platform
Multimedia Messaging Service
Medium Screen Rendering
National Center for Supercomputing Applications
Original Equipment Manufacturers. An OEM is a company that uses
product components from one or more other companies to build a
product that it sells under its own company name and brand
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Opera Platform
-
OS
-
OSS
Palm OS
-
Packet
-
PC
-
PCS
PDA
-
PIM
Portal
-
QnX
-
ROM
-
SDK
Shareware
-
Software
STB
SSR
Street HTML
Symbian
-
Symbian OS
-
UI
Verticals
VOD
W3C
WAP
-
Web
WML
XML
-
Opera’s platform for letting operators utilize the mobile phone’s idle
screen to offer customized one-push access to data services and
applications
Operating System. A Software layer between the hardware and the
application programs running on the computer (the Browser being an
example of an application). The operating system makes services and
functions such as scheduling, memory allocation, networking, and
means for handling input/output between applications and between an
application and the end user available to the applications
Open Source Software
Palm OS is the operating system that provides a Software platform for
the Palm series of handheld personal digital assistants (PDAs) made
by Palm Inc.
A unit of data that is routed between the sender and the receiver on the
Internet
Personal Computer. A computer designed for use by one person at a
time
Personal Communication Service
Personal Digital Assistant. Small mobile handheld devices that have
information storage, calendar, PIM etc.
Personal Information Management
A gateway on the Internet. Purpose to be a starting place for users of
the Internet
An operating system made by QnX Software Systems. The QnX
operating system is fully scalable and is focused towards the
embedded markets
Read Only Memory. Computer memory containing data that normally
can only be read, not written to
Software Developer Kit
Software that is provided for free to users for a number of days
(typically 30 days), before users have to pay for continued use
The different applications operating on the devices (Hardware)
Set Top Box
Small-Screen Rendering
An HTML dialect that does not follow W3C’s standard
Develops the Symbian operating systems. Owned by Nokia
(announced it had acquired Psion’s stake on February 9, 2004),
Ericsson, SonyEricsson, Panasonic, Siemens and Samsung Electronics
The Symbian operating system with customizable user interfaces,
color support, fit-for-purpose application suites, Internet connectivity,
Software development kits and PC connectivity Software, providing
key commercial and technological advantages for manufacturers of
Internet devices
User Interface
Verticals include a range of different products in different industries.
Video on Demand
World Wide Web Consortium (www.w3c.org)
Wireless Application Protocol. A specific set of communication rules
used for Internet devices so that they can access the Internet
World Wide Web or the Internet
Wireless Mark up Language
Extensible Markup Language. A flexible way to create common
information formats and share both the format and the data on the
WWW, intranet and elsewhere
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Other matters
Copies of this Prospectus may be obtained from Opera Software ASA, Waldemar Thranes gate 98, N0175 Oslo, Norway. Telephone +47 24 16 40 00 and Fax +47 24 16 40 01. Copies of this Prospectus
may also be obtained from the Managers or from www.opera.com.
Information that this Prospectus is referring to could be viewed in Opera’s reception in Waldemar
Thranes gate 98.
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Statements of Responsibility
The Board of Directors
This Prospectus has been prepared to provide the best possible basis of information in connection with
a Share Offer by Opera Software ASA and the Selling Shareholders and the admission of shares in
Opera Software ASA to listing on Oslo Børs. The Board of Directors of Opera Software ASA
confirms that to the best of their knowledge the information contained in this Prospectus is in
accordance with the facts and contains no omissions likely to affect the import of the prospectus. The
Company has appraised market conditions and future prospects on the basis of its best judgement.
Opera Software ASA is not involved in any legal proceedings, disputes or other matters which might
be of material significance to an evaluation of the Company other than as described in this Prospectus.
Oslo, February 25, 2004
Opera Software ASA
Christian H. Thommessen
Chairman
Håkon Wium Lie
John R. Patrick
Tore Mengshoel
Michael Tetzschner
Lars Bjørn Thoresen
Live Leer
(employee representative)
Snorre Grimsby
(employee representative)
Managers
The Board and Management of Opera Software ASA have prepared this Prospectus with assistance
from Enskilda Securities ASA and ABG Sundal Collier Norge ASA. The Prospectus has been
prepared on the basis of information provided by the Company and from external sources. A due
diligence review in respect of legal matters has been carried out by the law firms Wiersholm, Mellbye
& Bech and Steenstrup Stordrange, and PricewaterhouseCoopers DA has carried out a financial due
diligence review of the Company.
The Managers have through assistance to the Board and Management of Opera Software ASA
endeavored to provide a description of the Company that is as consistent and complete as possible, but
do not accept any legal or commercial responsibility for the accuracy or completeness of the contents
of this Prospectus. Moreover, the Managers do not accept any legal or commercial responsibility in
respect of any purchase of shares based on the information provided in this Prospectus. The
Company’s Board and the Managing Director have issued an undertaking as to the completeness of
the information provided to the Managers in respect of the preparation of this Prospectus.
Enskilda Securities ASA held 540 shares in Opera Software ASA and employees in Enskilda
Securities ASA held 100,000 shares, all of which was owned by Head of Equities Sales Fredrik
Cappelen, as of February 25, 2004.
Neither ABG Sundal Collier Norge ASA, nor partners or employees of ABG Sundal Collier Norge
ASA held shares in Opera Software ASA as of February 25, 2004. Michael von Tetzschner is a board
member of Opera Software ASA. He is also a board member of ABG Sundal Collier Norge ASA. He
owns 0 shares and 0 options in ABG Sundal Collier Norge ASA, and 34,280 shares and 100,000
options in Opera Software ASA.
12
Legal advisor to the Company
Wiersholm, Mellbye & Bech advokatfirma AS has acted as Norwegian legal advisor to Opera
Software ASA in connection with the Share Offer described in this Prospectus.
We have conducted a legal due diligence review of Opera Software ASA for the benefit of Opera
Software ASA and the Managers. Our due diligence review has been limited to matters of Norwegian
law, and has not covered tax, fiscal, technical, financial or commercial matters.
We have reviewed the information regarding Norwegian legal matters contained in chapters 2 (Details
of the Share Offer), 12 (Share Capital and Shareholder Matters) and 13 (Tax and Legal Matters) of this
Prospectus. On the basis of the information with which we have been presented, it is our view that the
said chapters give a fair and balanced description of the Norwegian legal matters described therein.
We confirm that the resolution of the board of directors of the Company of February 25, 2004 to
increase the Company’s share capital has been adopted pursuant to a valid authorization from the
Company’s general meeting and that, once the Board of Directors has duly adopted a resolution to
decide the subscription price and to allocate the new shares, the increase of the Company’s share
capital will have been duly adopted by the competent corporate body. As soon as the board of
directors has adopted such resolution, we will issue a confirmation regarding this to the Oslo Stock
Exchange.
Our statement is limited to the above and does not extend to the content other chapters of the
Prospectus or to any descriptions of commercial, financial, accounting or technical matters contained
in the Prospectus. Our statement is limited to matters of Norwegian law.
Wiersholm, Mellbye & Bech advokatfirma AS
Legal advisor to the Managers
Advokatfirma Steenstrup Stordrange DA has acted as the Norwegian legal advisor to the Managers in
connection with the Share Offer described in this Prospectus.
We have been engaged by the Managers to conduct a limited legal due diligence review of Opera
Software ASA based on the legal due diligence conducted by Wiersholm, Mellbye & Bech
advokatfirma AS. Our due diligence review has further been limited to Norwegian law, and has not
covered tax, fiscal, pension, technical, financial or commercial matters.
We have reviewed the information regarding Norwegian legal matters contained in chapters 2 (Details
of the Share Offer), 12 (Share Capital and Shareholder Matters) and 13.5 (Legal Matters) of this
Prospectus. On the basis of the information we have reviewed, it is our view that the said chapters give
a fair and balanced description of the Norwegian legal matters described therein.
Our statement is limited to the above and does not extend to the content other chapters of the
Prospectus or to any descriptions of tax, fiscal, pension, commercial, financial, accounting or technical
matters contained in the Prospectus. Our statement is limited to matters of Norwegian law.
Advokatfirma Steenstrup Stordrange DA
13
1.
Executive Summary
This summary is produced as a supplement to the more detailed information contained in the
Prospectus as a whole and the Appendices. Investors who are considering whether to apply for shares
in the Share Offer are strongly encouraged to read the entire Prospectus, including Chapter 11 on risk
factors, in order to make their own judgement.
1.1 Description of the Company
Corporate history
Opera Software ASA (“Opera”) was founded in 1995 to develop and sell Browser Software solutions
to the PC desktop market. Since 1998, the Company has added focus on Browser and related Software
solutions for the emerging Internet device Software Browser market, in particular the mobile phone
and interactive TV (“iTV”) segments. Over the last four years, the Company has gone through a
significant development both organizationally and financially, and has established a significant
position in its core market segments.
As the Company has reached its predetermined four milestones of:
• Profitability
• License income visibility
• Sustainable growth, and
• a transparent business model
Opera is now seeking listing on the Oslo Børs.
Business description
Opera develops and sells Browsers and Browser-related Software.
A Browser is the Software program that is needed to retrieve and display information and content from
the Web.
The Browser can also be used to mediate between the hardware and core set of applications to deliver
a consistent user experience, as well as being used as a home Screen on top of the device by using a
browser based UI (User Interface).
Opera focuses on four market segments:
• PC desktop (i.e. Software to access the Internet from the PC desktop)
• Mobile Internet (i.e. Software to access content and the Internet from mobile phones and PDAs)
• Interactive TV (i.e. Software to access content and the Internet through the TV)
• Verticals (i.e. Software to access content and the Internet from new Internet devices such as e.g.
cars)
While the PC desktop market is the foundation of the Company’s success in the other market
segments, the currently most important market segment is Mobile Internet, which Opera estimates will
represent the highest revenues in the years to come.
Opera considers its greatest comparative advantage to be its nine years of experience in making
Browsers for the desktop market. As few Web developers exactly follow the W3C standards, it has
proved essential to be able to understand the desktop market and to be able to render Street HTML.
The strong Opera community counting approximately eight million active users, has also contributed
actively in making Opera better, faster and more secure.
Opera views itself as a technology leader in the mobile Internet, desktop, and iTV markets.
14
Over the last few years Opera has signed partnership deals and entered into commercial contracts with
some of the world’s leading technology companies. In the period from 2001 to 2003, Opera’s annual
revenues grew from NOK 28.3 million in 2001 to NOK 78.5 million in 2003.
Innovation
Opera is an innovative company that has a history of introducing new features and functions to its
Browser Software. Opera believes that new product offerings and other value enhancing functions,
such as the Opera Platform and Small-Screen RenderingTM, will help Opera maintain the average
licensing revenues per user at current levels in the future. Opera also notes that Browser Software has
become an important strategic application on Internet devices, and to the extent that mobile operators
see the potential for improved ARPU by using the Browser, Opera will be able to climb higher in the
mobile Internet value chain.
Organization
Opera is headquartered in Oslo, Norway and has a wholly owned subsidiary in Linköping, Sweden.
Per December 31, 2003, the Company had 128 employees. About 45% of the employees are nonNorwegians.
1.2 Main financial figures
The following tables provide a summary of the profit and loss account, balance sheet, and selected key
figures for the Company for the years 2001, 2002 and 2003. A more extensive description of the
Company’s financial situation can be found in Chapter 10 of this Prospectus and the Company’s
Annual Report and Accounts for 2003 (Appendix 2 to this Prospectus).
Audited figures in NOK 1,000
Total operating income
EBITDA
EBIT
EBT
Net income / (loss)
Earnings per share
Earnings per share fully diluted
Dividend per share
Outstanding shares
Fully diluted shares
2003
78,531
3,989
1,265
1,805
376
2002
51,060
(18,263)
(21,380)
(22,237)
(16,202)
2001
28,293
(38,396)
(41,105)
(39,656)
(29,327)
0.005
0.005
0.00
78,143,212
82,259,462
(0.263)
(0.263)
0.00
61,641,420
61,641,420
(0.480)
(0.480)
0.00
61,005,490
61,005,490
15
Total fixed assets
Total current assets
TOTAL ASSETS
Dec. 31, 2003
25,974
65,800
91,774
Dec. 31, 2002
28,435
20,489
48,924
Dec. 31, 2001
25,108
23,281
48,389
Total equity capital
Total current liabilities
TOTAL EQUITY & LIABILITY
Dec. 31, 2003
79,977
11,797
91,774
Dec. 31, 2002
26,506
22,418
48,924
Dec. 31, 2001
38,686
9,703
48,389
1.3 The Share Offer and stock exchange listing
The Board of Opera resolved January 21, 2004 to apply for the Company’s shares to be admitted to
listing on Oslo Børs, and an application was sent to Oslo Børs on January 26, 2004. The board of Oslo
Børs resolved at its meeting on February 25, 2004, provided that certain requirements are complied
with, that the Company’s shares can be listed at Oslo Børs’ Main List. It is expected that the first
quotation and trading day will be on or around March 11, 2004. The Board believes that shares in
Opera are likely to attract wide interest from both large and small investors and the stock market in
general. In addition, the Board believes that a stock exchange listing of the Company will help to
further strengthen Opera’s profile and reputation in the markets in which it operates.
In conjunction with the application for listing, the Company plans to carry out a public Share Offer
made up of:
•
A public offer in Norway with an upper and lower limit for the number of shares that may be
applied for
•
An offer to institutions and other professional investors with a lower limit for the number
shares that may be applied for
The following table summarizes the terms and conditions of the Share Offer.
Amount of the Share Offer:
Minimum of 24,344,900 shares and maximum of
27,944,900 new and existing shares, assuming full
exercise of the Greenshoe option, in the Secondary
Sale and the Share Issue, each of nominal value NOK
0.02
Amount of the Share Issue:
Minimum of 12.5 million shares and maximum of 16.1
million new shares, assuming full exercise of the
Greenshoe option, each of nominal value NOK 0.02
Amount of the Secondary Sale:
11,844,900existing shares, each of nominal value NOK
0.02
Indicative Price in Share Issue and
Secondary Sale:
NOK 8.00 – 10.00 per share
Application Period for the public offer in From and including February 26, to 12.00 hours on
Norway:
March 10, 2004
Application Period for the offer to
institutions/ professional investors:
From and including February 26, to 15.00 hours on
March 10, 2004
16
Payment date for the public offer in
Norway:
March 15, 2004
Number of shares before the Share Issue: 84,652,747 shares, each of nominal value NOK 0.02
Number of shares after the Share Issue:
Minimum of 97,152,747 shares and maximum of
100,752,747 shares, assuming full exercise of the
Greenshoe option
Gross proceeds of the Share Offer:
Minimum of NOK 194,759,200 and maximum of NOK
279,449,000, assuming full exercise of the Greenshoe
option
Gross proceeds of the Share Issue:
Minimum of NOK 100 million and maximum of NOK
161 million, assuming full exercise of the Greenshoe
option
Gross proceeds of the Secondary Sale:
Minimum of NOK 94,759,200 and maximum of NOK
118,449,000
The Board believes that in addition to financing the Company’s planned expansion, the stronger
financial position that will result from the Share Issue will help to ensure that the Company is seen by
customers and the public at large as a credible long-term player in the Internet Software market.
17
2. Details of the Share Offer
The Share Offer represents an offer for the sale of between 12.5 million and 16.1 million new shares,
sufficient to generate issue proceeds for the Company of between NOK 100 million and NOK 161
million in the Share Issue, assuming full exercise of the Greenshoe option, and a sale of 11,844,900
existing shares from the Selling Shareholders in the Secondary Sale. On the basis of the indicative
price range, the Share Issue will result in an issue of up to 16.1 million new shares, assuming full
exercise of the Greenshoe option, each of nominal value NOK 0.02. The Share Offer will comprise:
•
A public offer in Norway with an upper and lower limit for the number of shares that may be
applied for
•
An offer to institutions and other professional investors with a lower limit for the number
shares that may be applied for
It has been provisionally assumed that 10% of the Share Offer will be reserved for applications
through the public offer and 90% of the Share Offer will initially be reserved for the institutional
placement. However, the final allocation between tranches will be decided on March 10, 2004 on the
basis of the subscription level in the respective tranches relative to the overall subscription level for
the Share Offer.
2.1 The Company’s share capital before and after the Share Issue
The Company’s share capital as of February 25, 2004 was NOK 1,693,054.94 made up of 84,652,747
shares, each of nominal value NOK 0.02 and fully paid.
The Company’s share capital following the Share Issue will be at a minimum NOK 1,943,054.94 and
at a maximum NOK 2,015,054.94 made up of a minimum of 97,152,747 shares and a maximum of
100,752,747 shares, assuming full exercise of the Greenshoe option.
2.2 The Share Issue
The Share Issue consists of a minimum of 12.5 million and a maximum of 16.1 million new shares
which will be offered in the Share Offer. The gross proceeds of the Share Issue amounts to minimum
NOK 100 million and maximum NOK 161 million, assuming full exercise of the Greenshoe option.
In order to satisfy the conditions for a listing of the Company’s shares on Oslo Børs, the Board
resolved that the Company carry out a share offering. In accordance with an authorization granted in
the extraordinary general meeting on January 30, 2004, the board of directors passed the following
resolution (see Section 12.5):
1.
2.
3.
The Company’s share capital shall be increased by NOK 250,000 through the issuance of
12,500,000 new shares, each with a nominal value of NOK 0.02. The board will if the
Greenshoe option is exercised, in a separate board resolution issue up to 3.6 million new
shares, each with a nominal value of NOK 0.02. The final subscription price in an eventual
Greenshoe issue will be equal to the price for the shares issued pursuant to this resolution.
The new shares shall be issued at a subscription price of a minimum of NOK 8.00 and a
maximum of NOK 15.00. The final subscription price shall be determined by the board of
directors after the expiry of the subscription period based on the results of the bookbuilding
process.
The share capital increase shall be carried out as a public share offering consisting of (i) a
public offering in Norway and (ii) an institutional placement. Allocation of the new shares
shall be made by the board of directors after the expiry of the subscription period based on
the results of the bookbuilding process in accordance with the allocation criteria described
18
4.
5.
6.
7.
in the prospectus dated February 25, 2004. The pre-emptive rights of the existing
shareholders are set aside.
Subscription in the public offer shall take place in the period from and including February
26, 2004 to 12.00 hrs on March 10, 2004 and subscription in the institutional placement
shall take place in the period from and including February 26, 2004 to 15.00 hrs on March
10, 2004 .
Payment of the subscription amount shall be made to a special subscription account no
later than March 16, 2004.
The new shares carry rights to dividends from and including the financial year 2003 and
shall otherwise rank equally with the existing share from the time when the share capital
increase is registered with the Register of Business Enterprises.
§ 4 of the articles of association shall be amended so as to state the number of shares and
the share capital after the share capital increase.
It is a condition for the completion of the Share Issue and for the stock exchange listing to proceed,
that the issue of shares raises a minimum of NOK 100 million of new equity capital for the Company.
2.3 Over-allotment option and stabilization - Greenshoe
In connection with the Share Offer, ABG Sundal Collier, acting as stabilization manager on behalf of
the Managers, may bid for, purchase or sell shares in the Company in the open market to stabilize the
price of the shares. However, the Managers are not required to engage in any stabilization activities.
Such stabilization activities, which, if commenced, may be discontinued at any time, may be carried
out in the period from the first day of trading of the Company’ shares on Oslo Børs to and including
the thirtieth day after the first day of trading. Stabilization activities may result in a market price of the
Company’s shares that is higher than would otherwise prevail or prevent or retard a decline in the
market price of the shares. The stabilization manager will not as a part of any stabilization activities
purchase shares at a higher price than the final subscription price in the Share Offer.
In connection with the Share Offer, the Managers may over-allot up to 3.6 million shares in the
Company.
The Board has granted the Managers a Greenshoe option pursuant to which the Managers may acquire
up to 3.6 million shares in the Company at a price equal to the final subscription price in the Share
Offer. The Greenshoe option may be used only for the purpose of closing out any short positions
created through over-allotments, if any, made in connection with the Share Offer. The Greenshoe
option may be exercised on one or more occasions at any time during a 30 day period starting on the
first day of trading of the Company’s shares at Oslo Børs. Any exercise of the Greenshoe option will
be promptly announced through the information system of Oslo Børs.
Certain of the Selling Shareholders have agreed to lend the Managers up to 3.6 million shares for the
purpose of over-allotment. To the extent that the Managers over-allot shares in connection with the
Share Offer, the Managers will have created a short position in the shares. Such short position may be
closed by purchasing shares in the open market or by exercising all or part of the Greenshoe option.
The Managers expect that the Greenshoe option will be exercised in the event that the trading price of
the shares is higher than the final subscription price in the Share Offer at the time the Managers are
seeking to close out the Managers’ short position. Otherwise, the Managers expect the stabilization
manager will purchase shares in the open market to close out such short-position.
Any stabilization activities will be conducted in accordance with the European Standards for
Stabilization issued by the Committee of European Securities Regulators in April 2002.
A stock exchange notice stating that stabilization activities may occur will be issued on the first day of
trading of the Company’s shares on Oslo Børs. Within one week of the end of the stabilization period,
the Managers will publish a statement through the information system of Oslo Børs with information
19
as to whether or not or any stabilization activities have been undertaken. If stabilization activities have
been undertaken, the statement will also include information on:
•
•
•
The date at which the stabilization period ended;
The price range between which stabilization was undertaken; and
The date at which stabilization last occurred.
2.4 Secondary Sale
In addition to the Share Issue, the Share Offer consist of the Secondary Sale whereby the Selling
Shareholders offer to sell 11,844,900 existing shares each with a nominal value of NOK 0.02 at the
same price as for the new shares offered under the Share Issue.
The Managers have entered into an agreement with each of the Selling Shareholders. Under these
agreements, each of the Selling Shareholders undertake to sell 11,844,900 shares through the Share
Offer. The Selling Shareholders have also irrevocably authorized the Managers to transfer the shares
in question from their respective VPS accounts in one or more lots during the period running from
March 11 to 16, 2004.
The table below lists the Selling Shareholders and the number of shares that each Selling Shareholder
has agreed to sell in the Secondary Sale:
Selling Shareholder
Teknoinvest
Four Seasons Venture
Geir Ivarsøy
Jon S. von Tetzchner
Håkon Wium Lie
Christian Jebsen1)
Lars Boilesen2)
Marit Bjørnvold3)
Shares prior to sale
10,668,496
6,682,287
20,512,120
19,482,110
2,587,645
0
29,400
574,000
Shares to be sold
5,000,000
2,000,000
2,000,000
2,000,000
258,000
37,500
349,400
200,000
Shares after sale
5,668,496
4,682,287
18,512,120
17,482,110
2,329,645
0
0
374,000
1)
Christian Jebsen will exercise 37,500 options and sell 37,500 shares. Prior to the sale, Christian Jebsen holds
directly 0 shares and 400,000 options in the Company (excluding shares and options held through Sanner
Industries Ltd.)
2)
Lars Boilesen will exercise 320,000 options and sell these shares and his current holding of 29,400 shares in
the Company. Prior to the sale Lars Boilesen held 29,400 shares and 800,000 options
3)
Rolf Assev’s wife
The Secondary Sale will not take place unless the Share Issue raises NOK 100 million of new equity
capital for the Company.
2.5 Indicative Price and final price
The price of shares issued or sold through the Share Offer is expected to be between NOK 8.00 and
NOK 10.00, but could be higher or lower than this range. This indicative price range has been
determined by the Board of the Company in collaboration with the Managers. The final price will be
determined by the Board in collaboration with the Managers on March 10, 2004 following the expiry
of the Application Period. The final price will be announced through Oslo Børs’ information system
prior to trading March 11, 2004.
The indicative price has been determined on the basis of an overall evaluation including due
consideration of previous share issues, the Company’s historic and expected earnings and future
market prospects and a comparison of these factors with the market valuation of comparable
companies, as well as taking into account the expected demand for shares.
20
The final price will be determined following a binding tender process among investors making
applications in excess of NOK 1 million (“book building”). The final price will be based on the level
of demand at different price levels.
2.6 Application to purchase shares through the public offer
Applications to purchase shares through the public offer will be made for a specific monetary amount
rather than a specified number of shares. The public offer will apply to any application for an amount
of up to NOK 1 million. The public offer applies only to Norway. This implies that if any application
is made through the public offer for an amount higher than NOK 1 million, the amount of the
application will be set at NOK 1 million. Applications for amounts in excess of NOK 1 million must
be made through the institutional placement. The minimum application amount for the public offer is
NOK 11,000.
The investors may only submit one application on behalf of the respective investor and its personally
related parties as defined in § 1-5 in the Public Limited Companies Act (i.a. spouse, under age children
and companies controlled by the investor) in the public offer. Related parties that apply for more than
NOK 1 million in the public offer may risk that the Managers without further notice reduce the
aggregate amount the related parties have applied for to NOK 1 million. Investors that apply for shares
in the institutional placement may not apply for shares in the public offer, the same applies for the
investors personally related parties. In the event the Managers for whatever reason does not reduce the
amount of shares applied for in the public offer on the basis referred to above, the investor may not use
the basis referred to above as a ground to require a reduction of shares allotted to the investor and its
personally related parties.
Applications to purchase shares must be made in the period from and including February 26, 2004 and
up to 12.00 hrs CET on March 10, 2004. Applications to purchase shares may be made conditional on
the share price being within or lower than the indicative price range of NOK 8.00 and NOK 10.00 per
share. Applications subject to such a condition must explicitly indicate this by completion of the
appropriate section of the application form. Where application is made subject to such a condition in
respect of share price and the final price is higher than the stipulated price, the application will be
discarded without notice to the applicant. Applications that do not explicitly contain any such
condition will be treated as binding applications regardless of the final price.
Applications to purchase shares through the public offer must be made on the application form
provided. Copies of the Prospectus and application forms can be obtained on request from either
Enskilda Securities or ABG Sundal Collier Norge. Correctly completed application forms must be
received by one of the Application Offices no later than 12.00 hrs CET on March 10, 2004.
Applications received are legally binding unless written notice of cancellation is received at either of
the Application Offices before the expiry of the Application Period. Application forms that are
incorrect or incomplete, or that are received after the expiry of the Application Period, may be
discarded without notice to the applicant.
Applications for shares can also be made through the Internet at the address www.opera.com.
Applicants using the Internet must have a VPS account. Such applications are legally binding subject
to being registered prior to 12.00 CET hrs on March 10, 2004.
It has been provisionally assumed that 10% of the Share Offer will be reserved for applications
through the public offer and 90% of the Share Offer will initially be reserved for the institutional
placement. However, the final allocation between tranches will be decided on March 10 2004 on the
basis of the subscription level in the respective tranches relative to the overall subscription level for
the Share Offer.
21
2.7 Application to purchase shares through the institutional placement
Anyone who wishes to apply for shares in an amount in excess of NOK 1 million must do this through
the institutional placement. Applications must be made during the Application Period by giving notice
in writing or by telephone to either of the Application Offices of the number of shares applied for and
the share price at which such application is made no later than 15.00 hours CET on March 10, 2004.
Such applications may be cancelled or changed by the applicant at any time up to the expiry of the
Application Period. Upon expiry of the Application Period, all applications submitted that have not
been cancelled will be deemed to be binding.
Investors that apply for shares in the institutional placement cannot apply for shares in the public offer,
the same applies for the investors personally related parties as defined in § 1-5 in the Public Limited
Companies Act (i.a. spouse, under age children and companies controlled by the investor). In the event
it is applied for shares both in the institutional placement and the public offer by the investor and/or
the investors personally related parties the said parties may risk that the Managers without further
notice disregard the applications made in the public offer. In the event the Mangers for whatever
reason does not reduce the amount of shares applied for in the public offer on the basis referred to
above, the investor may not use the basis referred to above as a ground to require a reduction of shares
allotted to the investor and its personally related parties.
2.8 Application Offices
Applicants must have a VPS account and an account with a Norwegian bank in order to be allotted
shares. If an applicant does not have a VPS account, it can be arranged through the Application
Offices, the majority of banks, post offices or investment firms. The Application Offices are:
Filipstad Brygge 1
PO Box 1363 Vika
0113 Oslo
Munkedamsveien 45D
PO Box 1444 Vika
0115 Oslo
Telephone: +47 21 00 85 00
Fax:
+47 21 00 89 62
Telephone: +47 22 01 60 00
Fax:
+47 22 01 60 62
Applications for shares can also be made through the Internet at the address www.opera.com.
2.9 Allotment of shares
Allotment of shares in respect of the public offer will be determined by the Managers in collaboration
with the Board of the Company. Allotment of shares for the public offer will endeavor to give all
applicants the number of shares for which they have applied. If the public offer is oversubscribed,
allotment will in the first place endeavor to ensure that all applicants receive at least the number of
shares expected to make up one round lot. Smaller applications may therefore be granted a larger
relative allotment than larger applications. The allotment of additional shares will apply objective
criteria based on a pro rata approach. Efforts will be made to ensure that the number of shares allotted
corresponds to multiples of round lots. If the offer is oversubscribed to such an extent that it is not
possible to allot one round lot of shares to every applicant that has applied for at least one round lot,
allotment of round lots will be made on a random basis using VPS simulation procedures.
Allotment of shares in respect of the institutional placement will be determined by the Board of Opera
in collaboration with the Managers. Decisions on allotment may take into account matters such as
early application, price sensitivity, the size of the application, investor quality and investment history
and otherwise in accordance with the international and Norwegian market practice. The overriding
objective of the Board and the Managers will be to create an appropriate long-term shareholder
22
structure for the Company. The Board reserves the right to give preference to Applicants that have
industry knowledge and have expressed long-term perspectives with the investment.
The allotment of shares for both the public offer and the institutional placement will take place after
the expiry of the Application Period on March 10, 2004. General information on allotment in the
public offer will be published pursuant to Section 2.9 below and will be distributed to all applicants on
March 11, 2004. Any applicant wishing to know the precise amount allotted prior to March 12, 2004
may contact either Manager from the morning of March 11, 2004 onwards. Applicants who have
access to investor services through the institution that operates their VPS account will be able to check
how many shares they have been allotted from and including March 11, 2004.
The distribution of the shares offered through the Share Offer between the Norwegian market and
foreign markets will be a result of the application of the allotment criteria described above. No shares
have been reserved for any specific national market.
2.10 Payment for shares allotted
Applicants for shares in the Share Offer will, as part of the subscription application, grant a single
authority to the Managers to debit the cost of the shares allotted from a specified bank account.
Notices of allotment will be sent out on March 11, 2004. Payment will be deducted from the
nominated bank account on March 15, 2004. Please note that it usually takes at least one day to
transfer money from one bank account to another. Shares allotted will be transferred to applicants’
individual VPS accounts as soon as practically possible following the deduction of payment from their
bank accounts. In the event of any delay in payment, interest will be charged at 9.25% p.a. on overdue
amounts.
In the event that funds are not available on the specified account at the appropriate time, or payment
cannot be claimed from the nominated account for some other reason, the Board of the Company and
the Managers reserve the right to sell any shares allotted to the applicant, cf. Section 10-12, fourth
paragraph, and Section 2-13, third and fifth paragraphs, of the Public Limited Liability Companies
Act, and to claim compensation for any loss caused thereby from the applicant.
Shares allotted in the Public Offer are expected to be transferred to the Subscribers’ VPS accounts on
March 16, 2004.
Payment by applicants to the institutional placement will take place against delivery of shares at a date
determined by the Managers. Settlement and physical delivery of shares are expected to take place on
March 16, 2004.
In order to ensure the prompt registration of the capital increase, the Managers have guaranteed the
payments due for shares allotted to applicants in the Share Issue. The guarantee provides for the
Managers to make advance payment of the total consideration for the Share Issue, limited to the
maximum size of the Share Issue, excluding the Share Issue’s share of the over-allotment and
Greenshoe option, (NOK 125 million) on March 10, 2004. Shares will then be transferred to individual
applicants’ VPS accounts as soon as payment is received in accordance with the payment terms set out
above.
Since the Managers are expected to pay the total consideration for the Share Issue on March 10, 2004,
it is expected that it will be possible to trade shares allotted through Oslo Børs from and including
March 11, 2004. This applies both to shares purchased through the public offer and shares purchased
through the institutional placement. However physical delivery of shares is conditional on settlement
being received in accordance with the payment terms set out above. Anyone who wishes to transfer
shares before physical delivery has taken place runs the risk that payment takes place in accordance
with the procedures set out above so that the shares sold can be delivered in time.
23
2.11 Publication of technical information in respect of the Share Offer
While shares in Opera will not be admitted to listing on Oslo Børs until March 11, 2004, the Company
has been permitted to use the Oslo Børs company information system to publish technical information
in respect of the Share Offer. This applies to information on any changes in the indicative price range,
the final determination of the share price, the amount of the Share Offer, information on allotment
percentages, etc.
2.12 Stock exchange listing of the Company’s shares
The Company submitted an application to Oslo Børs on January 26 2004 for listing on the Main List
of Oslo Børs, including an alternative application for listing on the SMB List in the event that the
conditions for listing on the Main List are not satisfied. The board of Oslo Børs resolved at its meeting
on February 25, 2004, provided that certain requirements are complied with, that the Company’s
shares can be listed at Oslo Børs’ Main List. It is expected that the first quotation and trading day will
be on or around March 11, 2004. A round lot in the Company’s shares will be dependent on the Offer
Price, but is expected to consist of 1,000 shares. The Company’s ticker code will be OPERA.
2.13 VPS registration
The Company’s shares are registered at VPS. The share registrar is maintained by DnB NOR Bank,
Securities Service Department. The Company’s securities registration number is ISIN NO 001
0040611.
2.14 Rights conferred by the shares offered
The shares offered for sale through the Share Offer will confer the right to any dividend approved after
the shares are issued, including any dividend for 2003. However, the Company will not pay out
dividend for the year 2003. In all other respects the new shares confer shareholder rights from such
time as the increase in capital is registered at the Register of Business Enterprises. Information on the
ability to possibly trade shares from March 11, 2004 can be found in Section 2.9 above.
2.15 Costs
Transaction costs, together with all other costs directly attributable to the Share Offer, will be for the
account of the Company. Share premium, less a deduction for transaction costs, will be credited to the
Company’s share premium reserve. The following table provides a breakdown of these costs.
Name:
Enskilda Securities
ABG Sundal Collier
Wiersholm, Mellbye & Bech
Location:
Oslo
Oslo
Oslo
Steenstrup Stordrange
Oslo
PricewaterhouseCoopers DA
KPMG
Oslo
Oslo
Nature of work involved:
Manager
Manager
Legal due diligence and legal
advice
Legal due diligence and legal
advice
Financial due diligence
Company’s auditors
Amount (NOK m):
5,536,402 - 7,906,903
4,406,799 – 6,286,098
1,538,000
670,000
450,000
120,000
The fees charged by the Managers are calculated on the basis of a pre-agreed contract, while other
costs are based on estimated time consumed. The figures include any value added tax. In order to
ensure the prompt registration of the capital increase, the Managers have guaranteed the payments due
from applicants in the Share Issue. The guarantee provides for the Managers to pay the total
consideration for the Share Issue on March 10, 2004. The guarantee fee is included in the figures
shown above. In addition to the costs detailed above, the Company will also be responsible for other
24
costs incurred, including the costs of printing and distributing the Prospectus and of marketing the
transaction.
2.16 Managers
The Managers of the Share Offer are Enskilda Securities and ABG Sundal Collier Norge.
Enskilda Securities held 540 shares in Opera and employees in Enskilda Securities held 100,000
shares, all of which was owned by Head of Equities Sales Fredrik Cappelen, as of February 25, 2004.
Neither ABG Sundal Collier, nor partners or employees of ABG Sundal Collier held shares in Opera
as of February 25, 2004. Michael von Tetzschner is a board member of Opera. He is also a board
member of ABG Sundal Collier. He owns 0 shares and 0 options in ABG Sundal Collier, and 34,280
shares and 100,000 options in Opera.
25
3. Purpose of the Offer and Use of Proceeds
The purpose of the Share Offer is to enable further expansion of the Company’s business and
strengthen the overall financial position of Opera as the Company aims to:
•
•
•
•
Expand and grow its revenue from the mobile Internet segment by serving more customers and
more products per customer
Maintain and expand its position and revenue from the PC desktop market by upgrading and
developing its PC desktop Browser product further
Increase its penetration of the STB/ iTV market
Increase its penetration of the verticals market by pursuing selected sales and development
opportunities together with selected customers/ partners
As the markets the Company operates within mature, Opera foresees that its Browser solution will be
included on more and more devices. As Opera gets paid a license fee per unit sold, the license income
in percent of total turnover will increase substantially. A customer will typically report the number of
units sold on a quarterly basis, and Opera will receive such a report four to eights weeks after the
reporting period has ended. Opera will then get paid four to six weeks after the report has been
received and an invoice has been sent. A transformation from development based income to license
based income will therefore require an increase in working capital. The proceeds from the Share Offer
will partly be used to finance an increase in working capital.
Opera is in a phase of strong growth and the Company is planning a substantial capacity increase over
the next 12-24 months. Stronger than anticipated customer demand and market growth might cause a
stronger growth than currently planned. The proceeds from the share offer will in Opera’s view give
the Company the necessary operational flexibility to scale the company according to market
development and customer demand. Although the Company expects strong growth with profits and
positive cash flow in 2004, this is not guaranteed. Hence, the share issue is important in order to
provide the Company a cash buffer that could be used in the event of unforeseen negative conditions.
As part of the Company’s expansion, the proceeds from the Share Offer will enable Opera to make
smaller acquisitions, e.g. of small Software development companies that may complement Opera’s
current organization and provide speedier growth than through existing organization and organic
growth. No specific acquisitions are planned at the moment, but the Company has previously acquired
a small Software company, HernLabs in Sweden, and may benefit from being able to do so again.
Furthermore, Opera is constantly negotiating with various customers over development and licensing
contracts for the Company’s Software products. It is important to the Company to have a sufficient
cash buffer to avoid the risk of speculation that getting the order and getting it quickly is critical to
Opera. Such speculation might lead to negotiations taking more time, resources and effort than
necessary.
26
4. Company Description
4.1 Company History
In 1992, a group of researchers working for the former Norwegian state owned telecommunication
entity preceeding Telenor explored an early version of the World Wide Web. At that point, the Internet
was an exciting field for researchers, but a sparse information space for commercial companies. The
Software used to browse the Web was immature, and the founders of Opera, Jon S. von Tetzchner and
Geir Ivarsøy, envisioned a multimedia Web where text, images, and sound could be browsed from any
device. At that time, no Software offered these features, and in 1994 Mr. Tetzchner and Mr. Ivarsøy
began developing their own Internet Browser Software, naming it “Opera”. Telenor used the first
versions of Opera but decided not to commercialize the product. In June 1995, Mr. Tetzchner and Mr.
Ivarsøy acquired the rights to the Browser solution and founded Opera.
Phase 1 – Focus on Research and Development in the Desktop Market
During 1995 Opera’s primary focus was on making the smallest and fastest Browser with the best user
experience for Windows PCs. In September 1996, the first version Opera was made available on the
Internet. Opera 2.1 was offered to users as “Shareware,” meaning users could download the Browser
for free, but then had to pay after a 30 days trial period. The Shareware revenue model for desktop
continued until end of 2000, with several new releases and more and more users discovering the
benefits of using Opera.
Phase 2 - R&D for Multiple Platforms with focus on Internet Devices
In 1998, Opera started focusing on the new emerging market for handheld Internet devices. By virtue
of offering the smallest and fastest Browser on Windows, Opera gained considerable competitive
advantages in the new and fast growing market for Internet devices. Opera made a strategic decision to
start development of the Browser on several new platforms.
Opera’s first deployment in a PDA: Psion’s Revo
Phase 3 - Commercialization
From the end of 1999, Opera started to grow substantially. An increased focus on sales and marketing,
and the growing need for more developers, led to an increase in staff from 25 by the end of 1999, to
over 100 one year later.
In 2000, Opera had several commercial breakthroughs, signing strategic agreements with Ericsson
Mobile Communications, Psion (the groundwork for later cooperation with Symbian), and others.
The Ericsson H210 Screen Phone: Not released out of prototype phase
The expansion was not limited to the new Internet device markets, with Opera changing the business
model for its desktop Browser from a Shareware model to an ad-sponsored model. From the release of
27
Opera version 5.0 for desktops in December 2000, users could download an ad-version of the Opera
Browser for free or chose to pay for a version without advertising. More than 6 million users
downloaded and installed the Opera Browser during the next 12 months. Today, between one and two
million people a month download and install the Opera Browser on their PCs, and Opera partners now
include IBM, Nokia, Motorola, Macromedia, Adobe, Symbian, Canal+ Technologies, Sony Ericsson,
Kyocera, Sharp, Metroworks, MontaVista Software, BenQ and Sendo
BenQ P30
Nokia 7700
Kyocera PS 900
Sendo X
Nokia 6600
Sony Ericsson P900
Motorola A920
Sharp Zaurus
Sony Ericsson P800
Sharp Zaurus
Nokia 9210
Psion Revo
2000
2001
2002
2003
2004
Phase 4 – From Browsing to Platform
Opera has a strong emphasis on continued innovation and advancing its technologies. As the product
line is expanding, so is the Company’s ability to claim a stake in and extract value from several parts
of the value chain. In Q2 2003 Opera launched the technology concept, “the Opera Platform” which is
a solution directed towards mobile operators. With the Opera Platform the Browser can now become
the main start-up screen, integrating the Internet with the device’s local applications, like calendar,
SMS, and e-mail. Using the Opera Platform, Opera’s open standards Browser technology positions
itself to become a key technology component on any device, not just the traditional role of being an
application for viewing Internet content.
Opera expects the Opera Platform to attract significant interest from mobile operators, which will
enable Opera to offer a better value proposition to more players in the value chain. The figure below
shows an example of Opera Platform’s start up screen on a mobile phone.
28
4.2 Business vision Vision and Goals
Vision
Opera’s vision is to deliver the best Internet experience on any device.
Goals
•
Achieve a global leadership position and a significant market share on mobile Internet
devices.
•
Empower Mobile - and iTV operators to increase their revenues per user and build loyalty
among subscribers.
•
Establish a clear No 2 position in the PC desktop market in order to secure the leading
position in the mobile Internet market.
•
Strengthen Opera’s position in the iTV and Vertical markets in order to be a lead player when
these markets take off
Mission
To generate revenues from Opera’s Internet Software technology in markets where the Opera solution
has significant advantages in terms of size, speed, stability and functionality.
4.3 Strategy
Overall Business Strategy
Work in close partnership with the leading OEM-players
Opera’s long term strategy has been to work in close cooperation and partnership with the leading
players in the Internet industry. Opera will not be able to establish itself as a leading player in the
Internet industry without support from partners with a strong distribution network in the different
markets. Except for providing distribution of Opera’s products, these partners give important input to
Opera with regards to its technical roadmaps and industry knowledge. Opera is fully focused on
enhancing existing partnership as well as establishing new strategic agreements with key players in the
industry.
29
Move up in the value chain with the Opera Platform by working with the operators
The technical evolution in Opera 7 enabled development of the Opera Platform, a technology that
makes it possible for Opera to move further up the value chain. Key focus for Opera is now to offer
the Opera Platform as a key enabler for mobile and iTV operators to increase revenues and strengthen
customer loyalty.
Innovation to Drive New Products
By focusing on innovation and offering the different parts of the value chain product enhancements
and new product that are based on the Browser experience, Opera believes it will become a contributor
in driving the market.
A Strong Foothold on Desktop Secures the Best Device Browser
Opera’s large base of users of its desktop Browser not only secures a steady income, but is also used
as a test group for Opera’s cross-platform core. This testing enables Opera to remove Software bugs,
and efficiently render “Street HTML,” the non-standardized mark-up language that a Browser needs to
decipher for satisfactory performance on the real Web. Desktop is also a strong communication
vehicle, and helps Opera to build a strong brand.
Improving Web Authoring
Most pages on the web not follow W3C's standards. In order to improve the quality of web pages,
Opera works with vendors of Web Authoring Tools to ensure that the pages that the tools generate
work well in Opera.
Strengthen the Opera Community
The Opera desktop Browser today has approximately eight million active users. Many of these are
playing a significant role in evangelizing the Opera story and helping enhancing the Opera product.
This community is of great value to Opera and has helped Opera to grow into the position it has today.
It is therefore of great importance to Opera to work in close cooperation with this community and to
make sure they understand how much Opera recognize their work.
Organizational strategy
The best people from around the world
Operating in a competitive industry, Opera seeks to hire the best people. Today there are 18
nationalities represented in the Company, working mainly out of Norway and Sweden, securing an
international environment that reflects the company’s customer base.
Staying independent
Opera is an independent Browser Software company. The Company believes it is strategically
important to be an independent company, and avoids exclusive partner and customer agreements as
this could potentially reduce interest from other companies.
Cooperation with strategic partners
To be able to understand new technologies and their possible implications in the industry, and to
influence the technology roadmap, Opera works closely with partners and standardization
organizations.
Protecting Intellectual Property Rights
Opera’s technology is protected by a combination of trade secrets, copyright and trademark laws, nondisclosure agreements and contractual provisions. The Company has also submitted a number of
patent applications. Opera seeks to apply for patents before demonstrating new and important
technologies to existing or potential partners.
30
In order to secure the ability to innovate, Opera seeks to retain all intellectial property rights for all
work conducted for partners. All innovations and improvements, as well as general bug fixes, are
added to Opera’s core, securing the best possible product offering.
Development strategy
Figure 1: Illustration of Opera’s development strategy
Windows
Microsoft *
Smart phone
µltron
Platform
Independent
kernel
Symbian
OS
Media
Highway
QNX
Unix
Mac
Brew *
Linux
Solaris
* Under development
Securing Full Interoperability on all Platforms
To work on all devices and all networks, Opera offers a cross-platform Browser that can be integrated
with all major operating systems. Opera’s desktop Browser has approximately 8 million users, many
of these acting as testers ensuring that that the Browser’s core works on all web pages.
Reformatting content for all screen sizes
One of the keys to success in viewing desktop Internet pages on Internet devices, is to reformat pages
according to screen size. Continuous improvements in Small Screen RenderingTM and Medium Screen
Rendering technology, together with a focus on usability, provides users with the best Internet
experience on any device.
Adhering to open standards
Opera makes use of already established standards on the Internet, and does not force operators or Web
authors to learn and write any new Web languages. By supporting open standards Opera attracts a
significant part of the existing development communities for services and content.
Opera takes an active role in standardization bodies to maintain the position as a front-runner in the
open standards community.
Reducing size and increasing modularity
The Opera Browser Software is developed based on several modules. These modules can be removed
or replaced depending on the device requirements. By focusing on reducing size and enhancing
memory handling, Opera’s technology can be set to work on most devices, including mass-market,
low-end devices.
31
Offering one Browser
Opera supports WAP2 and I-Mode, allowing operators to make use of previous investments, while
moving to fully utilize the opportunities presented to them by using all of Opera’s technology’s
potential, like full HTML browsing, the Opera Platform, and/or voice recognition.
The Desktop Browser as one of the Key Competitive Advantages
The Internet consists of billions of web pages and Opera estimates that more than 90% of the web
pages do not follow the W3C-standards. Common Web Authoring tools (e.g. Microsoft's FrontPage)
do not generate pages that follow W3C's standards. Rather, the pages are expressed in a dialect
referred to as "street HTML". Many of the web pages have only been tested up against Microsoft
Internet Explorer and will hence not be shown properly in other Browsers.
Over the nine years Opera has been making Browsers, the Company has acquired much knowledge on
how to implement W3C's standards, as well as how to deal with pages that do not follow W3C's
standards. Thanks to thousands of loyal and dedicated Opera users, Opera has been able to make the
necessary tweaks to be able to render Street HTML.
Browser testing on one platform is effective in weeding out bugs on all platforms. In this way, all
platforms benefit from bug fixes and general improvements. Furthermore, new functionality
developed as part of the Browser core is made available on all platforms. The below illustration
visualizes the way a bug fix benefits Opera users on all platforms.
4.4 Opera’s Market Segments
The foundation of Opera’s operations in its various market segments is its nine years of experience in
the desktop market. The other market segments like mobile Internet, iTV and Verticals are building on
the experience from the desktop market.
Currently, the mobile Internet segment is the most important market for Opera as this is the area where
Opera expects the highest market and revenue growth in the coming years. However, Opera believes
that both the iTV and the Vertical segments offer interesting opportunities going forward. A key
strategy has been to team up with experienced international partners in the Vertical markets. The
figure below shows the market segments where Opera currently operates.
32
Mobile Internet
iTV
Current main focus
Verticals
Market opportunities
Desktop
Foundation and technological platform
4.5 The Opera Product Offering
The basis of Opera’s product offering lies within the core technology of web browsing which is a
rendering engine that is capable of rendering content from the Internet or from other applications.
Continuous innovation has enabled Opera to enhance the product offering by offering products and
services that are closely connected to the traditional Browser technology.
The Opera Browser
A small, fast Browser with strong standards support and built-in SSR and MSR technology that
reformats Web pages and other content for all screen sizes. Accessibility to the real Web’s Street
HTML is ensured by virtue of its cross-platform core that is tested by Opera’s many desktop users on
a daily basis.
The Opera Platform
Traditionally Opera has delivered the Browser as a separate component directly to the OS developer
(such as Symbian) or to the OEMs (such as Nokia) for integration of the Browser into their own
environment. The Browser has been used mainly as the viewer for Internet content.
The Opera Platform enables integration of online content with local applications. The Browser can
function as a viewer for local applications and be used to take control over soft keys. This means that
the Browser can be used to show MMS, emails, sms, news feeds, time, date and battery indicators as
well as being used to control built in cameras and photo albums. This enables the Browser to be used
as a home screen of internet devices, so that operators can take control of the look and feel of the
device and push content and services.
With OEMs seeing the Browser as the key Software component for mobile phones, and operators
seeing the Browser as a key enabler to drive revenues and increases subscriber loyalty, Opera is now
moving higher up in the value chain.
Server solution
By letting Internet traffic pass through a server located at Opera or with the operator, surfing speed can
be significantly increased. The server will reduce the size of images and text before sending the data
out to the mobile surfer. As a result, the mobile surfer will experience higher loading speed, while also
saving on paying for data traffic as less information is transferred to the phone
33
Mail client
The mail client has been available for Opera desktop for two years and is now being ported to other
platforms. It is an e-mail database, news reader, and mailing list organizer all in one. The mail client
focuses on e-mails from people you know, root out spam mail, and label and filter your e-mails
according to your needs. One can store almost anything in virtual folders and E-mails can show up in
multiple access points, such as for each contact, under each label you have made for follow-up, each
type of search you have performed.
Web Previewer
When providing a device designed for content provision, the industry commonly releases a "CDK"
(Content Developer Kit). Opera’s CDK enables previewing of how a Web page will look when
browsing from a phone. This is crucial to Web developers seeking to make their sites look great also
from mobiles.
4.6 Continuous Development & Innovation
Constant innovation opens up new business opportunities
Opera has a strong focus on innovation and on new business opportunities. New and improved desktop
Browser versions are being developed and released, with great reviews. Together with new Browser
versions new functions and products are developed and offered to customers.
The illustration below illustrates a selection of Opera’s innovations, and the commercial benefits that
have ensued.
Focus
R&D Desktop
Keyboard navigation
Multiple Documents
Innovation
R&D Internet Devices
Cross-platform
development
Small Screen Rendering
Footprint reduction
Porting to EPOC
Spatial navigation
Smart frames
Focus on Modularisation
Table magic
Opera Show
DOM/BIDI for Smartphones
Image zooming
Mouse Gestures
1995
1996
1997
Expanding in the
value chain
Commercialisation
1998
1999
2000
2001
2002
2003
2004
Products
Since summer of 2002 Opera has announced new patent pending innovating Browser technologies that
have opened up new products to the world of Internet:
Small Screen Rendering
Since 2001 Opera has focused on how to adapt Web pages originally developed for desktop monitors,
into user-friendly content on smaller screens. Existing solutions were not very compelling:
1. Present it as you would on a desktop computer. This meant horizontal scrolling to read
content.
2. Zoom. This gave a nice overview of the page and structure, but presented difficulties when
trying to read text.
34
Therefore, in 2002 Opera introduced its Small Screen Rendering (SSR) technology that made it
possible to reformat Web pages for the small screens on handsets, eliminating horizontal scrolling on
small-screen devices.
The announcement of Opera SSR resulted in major international interest from the world’s media as
well as device manufacturers. For the fist time it was interesting to offer full access to the Internet
also on phones with smaller screens.
Medium Screen Rendering (MSR)
However, while SSR does a great job in generating user-friendly versions of Web pages for today’s
smartphone sized screens, it is not a perfect solution for larger screen sizes. In 2003, Opera therefore
announced a solution for rendering Web content also on mid-sized screens, ranging in size from PDAs
used in "landscape mode" to low-resolution TV screens. MSR addresses all these mid to top-tier
devices, reformatting content to fit the screen size, without having to resort to horizontal scrolling or
zooming. Like SSR, MSR reformats Web pages to fit on other screen sizes without introducing
horizontal scrolling. MSR identifies the Web page's content and adapts these different elements
individually to fit on medium-sized screens. Original fonts and colours are kept, and the design and
style is left virtually untouched. Opera's MSR innovation has been welcomed from key industry
players, and has already been delivered to several partners. The figure below shows the MSR in PDA
landscape mode.
35
User Interface (“UI”) innovations
During the last years Opera has also been focusing on enhancing the user experience for the end users
through easy understandable navigation methods.
The last quarter of 2003 saw two new innovations for which patents have been applied by Opera,
which will greatly ease Web navigation.
•
•
Table Magic – In its original iteration, SSR was made to present Web pages in one column, in
effect destroying any numeric tables on a page, such as financial numbers in a spreadsheet
online. With Table Magic, SSR is now capable of recognizing numeric tables, and display
these in a satisfactory manner.
Smart Frames – Smart Frames – presented itself as a special challenge on small screens, as it
made the whole screen into just several small windows with scroll bars. This problem Opera
has now solved with its Smart Frames technology. Opera identifies elements on frame pages,
then intelligently wraps, stacks and shrinks or enlarges to remove or reduce the number of
scrollbars. Thanks to Opera’s technology frames no longer pose a significant problem on
mobile devices.
In addition to these improvements in Q4 2003, other major steps forward were taken throughout the
year. Some highlights include:
• Spatial Navigation: Enables one-hand navigation of Web pages as well as remote control
• Footprint reduction from 2.2 MB to 1.23MB
• Compression further reduces footprint down to 750KB
• Multiple languages supported
• Opera was released fully-branded on Nokia’s 6600 handset, a Series 60 smartphone, in
December 2003.
36
4.7 Revenue Model
Opera today has two different revenue models, one for the Internet Device Market and one for the
desktop market.
Internet Device Market
Traditionally Opera licensed the Browser either directly to the
• OEM such as Motorola and Nokia
• the owner of the OS such as Symbian and QnX
• the owner of the UI/Middleware such as Canal+ or Series 60 from Nokia
During the last 18 months Opera has been focusing on offering the Browser also directly to the other
players in the value chain:
Mobile operators
• During the last 18 months Opera has successfully been working directly with mobile operators
to deliver a special branded version of the Browser directly to the operators in order for them
to gain a stronger position among their subscribers and increasing revenues from data traffic.
End users
• Opera has during the last year also started to market and sell the Browser directly to the end
users that have phones where Opera is not included. This possibility was first introduced with
the release of the Nokia 7650 and later the Nokia 3650, Nokia N-Gage as well as the Siemens
SX1.
Opera has with the new Product Offering been able to move up on the value chain by selling directly to
Operators and End Users.
Three Revenue Sources:
1.
Non-Recurring Engineering (NRE):
Mutually decided between the handset manufacturer/operator and Opera up-front, based on
the workload needed from Opera’s side. Opera places a high degree of importance on the NRE
fee, as it demonstrates strong commitment from partners.
37
Until now, the NRE fee has constituted the major part of Opera’s revenue in the Internet
device segment.
2.
Licensing fee:
Opera gets a license fee based on units sold. The fee per unit depends upon the volume
commitment from the handset manufacturer/operator. As a proof-of comitment from partners,
a guaranteed minimum number of licenses sold is customary in order to secure a minimum
level of revenues for Opera. Until now, the revenue stream coming from license fees has been
minor as there have not been many handsets with Opera included in the market.
In 2003 Opera also started to market and sell the Browser directly to the end users.
3.
Support & Maintenance:
A Support and Maintenance agreement that includes:
- New Releases of the Product and Modified Product:
- Upgrade rights for earlier versions of the Product/Modified Products; and
- Access to Opera’s™ ® Support Center
This revenue model implies that the major part of the revenues is connected to shipments of products
in the market. As a normal development cycle for an Internet Device is one to two years, and the
shipment period of such devices very often are between one and two years, Opera will be getting
revenues in a long period after the actual work is done.
Desktop
On desktop, Opera collects revenue in several different ways:
License sales (Users buying Opera).
Opera is available for USD 39 with various discounts. Buying Opera removes the advertising banner
from the user interface and gives access to e-mail support and 6 months of free WebMail. Until
December 2000 this was the only income from desktop.
Advertising in free version.
In December 2000 Opera released a version that includes an advertising banner for those users who
wanted to use Opera, but were not willing to pay the license fee. For those opting not to pay for their
copy, Opera receives income via the banner advertising in the user interface. The ad-sponsored version
has increased the popularity of Opera, even increasing license sales. The advertising sale itself has
proved disappointing until now. However, in 2003 the advertising system was changed to include
Google’s system, which increased the income.
Search partners.
The Opera Browser features integrated search and shopping bars, and partner companies pay a fee to
Opera every time a user utilizes the integrated search or shopping bar. Opera cooperates with a few
select partners it feels can contribute value to its product and users. Deals with companies like Google,
Fast, Lycos, InfoSeek, Yahoo, Amazon, and eBay are showing constant growth in revenues for Opera.
Rendering engine as a separate product.
Opera delivers a full-featured, embeddable version of its desktop Browser that can be integrated into a
wide range of applications. Adobe and Macromedia are major customers in this segment.
Opera Web Mail.
Opera provides a free and a pay service Webmail. When users pay for the premium service, Opera
splits the revenue with Outblaze, the company that operates the service.
38
4.8 Legal structure
Opera is headquartered in Oslo, Norway. The group consists of two legal entities, Opera Software
ASA and the Company’s wholly-owned subsidiary in Sweden, Hern Labs AB.
4.9 Organization and Management
Corporate operational structure
Opera’s corporate operational structure is shown below.
Figure 2: Corporate operational structure
Opera
Opera Software
Software ASA
ASA
Jon
Jon S.
S. vonTetzchner
vonTetzchner
CEO
CEO
Sales
Sales&
&Distribution
Distribution
Lars
LarsBoilesen
Boilesen
Executive
VPand Distr..
Executive
VP ofSales
Marketing
Marketing &Strategic
&Strategic Allian
Allian..
Rolf
RolfAssev
Assev
Executive
Executive VP
VP
Research
Research
Håkon
HåkonWium
WiumLie
Lie
CTO
CTO
Engineering
Engineering
ChristianKrogh
ChristianKrogh
VP
VP Engineering
Engineering
Operations
Operations
ChristianJebsen
ChristianJebsen
CFO/COO
CFO/COO
Source: Opera
Opera recognizes the need to be represented in its largest markets, and is constantly evaluating
whether to establish new sales and marketing offices in order to be closer to the market.
Opera wishes to retain and manage the core development team in Norway and Sweden.
Board of Directors
The board of directors is ultimately responsible for the policies and management of the Company,
including policies for strategy, accounting, organization, and finance to be pursued by the Company.
Christian H. Thommessen (46), chairman
Mr. Thommessen spent 17 years in international management consulting and executive management
before turning his career into full-time directorship in Technology/Venture (also active shareholder),
Government and NGO/Humanitarian sectors. Mr. Thommessen has worked as a consultant in McKinsey
&Co at their Copenhagen and Oslo offices, held executive positions in Norsk Hydro before he left for
IBM as assistant general manager IBM Nordic, President and General Manager IBM Norway and finally
general manager IBM Europe, Middle East & Africa for IBM Global Network and IBM’s internet
consultancy business. Thommessen also worked as CEO in the industrial company Glamox ASA. Today
Thommessen is chairman and board member in several private and publicly listed technology companies
including Trio AB (chairman – listed in Stockholm), Kistefos and Kistefos Venture Capital, a member of
the board of NTNU (the Norwegian University of Science and Technology), and is an advisor to the
Norwegian government through various government advisory boards. Thommessen is recently elected to
the European Commission’s eEurope Steering Group Second Chamber. He is also chairman of Save the
Children Norway and director of the Global Save the Children Alliance. Thommessen holds a master´s
degree in business from the Norwegian School of Economics and Business Administration. Thommessen
directly holds 845,000 shares in the Company, and owns 50% of Sollund AS, which holds 765,000 shares
in the Company. Thommessen lives in Oslo.
John R. Patrick (58)
Mr. Patrick is president of Attitude LLC and former vice president of Internet technology at IBM.
During his 35-year tenure at IBM, Mr. Patrick contributed to the foundation of IBM’s leasing business
at IBM Credit Corporation and was senior marketing executive for the launch of the IBM ThinkPad
brand. Mr. Patrick has been publicly credited with bringing the Internet to IBM. Mr. Patrick was a
founding member of the World Wide Web Consortium (W3C) at MIT and is now the chairman of the
Global Internet Project, a senior member of the Institute of Electrical and Electronics Engineers, a
member of the Internet Society, the Association for Computer Machinery, and the Working Group on
39
Authentication at the Center for Strategic and International Studies. He also serves as a member of the
board of directors for Danbury Health Systems Inc., Jupitermedia Corporation, and Knovel
Corporation. Patrick holds 100,000 shares and 100,000 options in the Company. Patrick lives in
Ridgefield, Connecticut, USA.
Tore Mengshoel (36)
Mengshoel is a partner with Teknoinvest Management AS, a leading Nordic venture capital firm
established in 1984. Teknoinvest currently manages approximately EUR 130 million in funds and
invests in start-up and intermediary stage companies in the ITC and Life Sciences sectors. Teknoinvest
mainly invests in the Nordic countries and the USA. Mengshoel’s investment focus is on the IT C
sectors, and he has managed investments and held board positions in the Nordic countries and the
USA. In addition to being a board member of Opera he is currently on the board of Funcom N.V. and
an observer to the board of Trolltech AS. Before joining Teknoinvest in 1997, he worked as a
management consultant with McKinsey & Co. in Scandinavia. He holds a MSc in computer
engineering from the Norwegian Institute of Technology (NTH, currently NTNU) and a master’s
degree in business administration from INSEAD in France. Teknoinvest manages in total an
investment of 10,668,496 shares and 4,266,667 warrants in the Company. Mengshoel directly owns
40,000 shares in the Company, and Teknoinvest Management AS, in which Mengshoel is a
shareholder, owns 132,564 shares in the Company. Mengshoel lives in Oslo.
Michael Tetzschner (47)
Tetzschner is the former president of Feedback Research Consulting AS, Norway, and Lifo Research
& Consulting, Denmark. Previously, Tetzschner was the managing director of the Norwegian School
of management (Handelshøyskolen BI). Tetzschner has also been the head of the executive board
(Byrådsleder) of the Municipality of Oslo. He graduated with a degree in law from the University of
Oslo. Tetzschner holds 34,280 shares and 100,000 options in the Company. Tetzschner lives in Oslo.
Håkon Wium Lie (38), chief technology officer (CTO)
Wium Lie is Opera’s CTO. Wium Lie is a Web pioneer, having worked on the WWW project at
CERN, the cradle of the Web. He first suggested the concept of Cascading Style Sheets in 1994, and
he later joined W3C to further strengthen the standard. In 1999, he was listed among Technology
Review’s Top 100 innovators of the next century. Wium Lie holds a master´s degree in visual studies
from MIT’s Media Laboratory, as well as undergraduate degrees in computer science from West
Georgia College and Østfold College. Wium Lie holds 2,587,645 shares and 400,000 options in the
Company. Wium Lie lives in Oslo.
Lars Bjørn Thoresen (34)
Thoresen is Partner in Four Seasons Venture. Four Seasons Venture manages approx. EUR 170
million in three venture capital funds, and has since its inception in 1985 focused on investing in
unique, high growth companies within the IT and Communication sectors. With its lates fund the
focus has widened to also include other sectors. Four Seasons Venture invests primarily in the Nordic
countries, but also in other European and US markets. Thoresen has been with Four Seasons Venture
for more than five years, and holds several other Board positions in Four Seasons Venture portfolio
companies, both in Norway, Sweden and in the US. Before joining Four Seasons Venture, Thoresen
held the position as senior associate at Braxton Associates in London. Thoresen has also previously
worked as management consultant at Deloitte Consulting. He holds a master’s degree in business
administration from INSEAD in France, and a bachelor’s degree in finance from St. John's University,
New York, USA. Four Seasons Venture holds 6,682,287 shares and 1,333,333 warrants in the
Company. Thoresen lives in Oslo.
40
Live Leer (32), employee representative
Leer is desktop product line manager at Opera. Leer has worked at Opera since April 2001. Before
starting at Opera, Live worked as the marcom manager for Apple in Norway for two years and one
year as project manager at the Web design agency SLB in Oslo (now Virtual Garden Screenplay). She
holds a bachelor’s degree in journalism from the University of Colorado at Boulder and a master’s
degree in international relations from the University of California, San Diego. Leer holds 50,000
options in the Company. Leer lives in Oslo.
Snorre M. Grimsby (34), employee representative
Grimsby is quality assurance department manager and research coordinator at Opera. He has worked
at Opera since January 2001. Prior to joining Opera, Grimsby studied English and political science at
the University of Oslo, and graduated with a cand.mag.iks degree in international culture and society
studies. Grimsby holds 2,400 shares and 40,000 options in the Company. Grimsby lives in Skjetten.
Management
Jon S. von Tetzchner (36), chief executive officer
Tetzchner is one of the two founders and the CEO of Opera. Tetzchner worked for Telenor Research
from 1991 to 1995, when he and his colleague Geir Ivarsøy founded Opera. Tetzchner has been
responsible for business development and management in the Company. Tetzchner holds a master´s
degree in computer science from the University of Oslo. Tetzchner holds 19,482,110 shares and
400,000 options in the Company. Tetzchner lives in Oslo.
Håkon Wium Lie (38), CTO
See above under board of directors.
Rolf Assev (41), executive vice president marketing and strategic alliances
Assev worked four years for the Lillehammer Olympic Organizing Committee in the marketing
department where he was responsible for developing and negotiating the international and national
sponsor contracts. He then joined the leading PR company in Norway, Geelmuyden.Kiese (GK),
where he worked four years as a senior consultant responsible for the IT-sector. At GK he was also the
key account manager for Microsoft. From 1998 to 1999 he was the general manager for the retail
chain Spaceworld. Assev holds a master´s degree from the Norwegian School of Economics and
Business Administration. Assev with family holds 1,223,820 shares and 400,000 options in the
Company. Assev lives in Oslo.
Christian Jebsen, (36), chief financial officer /chief operating officer (CFO/COO)
Jebsen worked seven years (1991-1998) within corporate finance, investment banking of Nomura
International in London and Enskilda Securities in Stockholm and Oslo. Prior to joining Opera, Jebsen
worked as the CEO of Stavdal ASA, a company listed on Oslo Børs. Stavdal ASA was acquired in
January 2000, at which time Jebsen joined Opera. Jebsen holds a bachelor´s degree in business
economics from Copenhagen Business School. Jebsen with family owns 83.4 % of Sanner Industries
Ltd., which holds 1,399,300 shares. Jebsen owns 400,000 options directly in the Company. Jebsen
lives in Oslo.
Lars Boilesen (36), executive vice president sales and distribution
Boilesen worked four years for the LEGO Group where he was sales and marketing responsible for
developing markets in Eastern Europe from 1992-96. He then joined Tandberg Data ASA as sales and
marketing, responsible for North Europe/Asia/Pacific, the last year as vice president of world-wide
sales. Boilesen holds a bachelor’s degree in business economics from Aarhus Business School.
Boilesen owns 29,400 shares and 800,000 options in the Company. Boilesen lives in Oslo.
41
Christen Krogh (38), vice president engineering
Dr. Krogh is in charge of all Software development at Opera. He has previously worked as a research
fellow and research scientist at Oslo University and Center for Industrial Research, respectively. He
has been group leader and subsequently research director at SINTEF Telecom and Informatics. He has
also worked with business development for a TV broadcast subsidiary. Dr. Krogh holds an
interdisciplinary doctorate degree from tne University of Oslo, and a bachelor´s degree with honors in
computer science from Glasgow University. Dr. Krogh holds 24,000 shares and 450,000 options in the
Company. Krogh lives in Asker.
Remuneration to board of directors and CEO
Through 2003 the Board of Directors have not received any cash compensation for their services.
However, Michael Tetzschner has received 100,000 stock options. All other members of the Board
have been large shareholders in the Company. From 2004 an onwards, the Board of Directors have
and will continue to become more independent and professional and also include employee
representatives. Shareholders representing more than 50% of the votes have agreed in principle that
the Board of Directors will, from 2004 and onwards, receive a compensation, which is considered
normal for companies like Opera.
Opera’s CEO, Jon S. von Tetzchner, received a compensation of NOK 456,000 for his duty as CEO of
the Company in 2003.
Employees
As of December 31, 2003 Opera had 128 employees. Of the 128 employees in Opera at the end of
2003, of which approximately 45% were non-Norwegian. The employees represent 18 different
nationalities.
The table below shows the development in number of employees since 2000.
Employee development per function (end of period)
2000
Development
34
Services
16
Sales and communications
31
Operation
19
Total
90
Source: Opera
42
2001
49
30
21
16
116
2002
63
27
22
18
130
2003
60
25
23
20
128
5. Background and Market Introduction
5.1 The Browser Evolution
From its inception at CERN in 1990, the Web has lived up to its name and is now one of the most
important electronic information systems on the planet. Tim Berners-Lee, the initial architect of the
Web, wanted to create a system where people could consume as well as contribute information. Thus,
the first generation of Software created to support his new invention were tools for reading as well as
writing documents.
In 1993, a group of young programmers at NCSA launched a program that could read pages on the
Web. The program was called "Mosaic" and it soon gathered a large following. Mosaic became the
first major Browser. In this document we describe the Browser industry.
In 1994, NCSA programmers founded Netscape. They rapidly released the first commercial Browser,
and the name of the company was to become closely associated with the Web. The Netscape Browser
was a stable, commercial product and millions of people discovered the Web through it.
This relatively innocent beginning for the Web and Browsers ended swiftly, ensued by one of the most
high-profile corporate battles of the last century: The Browser War. Microsoft saw how important the
Browser market was and decided to attack the market by developing its own ‘Internet Explorer’
Browser and distributing it free of charge. With Microsoft’s almost unlimited resources for marketing
and development, together with easy distribution through its Windows operating system, Netscape was
quickly overtaken. By 1998 Microsoft became the market leader, and has clearly dominated the
desktop Web since then.
The "Browser War" is an indication of the importance of the Browser. It is not just another application
- it represents a new medium and provides a window into an electronic society. As Opera’s new
initiative, the Opera Platform, demonstrates Browser technology can become the very foundation of
all Software development, eclipsing the importance of the operating system.
The first iterations of Opera were publicly released in 1996, getting instant recognition from advanced
Web users for its small size and fast speed. Still a young organization comprised of only a few
engineers, Opera kept a fairly low profile during the high-profile Browser War.
Having familiarized itself with users through desktop computers, the Web is ready for the next step:
Internet access anywhere. Opera started preparing for this market at an early stage. Envisioning that
the Web would one day outgrow the PC, Opera began development for alternative operating systems
as early as 1998. The Company saw that the world of the Web was about to change; evolving into a
market where nimble and fast Browsers like Opera would be attractive in the diversity of Internet
devices offered. Having worked on refining its Browser technology for all kinds of Internet devices for
several years, Opera is now available on several devices in the retail market. Opera believes it is very
well positioned to partake as a significant player in the further evolution of the Internet.
With the Opera Platform, Opera is shifting gears in commercializing the promises inherent in Internet
access anywhere.
43
5.2 General Market Trends
From Proprietary to Open Standards
The internet device industry has traditionally been based on each OEM developing a proprietary
operating system on which they put a set of applications and services. On top they have traditionally
been putting proprietary user interfaces. This is now changing as the OEMs are realizing that a key to
success is to support a strong developer community around their products to secure access to more
compelling content and services.
From Hardware-Centric to Software-Centric Devices
Opera believes that a major source of revenue growth for operators in the future will be advanced
data-enabled devices that can increase the data revenues. To provide consumers with compelling
content and services that will create revenue growth, the Internet Devices will need great applications
that stimulate usage.
To develop these applications and services in-house is cost prohibitive and could increase the time to
market.
To ensure that a large number of applications become available, and available on many handsets, the
industry has therefore realized that it needs to open up its development for third-party developers.
Hence there is currently a standardization effort taking place, where the industry is converging on
open standards and a handful of operating systems.
2G Environment
Voice complexity
Next Generation Evironment¹
Full multimedia complexity
Brand
Brand
Applications
Embedded
Software
Operating
System
Operating System
Embedded
Software
Applications/
User Interface
UIQ
Baseband / RF / Protocol System
Baseband / RF
System Integrator
Software
Hardware
Hardware
Software
Integration
Integration
Proprietary OS
Open OS
¹Representative companies only
The Browser Becoming Key to Other Applications
From being a Browser which main functionality is to access the Internet, the new Software-centric
devices are likely to depend more and more on the Browser as a core component within the whole
Software package.
Opera believes the Browser is now turning to be one of the most important components in the whole
internet device offering as the key integrator of the major applications on the new devices that are
being launched in the market.
44
User Interface
Browser
Voice
Rich Call
Messaging
Internet
Multimedia
& Games
Biz.
Applications
Operating System
Operators Taking Control
Major mobile operators as well as iTV operators are no longer interested in acting as simple suppliers
of bit pipes. They want to build loyalty among their user base by focusing on controlling the device’s
user interface and brand.
Over the last two years, operators have started to take more control of the user experience in order to
increase revenues and to reduce subscriber churn.
With the availability of a Browser based UI, the Operators are able to take control over the UI on
phone. By making use of the Browser technology, the Operators can make the Browser to be the
Home Screen of the device with tailor made content and services. From the traditionally simple skin
solutions that are available for Operators, using a Browser based UI is a great advantage as it opens up
for integrating with plenty of open standard authoring tools and applications as well as online content.
45
6. Opera for Desktop - The Foundation of the Opera
Competitive Advantage
6.1 Introduction
The Opera desktop Browser is the fundament for Opera’s market position and is the backbone of all of
Opera’s business areas. The strong presence in the desktop market offers competitive advantages for
Opera in the market for Internet devices, as all major new Software releases first are delivered as
public betas on some of the desktop platforms, enabling Opera to utilize feedback from thousands of
dedicated users. The Opera Browser is, as opposed to some of Opera’s competitors in the mobile
Internet and iTV markets, tested by millions of users every day. This is only possible because all of
Opera´s Browser versions are based on the same core. The improvements made in Opera’s desktop
versions are quickly transferred to other embedded versions.
There are a large number of users that use Opera to access the Internet. Opera´s users are active and to
a large extent technically apt, and provide feedback to Opera on bugs, display problems on sites, or
any other issues where they feel Opera can improve their Internet experience. These users do not only
share their opinions with Opera, but also ensure that Opera can access these Web sites by contacting
sites that use non-standard compliant code.
The desktop versions of Opera have attracted significant media attention around the world. Although
the Company has spent almost nothing on marketing Opera believes it has become a well-known
brand in the Internet industry.
Opera’s desktop versions have historically provided a steady, growing revenue stream. In 2003, the
desktop product line, including advertising income, accounted for NOK 23.3 million, up from NOK
17.5 million in 2002.
Opera’s desktop Browsers can be used on Windows, Mac OS, Linux, Solaris, and FreeBSD.
6.2 Market overview and size
The research firm IDC estimates that by the end of 2004, more than 780 million people will access the
Internet at least once per month. According to the same research firm, almost 1 billion people will be
accessing the Internet at least once per month in 2006. The figure below shows the expected
development in worldwide Internet users.
Figure 3: Estimated development in worldwide Internet users
1,000
900
Million users
800
700
600
500
400
300
200
100
0
2000
2001
2002
2003
2004
2005
Source: IDC, December 2002
46
2006
6.3 Operating systems
A Web users’ choice of Browser is controlled somewhat by what operating system he/she is using.
There are several alternative operating systems available for desktop users, but three dominate:
Windows, Macintosh, and Linux.
Microsoft Windows OS
Microsoft Windows is a personal computer operating system owned and developed by Microsoft.
Microsoft Windows has become a de facto “standard” for individual users in most corporations as well
as in most homes.
Linux OS
Linux is a free or very low cost operating system comparable to traditional and usual more expensive
UNIX systems. Linux has gained a reputation as an efficient, secure and fast-performing system. The
central part of the system was developed by Linus Torvalds at the University in Helsinki.
Macintosh OS
Macintosh OS is the operating system for Apple Computer’s Macintosh line of personal computers
and workstations.
According to OneStat.com, the 3 most popular operating systems are:
Table 4: Ranking of the most popular operating systems
Ranking and OS
Market share
1. Windows
97.5%
2. Macintosh
1.4%
3. Linux
0.3%
Source: OneStat.com
Linux is by many expected to be the new challenger to Microsoft’s Windows dominance. Some major
retailers have now started selling Linux desktop computers, and IDC expects that Linux will become
the number 2 desktop OS before 2005.
6.4 Opera’s Solution
Opera’s family of Browsers is cross-platform, available on six operating systems.
Opera has demonstrated its ability to focus on continued innovative leadership, introducing several
new features to Browser Software. Examples are features such as mouse gestures, zooming, integrated
Google search, multiple document interfaces, and FastForward. Like The Wall Street Journal says in
their review of Opera 7, entitled “Opera's New Web Browser Is Worth Singing About“:
“Just when I thought Software had become as innovative as a bacon sandwich, something
came along to prove me wrong. There is Software out there that is innovative and that
actually makes things easier. It's a Web Browser made by a Norwegian company called Opera
Software ASA and its latest incarnation, released last month, is a real gem.”
-- Jeremy Wagstaff, The Wall Street Journal (February 5, 2003)
In addition, Opera continues focusing on its core strengths vis-à-vis Internet Explorer.
"...if you have to power-browse, then...[Opera]...is the Browser for you."
-- John C. Dvorak, PC Magazine (November 26, 2002)
47
Opera’s key advantages are:
Fast and small
Users and press worldwide have hailed Opera as the fastest Browser on earth. Opera uses less memory
and space on the hard drive than competing full-featured Browsers. Internet Explorer´s memory
requirement has increased substantially, while Opera’s latest release actually made the Browser even a
bit smaller than its predecessor – currently requiring about 3 megabytes.
Standards compliant
If Web authors test their site with Opera it is most likely that the site is open and accessible to all
major Browsers, platforms and operating systems. Opera supports open international Web standards,
such as HTML, XML, XHTML, WML, CSS, and DOM, and is a member of the World Wide Web
Consortium (W3C).
Secure
Opera has a firm commitment to privacy and security. Opera has often been the first to introduce and
support the latest in security, such as 128-bit SSL and TLS. Opera users can choose the level of
security that best fit their needs, e.g. blocking pop-ups, JavaScript, or cookies. From time to time
security issues, like other bugs, do come up, but usually Opera has received compliments for having a
much better safety record than the competition – i.e. quickly taking care of problems when they do
surface.
Innovative
To make Opera the most user-friendly Browser regardless of impairment, a wide variety of different
features have been developed, such as zooming, mouse gestures, keyboards shortcuts, and full-screen
mode.
Fun
With Opera, users can customize their Browser with skins, buttons and panels. Users can also make
their own Browser and distribute it to friends, family, colleagues, or customers with the Opera
Composer.
Coming: The Opera Platform
The desktop team at Opera is also working towards incorporating the Opera Platform for the mobile
Browser to the desktop environment. Envision this as making the traditional bookmarks “dynamic.”
Users will be met with a start page with information on search, bookmarks, and history of their
formerly visited links information - all in one place. For the users who tend to go to the same pages,
this will provide a simpler and quicker way of finding the information they need. For ISPs, this may
also be a useful way of branding the Browser, so their users can set their own start page, content, and
advertising. The advantages presented to mobile operators are the same as those for their counterparts
on desktop, whether they are ISPs or other companies who wish to brand themselves. The Browser can
be tailored and specially built to fit the branding needs of these "desktop operators".
6.5 Competitors
Creating a simple HTML Browser to browse the Web is not difficult for a skilled programmer. Taking
a look in a Browser archive like http://browsers.evolt.org/ you can download a wide variety of
Browsers.
The challenge lies in creating a full-featured Browser that implements all common web standards and,
at the same time, is able to handle pages that do not conform to these standards. This takes years of
development and fine-tuning. To include workarounds for such sites is a momentous task. Therefore
the list of Opera’s real competitors is significantly shorter than the number of Browsers available
online, or those that are hyped by the media from time to time.
48
Opera counts among its competitors in the desktop space Microsoft’s Internet Explorer, Netscape
Navigator/Mozilla and Konqueror, and Apple’s Safari.
Internet Explorer
Internet Explorer’s dominance in the market for desktop Browsers has come about partly due to its
extensive distribution network. Microsoft based this network on its close ties to PC manufacturers all
over the world, and the company continues to dominate these channels. Additionally, Microsoft’s
Internet Explorer is moving more towards the integration of applications within its Browser. For
example, its Media Bar lets you play streaming audio and video without having to open a separate
Browser window. The integration of Browser and application is intended to merge the browsing
experience into the desktop experience, and thus strengthen the value of Microsoft’s Office products.
Microsoft's Passport authentication Software - part of its .Net initiative, is also closely tied into its
strategy for Internet Explorer. Passport is promoted to end users from within the Windows XP
operating system. Passport works such that users enter information once in a Web site, i.e. e-mail
address or credit card information, and the program stores the information to authenticate a user's
identity on all other Web sites that use the Passport service.
In October 2003, Microsoft presented plans for its upcoming new operating system called Longhorn,
where the new Web services architecture will be tightly integrated with the other applications on the
desktop. According to Jim Allchin, Microsoft group vice president of platforms, Indigo is making a
subsystem underneath that does everything for you. (Gates Rounds Up Longhorn Plans , eWeek,
October 27, 2003: http://www.eweek.com/article2/
0,4149,1364410,00.asp) Journalists and analysts have interpreted this to mean that the operating
system and the Browser are intertwined, and it is expected that the next version of Internet Explorer
only will be available to those who upgrade to Longhorn. However, Microsoft first has to overcome
such obstacles as spam and security and have publicly declared that they will have to solve these
issues before they can move forward with Indigo.
Netscape/ Mozilla
Despite losing the Browser war, Netscape kept its position as the second most used Browser for some
time. Currently, Netscape is increasingly being replaced by its open source offspring, Mozilla, which
was born in 1998 when Netscape faced with the defeat from Microsoft, decided to let the Browser go
to the Open Source Community.
The Open Source Community was and is committed to open standards and open code bases, letting
developers all over the world access to the programming code of the program in question and possibly
add features and refine the program. Dubbed the Mozilla project, the development of a Browser was
the largest Open Source initiative to date, with the exception of the development of the Linux OS
itself. The project dragged out, version numbers were skipped, but in mid-2002 Netscape released
version 7, built upon the Mozilla project’s work with a Netscape user interface.
In 1998 AOL Time Warner bought the commercial part of Netscape. AOL Time Warner later filed a
lawsuit against Microsoft for unfair competitive practices that had crippled AOL Time Warner’s
Netscape Browser. Microsoft ended up paying AOL Time Warner USD 750 million to settle the suit,
on the condition that AOL Time Warner would use and open up its services to Microsoft Internet
Explorer.
Soon after the lawsuit was settled, AOL Time Warner pledged USD 2 milllion to the Mozilla
foundation. The Mozilla project was therefore able to continue and expand its development in spite of
Netscape’s demise, and Mozilla has continued to build a name of its own and received positive
product reviews. The latest release of Mozilla was Mozilla 1.6 in July of last year.
Konqueror/ Safari
Konqueror is an open source Web Browser traditionally used in the Linux desktop environment. It is
based on the KHTML, the Konqueror desktop HTML Engine (KDE) rendering engine. Recently
49
Apple chose KHTML as the basis for its new Browser Safari. Konqueror benefits from being well
integrated into the KDE desktop environment so users can manage files, and launch applications and
plug-ins, and view documents without having to open another application.
Table 5: Opera competitors
Company
Browser name
Opera
Opera
Microsoft
Internet Explorer
Netscape/Mozilla
Navigator/ Mozilla
Konqueror
Konqueror
Apple
Safari (based on Konqueror)
Source: Opera and the companies represented
Operating systems
Linux, Mac, Windows
Windows, Mac
Windows, Mac, Linux
Linux
Mac
6.6 Opera’s position on desktop
Until December 2000, Opera was exclusively available as Shareware, meaning users could download
the Browser, but then had to pay to keep using it after 30 days. With the release of Opera 5.0, the
Browser became ad sponsored. Users can now use Opera and all its features for free for as long as they
like, but can pay to remove the ad banner from the user interface and receive premium support. Since
then, Opera has seen substantial growth in downloads and usage numbers.
1.8
40
1.6
35
1.4
30
1.2
25
1.0
20
0.8
15
0.6
10
0.4
0.2
5
0.0
des.00
0
apr.01
aug.01 des.01
apr.02
Downloads per month
aug.02 des.02
apr.03
Accumulated downloads (in million)
Downloads per month (in million)
Figure 4: Opera downloads from December 2000 to December 2003
aug.03 des.03
Downloads accumulated
Source: Opera
It is difficult to find statistically sound data for defining the exact market share for each Browser, but
Opera believes it currently has approximately 1 – 2 % of the market.
In a report from September of 2003, WebSideStory’s StatMarket claims a market share of around 96%
percent for Internet Explorer, and around 3% percent for Netscape/Mozilla. Opera believes these
figures are close to accurate. Other competitors only have marginal market shares.
Opera aims to continue the increase in market share and revenues seen in 2002 and 2003 by delivering
users with a best-in-class product for the sophisticated Web user. The goal is to:
- Get more users to download and try Opera
50
-
Get more users to keep using Opera
Get more users to pay for Opera.
To achieve these goals, the following initiatives are in continuous progress:
Market-driven development
Opera will continue delivering new, innovative features that will endear new Opera users
Aggressive PR promotion
Opera has a high public profile, exclusively fuelled by the use of PR and word-of-mouth. Despite
being a well-known brand, Opera has never spent any resources on advertising or sponsorships.
Build community
Opera believes it has a unique position, as most users are loyal and enthusiastic. These users talk about
Opera to others, report bugs, complain to Websites that are not optimal in Opera, give feedback on
new features, etc. To continue building on this base, Opera has built a community site called My
Opera, equipped with talkback forums, Opera merchandise sales, promotion material, and tools to
further enhance the Internet experience with skins and panels. Further strengthening Opera’s
community and My Opera is one of the company’s main priorities in 2004.
Opera also has a small Webmail service labeled Operamail. This is a service developed and run by
Outblaze Ltd, then re-branded to fit with Opera’s visual image.
Tools for the user: Search and advertising
Opera has millions of users all over the world, and the majority of these users prefer the free adsponsored version of Opera. To make sure they continue to use the Browser, Opera is continually
trying to find advertising and referred search solutions that are perceived as beneficial tools by the
users. Google has proved to be a good partner in achieving this goal. The integrated search bar in
Opera with Google as default continues to be a very popular service and provides a healthy revenue
stream for Opera. Since September 2003, Google has been serving content-related text ads in the
Opera Browser, which have become popular. Furthermore, users can now choose between graphical
and text ads in the Browser interface. Opera will continue to explore similar solutions in the years to
come.
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7. Mobile Internet
7.1 Introduction
Not only the Internet had an astounding adoption rate in the last decade, another communication
technology became even more commonplace, namely the mobile phone.
According to the Economist (November 21, 2002):
“By putting new technologies, such as digital photography and electronic messaging, into
consumers' hands in an easy-to-use form, the new handsets seem to be succeeding where the
PC has failed. Mobile phones have a far broader appeal than PCs. The lone exception is
North America, where PC ownership exceeds mobile-phone ownership. But even there phones
are catching up. In Europe, more people now send and receive short-text messages on their
phones than use the Internet, according to figures from Gartner…. [2002]… users of mobile
phones around the world passed the 1 billion mark. The number of mobile phones is now
greater than the number of fixed-line ones. PC sales, meanwhile, have stagnated, and
innovation has slowed: today's PCs are really just like those of a year ago, or two years ago,
only faster. Sales of handheld computers, or personal digital assistants (PDAs), at around
10m a year, are dwarfed by sales of mobile phones. It looks increasingly as though the
“personal computer” was a misnomer. The truly personal digital device today is the phone.”
Opera’s view is that it has the technology, the partnerships and the commercial contracts to become a
key player in this sphere of Internet-enabled mobile phones.
The following discusses this new marketplace, starting with first explaining the two markets that are
now merging, those of the mobile Internet and the mobile phone.
7.2 The mobile Internet and the Handheld Computing Market
Seeing the explosion in the growth of mobile phone and Internet users, the computer industry
predicted that the next success story would be handheld computers with some sort of Internet access.
Many innovative different hardware designs were launched by the largest OEMs in the 90’s; today
only remembered as commercial disappointments with names like the Apple Newton, IBM and
BellSouth’s Simon, or Motorola Envoy. In fact, only by simplifying to include just functions like an
organizer, a calendar and the ability to scratch down quick annotations, did the first handheld
computer become a success: The Palm Pilot 1000 launched in 1996.
The introduction of access to the Internet on mobile phones has been stunted by several technological
restrictions, many inherited from the nature of the desktop Internet. One of the biggest obstacles is
how to bring a large Web page onto small screens without having to scroll both left/ right as well as
up/ down to read text and see large pictures.
OEMs and operators tried to overcome this and other challenges like slow connections speed by
developing a new mobile Web for mobile devices, naming it WAP (Wireless Application Protocol).
This new mobile version of the Web created some interest with consumers. However, WAP did not
become a success.
Some different approaches were also tried. Palm developed a way to strip down the Web for their
range of PDAs, calling it “Web clipping.” The success of this approach can maybe be best measured
by the fact that Palm now has chosen a HTML Web Browser in the new version of their OS.
Another approach was tried by AvantGo, also available on the Palm OS, where major Web sites could
make their contents available in a special format, ready to be quickly downloaded onto Palm PDAs by
52
users accessing channels for news, entertainment, and so on. In Japan, the operator Nippon Telephone
and Telegraph (NTT) tried something completely different again, creating a success in Japan: i-Mode.
Instead of trying to fit the desktop Web into their mobile phones, they created a stripped-down, special
mobile Web just like their European counterparts did with WAP, built on the format c-HTML
(compact HTML). Contrary to Europe, however, NTT managed to create an interesting business
model for content developers, making i-Mode an interesting Internet experience. However, the i-Mode
solution has failed to garner major interest among the European telecoms who have licensed the
technology and business model.
The Economist writes (November 21, 2002):
“As the computer industry tries to cram PCs into pocket-sized devices, the mobile-phone
industry has arrived at the same point—but from the opposite direction. The latest phones
announced by Nokia, the world's largest handset maker, include one model with a folding
keyboard aimed at business users, as well as a colorful phone that plays computer games.
Digital cameras, already a popular feature of mobile phones in Japan, are starting to appear
elsewhere. Color screens are spreading fast. The latest phones have as much computing
power as a desktop computer did ten years ago. In short, the once-separate worlds of
computing and mobile telephony are now colliding, and the giants of each industry Microsoft and Nokia, respectively - are squaring up for a fight for pre-eminence … Both
camps are betting that some kind of pocket communicator, or “smartphone”, will be the next
big thing after the PC, which has dominated the technology industry ever since it overthrew
the mainframe 20 years ago.”
Contrary to earlier predictions, the action in the mobile Internet market is not going to take place on
small, handheld computers, but on mobile phones with increasing computing functions. We will
therefore turn to explaining the mobile phone market itself, and how Opera navigates in a new and
very complex marketplace.
The Mobile Phone Market
Gartner Dataquest predicts the sale of mobile terminals will reach 528 million units in 2006 (January
2003). Of these units, sale of enhanced phones, which are voice centric devices enabled to deliver data
content, are expected to reach 429 million units. Sale of basic mobile phones is expected to decrease
significantly going forward. Enskilda Securities Research estimates on the future development
Figure 5: Development in mobile phone shipments
600
500
Million units
400
300
200
100
0
2001E
Basic phones
2002E
Enhanced phones
2003E
2004E
2005E
2006E
2007E
Smart Phones (open standard with downloadable programs)
Source: Enskilda Securities Research, February 2004
53
Handsets sold per manufacturer in Q3
2003 The chart to the right shows the
estimated market shares for sold units
for the various mobile phone
manufacturers in Q3 2003. In Q3 2003,
Nokia had an estimated market share of
39% of the global mobile phone sales.
Other
12 %
LG Electronics
6%
Nokia
39 %
Sony Ericsson
6%
Siemens
10 %
Samsung
13 %
Motorola
14 %
Source: Enskilda Securities Research, January 2004
Segments of the wireless phone market
Opera currently separates the total mobile phone market into three categories. It should be noted that
different market players, consulting and market research firms operate with different definitions:
1.
Basic Phones
Phones that are mainly designed for voice communication and to keep a low level of technical
features. No color screens
2.
Enhanced Phones
Phones that have color screens and that today have the opportunity to access to wap
communities. Currently based on proprietary OS but on the edge of moving towards open
standard OS.
3.
Smart Phones
High-end phones with PDA like capabilities. Mostly based on Open Standards with access to
third-party developer communities.
Operating systems
An operating system is the Software that controls the operation of a computer and directs the
processing of programs (by assigning storage space in memory and controlling input and output
functions).
Mobile phone developers are using a variety of different Software platforms/operating systems for
their mobile phones, making the market more fragmented and less clear cut than the desktop
computing world. This fragmentation poses both opportunities and challenges for Opera.
Most mobile phones are currently equipped with proprietary operating systems, which means that the
phone manufacturer distribute its phone with in-house developed operating system. Going forward,
however, the industry is gradually adopting a new generation of third-party solutions such as Symbian
OS, Microsoft’s Windows Mobile-based smartphone, Palm OS and Linux .
54
OS Solution
Ownership
Vendor backing
Handsets announced
Estimated sales
Separate UI
Customizable UI
Symbian
Handset vendor
grouping
Nokia, Motorola,
Samsung, Siemens,
SonyEricsson,
Panasonic, Sendo,
BenQ
17
6-7m
Yes
Yes
Microsoft
Smartphone
Microsoft
PalmSource
Linux
Palm
Various
Samsung, Motorola,
HTC
Handspring, Samsung,
Kyocera, Sony
Motorola, DoCoMo,
Huawei, Samsung,
NEC
4
0.1-0.2m
No
No
10
0.3-0.7m
No
Partial
1
0
Yes
Yes
Source: Lehman Brothers, November 2003
Opera believes there is a trend towards hardware manufacturers using third party operating systems, as
such solutions can reduce time to market for new products, there is less technology risk associated
with standardized Software, this Software has lower support costs and it is expected that operators will
demand standardized Software.
As more and more handsets run on standardized, third-party platforms, Opera is expecting more
opportunities to emerge. Even though porting to a different OS involves considerable effort, the task
has been made easier with each new version of Opera and can now be done at a reasonable cost.
Already Opera is available on Symbian OS, Linux, and Itron, with Microsoft Smartphone and Brew
under development.
Proprietary
Proprietary OS is an operating system developed by the handset manufactureres. Most handset
manufacturers have develped their own proprietary operating systems and often also different
platforms. Each of these operating systems have been designed for very limited hardware platforms.
Opera believes that standard operating systems for mobile phones such as Symbian, Linux and
Microsoft will dominate the market in the. However, this will take many years, and major investments
will be invested into proprietary platforms in years to.
As these evolve, Opera can expect more opportunities to emerge. Even though porting to a different
OS involves considerable effort, the task has been made easier with each new version of Opera and
can now be done at a reasonable cost.
Symbian
Symbian OS is an operating system with associated libraries, user interface frameworks and reference
implementations of common tools, produced by Symbian. There are multiple user interface flavours
that use the Symbian OS, such as UIQ and Nokia's Series 60. The adaptability of the user interface
enables the use of Symbian OS on various form-factors of hand-held devices: Clam-shell or tablet,
keyboard and/or pen, PDA or mobile phone, and others. The current Symbian OS is derived from the
EPOC32 operating system, which was used on Psion Series 5 PDAs and originally developed by Psion
Software. The Symbian OS has since gone though several versions.
Microsoft Mobile
Windows Mobile is a global brand for Microsoft software for mobile devices such as Pocket PCs and
Smartphones. The brand reflects Microsoft’s commitment to the mobile space in bringing its software
for mobile devices into the Windows brand family. Windows Mobile gives the users a familiar
experience compared to what users experience for desktop. Vendors that have included Microsoft
Mobile in available products include devices from ASUSTeK Computer Inc., Dell, Fujitsu Siemens
Computers, HP, Toshiba America Information Systems Inc. and ViewSonic.
55
Palm OS
Palm OS is the operating system that provides a software platform for the Palm series of handheld
personal digital assistants (PDAs) made by Palm Inc. Palm OS was designed from the beginning to fit
into a palm-size device of a specific size and with a specific display size. Palm OS is licensed to
OEMs by a separate division within Palm called “Palmsource.” Current licensees include Handspring,
Kyocera, Sony, Samsung, Acer, and Legend.
Linux
In the convergence of operating systems for mobile phones, Linux is one of the contenders. Linux is
an operating system designed to provide a free or very low-cost operating system comparable to
traditional and usually more expensive UNIX systems. Linux has gained a reputation as an efficient,
secure and fast-performing system. Linux is a complete operating system, including a graphical user
interface, an X Window System, TCP/IP, and other components usually found in a comprehensive
UNIX system. Although copyrights are held by various creators of Linux's components, Linux is
distributed using the Free Software Foundation's stipulations that mean any modified version that is
redistributed must in turn be freely available. Unlike Windows and other proprietary systems, Linux is
publicly open and extendible by contributors.
BREW
BREW (Binary Runtime Environment for Wireless) is Qualcomm's open source application
development platform for wireless devices equipped for code division multiple access (CDMA)
technology. BREW makes it possible for developers to create portable applications that will work on
any handsets equipped with CDMA chipsets. Because BREW runs in between the application and the
chip operating system software, the application can use the device's functionality without the
developer needing to code to the system interface or even having to understand wireless applications.
Users can download applications - such as text chat, enhanced e-mail, location positioning, games
(both online and offline), and Internet radio - from carrier networks to any BREW-enabled phone.
Manufacturers often combine different operating systems with different user interfaces
Software used by leading handset vendors
Nokia
Motorola
Samsung
Siemens
SonyEricsson
LG
Pansonic
Alcatel
Proprietary
X
X
X
X
X
X
X
X
Symbian
X
X
X
X
X
Microsoft
PalmOS
Linux
X
X
X
X
X
X
BREW
X
X
X
X
X
X
Source: Company reports, Lehman Brothers
Mobile Operators
Except for i-mode and SMS, mobile data has so far not become a major part of the mobile operators’
average revenue per user (”ARPU”). The mobile operators currently experience several challenges,
including traffic growth, price pressure, cash constraints and subscriber churn.
Mobile operators have started to launch new services to attract and keep high ARPU subscribers,
including Vodafone Live!, O2 Active and T-Zones. However, there are some factors that hold back the
real data growth:
•
Network quality and capacity still too low
•
Cost of handset subsidies in order to distribute new high-end handsets
•
Lack of consumer education on how to use the data services
•
Too generic service offering
56
Worldwide telecom operators 2002 market shares (excluding China)
Source: Symbian
7.3 Mobile Internet technology
With the advent of the Opera Platform, Opera is now focusing on two areas:
- Web Browser
- Opera as a Browser for viewing Internet content
- Target market: OEMs
- The Opera Platform
- Opera as a mean to integrate Internet content and local applications
- Target market: operators and handset manufacturers
Opera as a mobile Browser for Handset Manufacturers and OEM
The Kyocera CVB with fully branded Opera-button to access the Internet, currently on sale in China and to be launched in Japan. Browsers
are becoming such an important unique selling point of the new generation of phones, that it’s important for OEMs to brand the
Browser to show that they use the best solution
Opera believes the use of wireless Internet will increase rapidly as we see faster access to the Internet
via new technologies such as GPRS (General Packet Radio System), EDGE (Enhanced Data Rates for
Global Services), and UMTS (Universal Mobile Telecommunication System, 3G) entering the market.
With UMTS and its 2Mbps connection it would in theory be 200 times faster to load a Web page
compared with GSM. A Web page that needs 1 minute to load on today’s GPRS system, would in
theory take 0.3 seconds to load with UMTS. However, speeds will vary and are likely to be lower
depending on number of users per base station at any given moment in time, as well as other factors
such as latency and round-trip times.
57
For Opera, bandwidth has with 2.5G networks already reached an acceptable level, although 3G
networks will improve the user experience further. The most important change is rather the shift to
packet-based networks that introduces new cost structures, and this is achieved with 2.5G. The old
pay-per-minute model meant users were charged not only for downloading content, but also for
reading it. The new pay-per-megabyte model provides users with more incentive to stay connected for
longer time periods.
Since its inception, the mobile Web has faced several major challenges compared to the Web we know
from our desktop computers. The most important challenges being:
•
•
•
•
•
Screen size
Input methods
Low bandwidth & long roundtrip times
Device capabilities, e.g. battery capacity
Browser capabilities
Technologies such as WAP and i-Mode have been developed to overcome these challenges. More
specifically, WAP has included features such as:
•
•
•
•
Network compression technology for faster downloading of content
Strict mark-up language to avoid complex error handling procedures and ensuring
compatibility between devices
AccessKey to provide easier navigation
“Decks” to minimize number of connections and roundtrip delays
There are many good characteristics to WAP as a technology. However there is a common perception
that it has never lived up to the users’ expectations and has so far been a failure. WAP failed in
delivering interesting content in an attractive and user-friendly way. Also, operators in Europe have so
far failed to provide business models for content providers, as opposed to their Japanese counterparts
with their i-Mode technology.
The most popular document format on the Web today is HTML. A large majority of HTML
documents deviate from the specifications, and today’s Browsers must therefore perform intricate
error handling to display the resulting code commonly referred to as “Street HTML”.
Many people and organizations would like to change the content landscape to improve the quality of
this code to promote competition and innovation on the Web. The Web’s standardization body, the
World Wide Web Consortium (W3C) has issued guidelines for Web content developers that, if used
correctly, would have improved the quality of Web documents. One of these specifications is
XHTML. XHTML 1.0 is a reformulation of HTML 4.01 in XML, bringing the rigor of XML to Web
pages.
In the mobile phone arena, even the coordinating group behind WAP, the WAP Forum, recommends
the use of the W3C´s standards like XHTML and CSS for mobile devices.
Opera believes that XHTML is a big step forward, but that it will take a long time for sufficient market
adoption. The experience with WAP has demonstrated that the introduction of a completely new
language is a significant barrier. Users want to access their favorite Web sites and content developers
wants to work with the languages they already know. Even though XHTML is not a completely new
language, transition to its strict grammatical form is non-trivial.
One way of avoiding to deal with Street HTML directly is to convert the content to a simpler
language. For example, a proxy server can convert Street HTML documents to XHTML documents.
The benefit of this approach is that the clients can be simpler and bandwidth can be optimized.
58
However, the drawbacks are significant. First, the user’s experience will suffer since format
conversions may lead to some amount of data being lost. Second, the solution scales poorly as all
documents have to go through the same proxy server. Third, the client will not be able to perform local
tasks such as displaying HTML-e-mail and other local documents. Finally, and perhaps most
importantly, security suffers when encrypted sessions are decrypted in the proxy server. If the proxy
server is broken into, encrypted sessions and sensitive user data (e.g. cookies) are compromised.
Opera therefore believes that “Street HTML”, despite its shortcomings, will continue to be the
document format on the Web. None of the other alternatives have reached a critical mass usage, and
Web authors seem increasingly conservative. Also, the fact that hundreds of millions of Web Browsers
are already deployed makes it harder to change the Web content landscape.
7.4 Opera’s Mobile Browser Solution
Opera believes that the core of the Opera Browser, tested by millions of desktop users for more than
nine years, positions Opera as a unique mobile Internet Browser with access to the full Web,
supporting all the open standards as well as Street HTML. Opera’s Browser is a full featured, fast
Browser with a very small footprint which makes it possible to integrate Opera into lower-end phones,
or phones where ROM footprint storage is critical for the component cost of a device. Opera believes
that the size of the Browser is very important, since the market for low-end phones is probably the
market where the significant volumes are going to be found in the future. Even though handsets are
getting more powerful, Opera believes the size of its Software will be a key sales argument also in the
future. Opera’s small size conserves resources that can be used by other applications and improves
battery life.
Opera experienced a smartphone technological breakthrough in 2002, when its developers found a
way to render HTML pages without horizontal scrolling for small-screen devices. Since then, Opera
has closed deals with many of the industry’s largest players. Opera currently has a patent pending on
its Small-Screen Rendering (SSR) technology. The Medium-Screen Rendering (MSR) technology was
announced in January 2004.
The illustration below how the principles behind the SSR Technology.
59
With the SSR and MSR technologies, Opera can make the Internet available on mobile devices. With
these technologies, and because Opera also supports Street HTML, XHTML, and c-HTML (i-Mode)
standards, Opera believes that its Browser tailored for mobile phones is uniquely positioned to become
the Browser of choice on a significant number of mobile Internet devices.
Although several WAP Browser vendors claim they can easily scale
up to support new standards, Opera is of the opinion that none of
them have yet been able to make a successful Street HTML Browser.
Since Opera allows for Small- and Medium-Screen Rendering, the
Company is uniquely positioned to become a trusted vendor in the
growing market for Browsers on mobile devices.
Opera believes that the first stage of the mobile Internet will be
enabled by reformatting of current Web content, allowing people to
view the thousands of Web sites they are used to from their PC. This
will drive the consumer interest in Web-enabled phones. Opera
believes it will greatly increase the end user demand for bandwidth,
which directly translates into higher ARPU for the operators.
The next step will be a gradual increase of sites and operator services
customized for the mobile Internet. Application developers will want
to take advantage of the most advanced Web technologies available,
putting Opera in a favorable position.
60
The Opera Platform as home screen for operators
With ARPU falling as a result of lower prices per voice minute and little growth in voice traffic,
operators are now more than ever depending on increasing data traffic. In order to secure higher data
revenues, subscribers need to be offered new and compelling services and content.
New services and content requires a stronger Software focus from handset manufactures as well as a
clear business model where service and content providers can generate money. This is forcing the
Mobile Internet Market to move from being hardware-centric to becoming more and more Softwarecentric.
As the industry has evolved, operators are also becoming more and more eager to build their brand to
increase subscriber loyalty. For operators to secure uptake of the new services, the new service
offerings have to be backed by strongly branded, massive marketing campaigns. The operators need to
carry the brand onto the handset. This brings OEMs and operators into conflict, as OEMs do not want
to produce special versions for all but the largest operators, an then, only when there is guarantee of
large volume. In fact, to ensure that the users have enough choice the operators want the branded
experience to be available across a wide range of phones from different manufacturers. This further
compounds the problem of small volumes, where each operator wants their special versions of
different phones, and makes the handset manufacturers even less likely to meet their requirements.
The mobile phone OEMs have invested and continue to invest significant amounts in brand building
and are reluctant to loose complete control of the mobile experience.
Illustration of the Opera Platform
Using the Opera Platform operators
can update the interface of their
subscribers over the air instantly
The Opera Platform puts the
Browser as the central component
on the handset. It no longer matters
what operating system the phone is
using. As long as it runs Opera,
operators can tailor all applications
and branding to be controlled by
Opera – the whole user experience
around the Browser, Opera as the
phone’s central component.
The Opera Platform in action. The user clicks on a button confirming he wants the operator
Orange’s Manchester United skin. The user sees news about the football player Rivaldo,
and clicks the news item. The news quickly comes in the same interface, and the operator
has made money on data traffic.
61
7.5 Competitors
With the advent of the Opera Platform in addition to the traditional Opera Browser, there are now two
different type of competitors:
- Other Web Browsers that offer access to the Internet
- Other Home Screen and UI facilitators that offers full branding for the Operators
Web Browsing Competitors:
There has been a number of Browser vendors for mobile handsets over the years. Opera is in many
ways a new entrant, sparked by the technological development in handset hardware and the move from
specific mobile Internet standards to the full Internet.
It should be noted that Opera is the only other player except from Microsoft that also has a fullfeatured Browser that is widely used on PC desktops. Additionally, Opera believes it is the only
Browser that uses the same source code for all its Browser versions, on different platforms. Opera
believes this puts Opera in a unique and attractive position.
The main vendors for mobile Browser that support XHTML, CSS and some HTML or better are
outlined in the table below. These vendors mainly provide WAP Browsers.
Table 6: Opera competitors
Company
Browser
Opera
Opera 6.0/7.0
Access
Netfront 3.1
Openwave
Openwave™
Mobile Browser
AU-system
Mobile Internet
Client (MIC) 1.1
Nokia
Nokia Mobile
Browser 3.0
Pocket Internet
Explorer
Microsoft
OS
Design wins
Nokia 9210, Sharp Zaurus, Psion
Unix, Linux, Mac, Windows,
Revo, Sony Ericsson P800/P900,
EPOC/Symbian, QNX, OS/2
Nokia 6600, Nokia 7700
Pocket PC (Win CE) PsOS,
Linux, Vxworks, Palm OS 5, All NTT DoCoMo phones
Symbian OS, QNX, various
iPAQ Pocket PC H3870
proprietary
Sharp Zaurus, Palm Devices
Various proprietary.
A majority of European and American
Openwave services OS
WAP handsets.
Wisdom OS 5.0 (Motorola)
Motorola Accompli 009,
Many European, American & Asian
Win CE, Epoc/Symbian, OSE
handsets from several handset
Basic, Palm OS, VxWorks,
manufacturers.
Rex, various proprietary
Sony Ericsson P800/P900
Nokia OS, Symbian
All current Nokia phones
Windows CE family
All Windows CE devices
Source: Opera
Access (Ticker 4813.T)
Access is a Browser Software company based in Japan. Access is the vendor for NTT DoCoMo’s
iMode handsets and has gained a very strong position in the Asian markets (NTT DoCoMo owns 9.6%
of Access). Access will provide the Browser for the next generation Palm OS.
In 1998 Access developed cHTML as a markup language for mobile phones in conjunction with
Fujitsu, Matsushita, Mitsubishi, NEC and Sony. Access was a co-editor defining the specification for
XHTML Basic at W3C. Access was also an editor for the new WAP 2.0 specification within Open
Mobile Alliance (former WAP forum). Access is also an active member of the CDMA Development
Group (CDG).
Access Netfront is an iMode Browser that has been extended to render Web sites. According to
Access, different versions of the Netfront Browser have been installed and shipped in more than 100
million mass-produced units and on over 250 different commercial products, ranging from TVs, STBs,
62
word processors, PDAs, Web phones, game consoles and mail terminals to car navigation systems and
kiosk terminals. Netfront is available for Linux, Pocket PC, Symbian and Palm OS.
Access has considerable experience in delivering embedded solutions, and its relationship with
DoCoMo is a great advantage in Japan.
Opera considers Access as its strongest competitor in the mobile Internet market.
www.access-sys-eu.com
Openwave (Ticker OPVW.OQ)
Openwave (previously Phone.com) is a communication Software company based in the US. The
company develops client Software for browsing and multi-media messaging, infrastructure such as
WAP, gateways and wireless and wireline applications such as email and multimedia messaging and
related services. Openwave has possessed a strong position in the European and the US mobile
Internet markets. Openwave ships on handsets from many major OEMs and work with most operators.
Today, Openwave delivers to AT&T Wireless, China Unicom, Cingular, Cox, KDDI, J Phone, Sprint,
Orange, Telecom Italia, Vivo, Telefonica, T-Mobile, Vodafone and Verizon and more. Openwave also
provides client Software solutions to mobile device manufacturers including Motorola, Samsung,
Alcatel, Siemens, LG and Sagem
Openwave has traditionally tied their WAP Browser with their WAP-gateway offering, making a
significant part of their revenue from the server solutions. Their new focus on Openwave Phone Suite
V7 shows their ambitions to move away from being dependent on server revenues. The suite consists
of Openwave Mobile Browser and Openwave Mobile Messaging Client, as well as two new products,
Openwave File and Application Manager and Real Networks' RealOne™ Mobile Player
www.openwave.com
Teleca AB (Ticker TELCb.ST)
Teleca is an international consulting company building and applying advanced technology. Teleca
offers, among other things, Obigo, which is Teleca's Software for mobile devices, which currently
consists of four application areas: Browsing, messaging, content management and gaming. Together
with Openwave, Teleca has claimed much of the WAP-enabled handset market so far. The Browser is
shipping in all geographical markets.
Teleca has long been aiming to adopt Internet standards in their offering. The Sony Ericsson P900
model contains Teleca’s Obigo HTML Browser in addition to the Opera Browser.
www.teleca.se
Nokia (Ticker NOK1V.HE)
Nokia has for many years been focusing on making their internal WAP Browser. This Nokia Browser
is used in most of the handsets that is based on their own, proprietary OS. The Browser has been
ported to Symbian OS and is shipping on the 92xx series (together with Opera) as well as on the Nokia
S-60 phones. The Nokia Browser supports XHTML Mobile profile and is offered as a standard
integrated Browser in all S-60 offering from Nokia.
Nokia has previously licensed this Browser to other vendors on non-Symbian operating systems.
The focus in Nokia now is to include full support for HTML and other full Internet standards such as
CSS and DOM.
63
If Nokia succeeds in the development of a full HTML Browser it is likely that Nokia will put this in all
of their phones as well as an integrated part of the S-60 offering.
www.nokia.com
Microsoft (Ticker MSFT)
Microsoft is the leading provider of Browser Software in the PC desktop market, and delivers a
Browser with all versions of their operating systems. While Opera ships the same Browser engine on
all platforms, Opera believes that Microsoft’s embedded Browser is different from the Internet
Explorer version used on Microsoft Windows for PC desktop.
Microsoft currently claims supports for HTML 4.1 in their Browser for Microsoft Smartphone. It is
noteworthy that Microsoft only provides Browsers for their own operating systems. Opera therefore
believes that Microsoft is as such not a direct competitor to Opera as a cross-platform Browser.
www.microsoft.com
Other proprietary Browsers
Many of the handset manufacturers have developed Browsers internally. It is however expected that
the resources needed to keep up in the race towards Web standards will lead to outsourcing of this
work. Some may develop WAP 2.0 Browsers, but Opera believes that HTML, JavaScript and DOM
most likely is out of their scope.
Server solution-based competitors
Companies that develop server-side solutions often originate from other technology areas, and then
reuse their technology in a new segment. An example is the Canadian firm Bitstream, whose core
business is font technology. Reusing font technology for small fonts, Bitstream’s solution is able to
display complete Web pages on PDA sized screens without any reformatting.
Server solutions have both advantages and disadvantages. On the positive side, they can handle a lot of
the heavy processing on the server and compress the content to make better use of low bandwidth. The
client can be smaller in size and easier to deploy.
Unfortunately, it is costly to run these servers and the higher the volumes shipped the more complex it
gets. Such solutions can not scale to the volumes currently shipping in the mobile phone markets. In
addition, most servers perform some kind of conversion and some data may be lost in these
conversions. Client/Server solutions can also not be used for client side tasks such as displaying
HTML e-mail.
Client/Server solutions are competitors to Opera within specific operator networks. But for the handset
manufacturers, client/server solutions are not feasible solutions due to the scalability problems.
Current client/server solutions include:
Company
Product Name
Bitstream
Thunderhawk
ReqWireless
WebViewer
Handspring (Old versions)
Blazer
Platform/ OS
Pocket PC
Java, all platforms
Palm OS
Openwave is often perceived as a client/server solution. This is due to the fact that the WAP-standard is in itself a
client/server solution. The only way to make such a solution scalable is to make it a standard across all networks which is
what the WAP Forum intended. A number of companies provide clients and/or gateways that more or less follow the
standards. Openwave optimized their client to work best with Openwave gateways, then provided the client for free while
making revenue from the servers. Still, Openwave is quite different from the client/server examples above as they all have
completely proprietary solutions.
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Opera has developed its own server solution, focusing on the bandwidth problem in particular. The
server solution is implemented as an Apache Web server module. It performs the following major
functions:
- Reducing image size
- Reducing image depth (which colors are available on the handsets screen)
- Compressing text (HTML, CSS, JavaScript)
In general, the bandwidth needed to transmit the front page of a major newspaper’s Web site is
typically reduced by more than 50%.
What distinguishes Opera’s server technology from other market contenders is the design choice that
Browser processing shall be performed in the handset, leaving the user as much in control as possible,
and only bandwidth-saving processing shall be done on the server.
Opera Platform Competitors
Company
Product
Opera
Opera
Platform
Surfkitchen
SurfKit
Mobile
Operator wins Presentation
tool
EPOC/Symbian; TBA
Full Internet
Linux, MS Mobile
Browser
during Q2 2004
Sonofon DK, XML based
EPOC/Symbian,
client
Java
OS
Low-medium end
Openwave® phones, Microsoft
Openwave
Phone Suite and Linux as main
new target
Version 7
platforms.
Action ADS Symbian, MS
Action Engine
Platform
Mobile
Symbian, Java
MIPD 2.0 and MS
Trigenix
TrigPlayer
Mobile during Q2
2004.
Replication Symbian, MS
Cognima
Engine
Mobile
Multiple
properitary and
Macromedia Flash Lite
open operating
systems
Data
Server
Replication solution
Push/Pull or 3rd 3rd part
part
Client-Server SurfKit
Server
Multiple large WAP Browser Client- server
carriers such as
China Unicom
and Verizon
O2
Openwave®
Mobile
Access
Gateway
XML based
client
XML based
Client
Client-Server Action ADS
Smart Server
Client-Server TrigServer
Orange
3rd part
Docomo
Yes
Client-Server Cognima
Server
Client:
Yes
Properitary
vector based
T-Mobile
In fact, most of these companies are both competitors as well as potential partners. Neither of the
listed companies have a rich Browser based presentation engine for rendering services like Opera has,
likewise Opera cannot alone integrate existing systems such as billing and content management like
these other companies can. The latter is something that is needed to offer a complete solution to
network operators. The giant operators, like Vodafone and Orange, can integrate directly with Opera’s
systems. While smaller operators will probably opt for integration through a third-party, saving on
time to market. So one should also look at these competitors as potential partners together with which
Opera can provide the building blocks for successful bids to network operators.
Surkitchen
Surfikitchen is a small company founded in 1999, headquartered in Reading, UK. The company
provides a client-server solution based on XML traffic.
ActionEngine
Action Engine's Action ADS Platform consists of client and server components as well as
provisioning utilities targeted at wireless operators. The platform is built using open standards (XML,
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XSLT, CSS, J2EE). The solution is integrated in the SPV Microsoft Smartphones shipped by the
British operator O2.
Trigenix
The UK based firm Trigenix focuses on providing a solution for re-skinning the user interface of the
phones. The idea is to allow end user customization of the user interface through downloading of
different themes.
Cognima
The small UK based firm Cognima core business is replication of data between different applications
on mobile devices and servers. A typical example is the Contact application, but also browsing among
the targeted applications.
Macromedia
Macromedia Flash Lite is a new Macromedia Flash profile specifically developed for mobile phones.
The profile is designed to require fewer device resources and to operate in most mass-market phones.
Flash Lite is still a Browser plug-in for the NTT Docomo phones (beginning with the 505i phones),
just as it is for the Motorola A920.
Opera’s technology provides a richer end user experience, based on open standards – not proprietary
like Flash Lite. Also, it’s important to understand that Flash Lite does not render normal Flash content
- only to a very limit extend. Flash Lite is a new format, which can be difficult to introduce with no
existing content (example WAP in Europe). It should be noted that Flash Lite also is a plug-in for
Opera, just like on desktop, so it should be possible for these two technologies to co-exist.
7.6 The Mobile Internet Value Chain
As a mobile Internet Software vendor, Opera is dependent on developments downstream in the value
chain.
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When Opera signed the agreement with Symbian in 2001, the idea was to be included into the OS for
Symbian to offer this as an integrated part of their offering to their licensees. As Symbian decided not
to be responsible for the UI level, it was natural for Opera to work directly also with the parties
responsible for UI: the handset manufacturers themselves or dedicated Software companies.
With the introduction of the Opera Platform, Opera is now marketing and selling the Opera technology
directly to operators. The Opera Platform offers operators the possibility of higher ARPU as well as an
efficient way of building loyalty among their users.
While handset manufacturers are concerned with keeping the price down on the handsets, pressing the
price on each component in a phone down to a minimum, operators are more concerned about the
ability to raise the ARPU and to strengthen their brand in order reduce churn.
7.7 Opera’s position in the mobile phone market
Position on Symbian OS
Symbian was established as a private independent company in June 1998 and is owned by Ericsson,
Nokia (Psion sold its ownership to Nokia in February 2004), Panasonic, Samsung Electronics,
Siemens and Sony Ericsson. Headquartered in the UK, it has offices in Japan, Sweden, UK and the
USA. Symbian licensees cooperate in the development of the operating system, while fiercely
competing in the consumer market. This results in a quite complex Web of relationships.
There are a number of steps from the operating system to the final handset. This is outlined in the
figure below.
OS level
Symbian delivers the operating system with all underlying functionality and a reference UI. Opera is
included in the OS delivery from Symbian in version 7 of the operating system and is the default
Browser for the communicator devices. Originally it was the Symbian strategy to deliver both the OS
as well as different UI’s. A change in strategy in 2002/2003 made Symbian move away from this and
is now fully focused on the OS.
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User Interface (UI) level
On top of the operating system, a user interface and application level is developed. There are currently
4 different publicly known UI platforms:
UIQ
UIQ is a wholly owned subsidiary of Symbian which licenses their platform to several handset
manufacturers. Known licensees include Sony Ericsson, Motorola and BenQ. Opera is the default
Browser on the UIQ platform, i.e. the user interface is developed by UIQ and is part of the general
delivery to the Symbian licensees.
UIQ is a customizable pen-based (touch-sensitive color display) graphical user interface for mediarich Symbian OS mobile phones. Symbian OS Software architecture makes UIQ flexible, allowing
phone manufacturers to develop a range of diversified mobile phones using the same technology base.
Sony Ericsson has adopted the UIQ user interface for its P800 and P900 smart phone. These are
advanced, open, pen-based high-end phones that Sony Ericsson positions as the ultimate mobile
multimedia experience. The P800and P900 ships with an integrated Teleca Browser, but today all
Sony Ericsson P800 and P900 users are getting the Opera Browser on the CD that is distributed with
the phones, and it can also be downloaded free from Sony Ericsson or Opera´s Web sites. Opera
estimates around 40,000 downloads per month of this Browser.
Motorola released the Motorola A940 with Opera’s Browser pre-installed in Q103, based on the UIQ
platform.
Sony Ericsson P800 is a feature rich Symbian OS v7.0 phone, featuring a large color touchscreen and a built-in camera.
Series 60
Nokia has created a manageable set of reference platforms on which developers can base their designs.
At one end is a cost-driven model, Series 30, which is very similar to today's handsets. At the other
end are feature-driven platforms like Series 60 and 80. In between is Series 40.
Series 30, 40 and 60 are descended from Nokia's current two-soft key UI; extending the familiar
experience. Series 80/90 is more akin to handheld computers and large computing devices which in
addition to a full personal information manager and a variety of user-specific personalization also
includes a full-video, a, 640 pixel wide screen and a keyboard and/or pen input.
The Series 60 UI platform is developed by Nokia Mobile Software and licensed to several handset
manufacturers, both Nokia and others. Known licensees include Nokia, Siemens, Panasonic, Samsung
and Sendo. Series 60 currently ships with Nokia’s internally developed XHTML-Browser.
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Opera is today being shipped on the Nokia 6600 as the default HTML Browser in major markets.
Series 80
Series 80 is a two-hand operated user interface with colour screen and space for different types of
applications. The Nokia 9200 Communicator series represents the standard series 80 product, which
has a full keyboard and a command button area for UI navigation. Opera is the default Browser on the
9210i. This platform has not been licensed to other manufacturers. Nokia has announced that they are
working on a new version of this platform
Series 90
Nokia has announced that the first product on their new Series 90 Platform will be the Nokia 7700
which will be including the Opera Browser as default Browser. The Series 90 is designed for high-end
mobile devices with high-resolution, touch-sensitive color screens The Browser is expected to be a
key component in this new type of Media Phones coming from Nokia.
Fujitsu
Fujitsu has announced a 3G device based on Symbian OS for the NTT DoCoMo network. The device
is based on their own UI platform and will not be licensed to other manufacturers. They will not
release SDKs to allow third parties to develop for the native OS. Third party applications will be
developed in Java. The Browser on this phone is Access Netfront on request by NTT DoCoMo, one of
Access’ major shareholders.
Other UI platforms
One to three of the new UI platforms are possibly under development in Asia. Like Fujitsu they will
probably not be licensed to others or are not open for third-party development.
While a number of companies are currently licensing Nokia’s Series 60 platform, it is also expected
that some in time will develop their own UI platform on Symbian OS. Siemens and Samsung are
currently the most likely candidates.
Manufacturer level
The manufacturers that license the different UIs can use the platforms as is or make modifications. For
example, Sony Ericsson originally chose to use the Teleca Browser for the P800 even though Opera
was the default Browser for Symbian OS.
On the same note, the manufacturers that license Series 60 may choose to use different applications
than the standard package to differentiate their products.
Product level
Within individual manufacturers that build products on a specific Symbian OS UI platform, there
tends to be small differences between products. However, the product managers often have
considerable power to differentiate their products if they wish.
Operator level
The operators play an important role in the mobile phone value chain. Their influence differs
considerably from country to country. One extreme is NTT DoCoMo in Japan, which specifies all
requirements for a phone and ships them under their own brand. Another is the Scandinavian model,
where the individual operators have very little influence on the products and generally ships any
device the consumer wants. There is a general trend among European and American operators to try to
move towards the Japanese model.
In the markets where the operators have a strong position, they purchase select phones from the
handset manufacturers and resell them to their customers. The operator’s decision therefore greatly
influences the sales of different handsets. It is possible for a telecommunications company to request
individual modifications to a phone to differentiate their network.
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Position on non-Symbian operating systems
The world of Symbian OS is quite complicated due to the fact that it is an open operating system with
a number of different handset manufacturers as licensees and further licensing between these
companies. The situation for the other operating systems is usually simpler.
Position on Linux
Opera has a strong position on Linux because it ships on the best-selling Linux PDA, Sharp Zaurus,
and because of IBM and Motorola’s strong commitment to Opera on this operating system. See
Chapter 9, Vertical Markets, for more details on the relationship between Opera and IBM
Major handset manufacturers have ongoing smartphone projects on Linux, and several will be
integrating the Opera Browser in their Linux devices.
The operating system may be used in several different ways:
• Proprietary except for the kernel itself. It would not be apparent to the end user that the
underlying operating system is Linux
• Developed as a package of kernel and GUI. This package could be used internally or licensed
to other manufacturers in much the same way as S60 & UIQ is on the Symbian OS.
Based on a more open approach by combining the kernel with a windowing system from another
provider, such as Trolltech’s Qt/E. This is the approach used for the Sharp Zaurus PDA.
According to the industry analysts in the Aberdeen Group, Motorola has differentiated its OS strategy
based largely on the cost and power optimization offered by Linux. Aberdeen expects the handset
volumes driven out of China to dictate the use of Linux globally, and that CDMA and Linux will help
Motorola’s product platform differentiate from the marketplace on more than just brand and design.
On Linux, Opera is the Browser on the Sharp Zaurus PDA, the bestselling Linux PDA.
The Sharp Zaurus PDA
with Opera included
Motorola A920 with
Opera included
Position on µItron
µItron based platforms are only slightly different from proprietary platforms. While the base kernel
may be similar, it will usually be heavily customized and not directly compatible with other
manufacturers. However, porting from one to another will often be easier than porting between
completely different operating systems.
Opera is currently working on a delivery on the µItron platform for the Japanese mobile phone
manufacturer Kyocera. This represents a good opportunity to gain foothold in these markets.
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Position on Microsoft
Microsoft Smartphone OS is delivered as a complete and fairly monolithic Software package to the
handset manufacturers. It is therefore most appealing to companies that have limited expertise in
Software development or wishes to outsource that part of the development.
Opera is currently porting the Opera Browser to Microsoft Smartphone edition estimating a final
product available in Q2 or Q3 2004.
Position on BREW
Opera has started the porting of Opera to the BREW environment to secure access to the growing
CDMA market.
Position on proprietary OS’
Put together, proprietary OS’ have by far the largest market share today. They are specific for each
manufacturer and in many cases there are even different proprietary OS’ inside a single company.
Most of these systems are used in phones, which at best have WAP browsing capabilities. The
Browsers used are mostly Openwave, AU System, Access or internally developed Browsers.
Software development is becoming an increasingly larger part of the total phone development, and this
is one of the main reasons for the convergence towards fewer operating systems such as Symbian,
Microsoft and Linux. However, this will take very long time and the proprietary OS’ will continue to
evolve in parallel.
Over the next 12 months these platforms will become more advanced and open up major opportunities
for Opera. It is likely that Opera will be porting to one or more proprietary OS in the next 12 months
as a consequence of the Opera Platform offering.
7.8 Opera’s Position in the Mobile Operator Market
Opera has been working with operators since summer of 2002, and has gained a good understanding
of their needs to raise revenues and increase loyalty.
Including Opera’s Browser solution on handsets brings real benefits to mobile operators. Compelling
Web content drives pick-up of handsets, and full HTML browsing increases data traffic on the
network and hence ARPU for operators.
Opera has sold special branded versions to several operators, but only one is official: the Portugese
operator Optimus. Optimus introduced the branded Opera Browser to their users May 2003.
Evaluations done in September 2003 prove the value of offering full access to the Internet. From May
to August, GPRS data traffic on Optimus' network increased 416%. Considering that Opera is merely
installed on a small number of Optimus' phones, subscribers with Opera on their phones generated,
according to Optimus, thousands of percent more data traffic than subscribers without Opera on their
handsets.
As for the Opera Platform, all major operators are evaluating how to make a unified UI-offering on all
different phones they are selling in their networks. Opera is currently working with several operators
to integrate the Opera Platform, but it is still in an early phase and there is still uncertainty connected
to this as the final product is not yet finalized.
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7.9 Product Portfolio on Announced Products
The figure below shows announced mobile phone models where Opera is included.
BenQ P30
Nokia 7700
Kyocera PS 900
Sendo X
Nokia 6600
Sony Ericsson P900
Motorola A920
Sharp Zaurus
Sony Ericsson P800
Sharp Zaurus
Nokia 9210
Psion Revo
2000
2001
2002
2003
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2004
8. Interactive TV (iTV)
8.1 Introduction
Opera for iTV's vision is to enable ”ordinary people” within the home to access content in its many
forms with the best navigational experience, independent of time, space or media device.
To achieve this vision, the iTV business area in Opera develops Browser and presentation engine
Software for set top boxes (STBs) and home electronic consumer devices like game consoles and
home media servers.
In addition to Opera’s powerful browsing technology within a STB, Opera can be deployed as the
primary graphical user interface to navigate between channels rendering dynamic content, and
controlling native functions and applications of the hardware.
A STB is a device that enables an analogue television to receive and decode digital television signals
and access the Internet as an alternative to PCs.
By 2010 most governments around the world have agreed to ‘switch off’ the analogue terrestrial
television service, this means that to watch TV viewers will need a digital STB or fully enabled digital
television.
Aggressive rollouts of digital STBs and iTV services are under way around the globe, lead by
companies such as BSkyB in the UK and Softbank in Japan. Opera provides solutions for both low
and high-end STBs.
8.2 iTV Market
Opera believes that digital STBs and digital televisions will become the anchor of advanced home
media networks in the future. Such networks will require an HTML presentation engine and a home
media Browser, which will be the central Software component that links multiple service offerings on
different devices around the home.
The majority of STBs deployed to date have been produced for Pay TV operators. The business model
pursued by pay TV operators of subsidizing hardware has enabled the packaging of hundreds of digital
TV channels within a STB. While this model has delivered more television content, fast subscription
growth and revenue, this 1st generation of “low-cost” STBs has not been engineered to deliver
satisfactory enhanced television content and services to consumers.
In 2003, a strong retail market began to emerge. Record sales of digital terrestrial television STBs
along with strong global sales of high definition TV and plasma screen TV began to highlight an
upward sales trend in quality home entertainment devices. Home Projectors and personal video
recorders (PVR) like TiVo and the worlds first home media server “CoCoon” in Japan, are now
reorienting both OEMs and operators towards the new emerging retail market, following the current
growth patterns in the mobile phone industry.
Like the mobile phone sector, consumers are starting to demand higher performance and
interoperablity between devices in the home - based on Internet technology. Evidence over the past 12
months shows that that consumers are prepared to pay for this technology, opening up a retail market
that offers consumers more advanced STBs for the first time.
Market size
As the infrastructure moves from analogue to digital, digital STBs are expected to show strong
growth.
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140
120
Million units
100
80
60
40
20
0
2002
2003
2004
2005
2006
2007
2008
Source: Strategy Analytics, December 2003
Competing distribution television technologies
Digital television has three established distribution technologies that are competing for viewers: cable,
satellite and digital terrestrial. A new emerging fourth distribution technology, TVoIP – the streaming
of broadcast quality television and movies over IP networks, is now poised to take a significant share
of the broadcast market, finally realizing its potential.
Opera believes that long term TV content, like
the Internet, will be delivered over IP networks.
As broadband and high speed Internet services
attain critical mass, especially via ADSL or
fibre to the home, new and existing ‘content
providers’ will offer video on demand (VOD)
and other types of interactive video content .
The triple-play of digital TV, telephony and
Internet access will replace the traditional voice
network in revenue value for operators.
Massive peer-to-peer transfers of often illegally
copied content is putting pressure on operators
IBM- PPC 405Vulcan Board – Low cost, high quality
to monetize legal content over the Web, TVoIP Reference Design. Opera ported its Linux Browser
offering consumers a compelling, dynamic
to this reference design in 2003
offering of entertainment.
In IP deployments, Opera’s is uniquely positioned for growth, with its Browser capable of advanced
rendering techniques like Mid-Screen Rendering (MSR). Opera for iTV has incorporated specific TV
extensions based on Open Standards and refined features like spatial navigation within its core
offering. Opera is a multidevice Browser that can provide a platform for interoperability, by using
HTML and other W3C standards as the common language between the different devices.
Competing standards
The iTV market is highly fragmented due to a reluctance of the industry to agree on one or a few
standards. Opera believes that as consumers connect to local home networks and the Internet, the
importance, of Web standards within STBs will replace the use of non-standard proprietary technology
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Application programming interface (middleware) standards
The application programming interface (API), or middleware, is a Software platform that runs on the
set-top box that enables iTV applications to run on the STB. Middleware solutions typically feature a
component that resides at the head-end system that enables communication between the server and the
applications that run on the STB.
Opera believes it is unlikely that a true convergence of different iTV platforms will happen without the
contribution of W3C standards and technologies as the demand for “quality” digital services increases.
Operating systems
The middleware typically runs on the STB´s operating system, and these operating systems can be
proprietary or open. There are a number of companies who provide an iTV platform that covers both
the middleware and the operating system for a STB. The largest of these include PowerTV, Liberate,
OpenTV, and Microsoft. Linux has become one of the most popular embedded operating system for
STBs, digital TV sets, and mobile devices. STB and consumer electronics manufacturers such as Pace,
Sony, Thomson, Samsung, i3micro and Amino have developed commercial products based on Linux.
In more consolidated market segments such as the cable and satellite, the operators tend to require
middleware solutions based on proprietary operating systems such as ST Microelectronics’ OS20,
PowerTv, Motorola’s OS9, and VxWorks.
Web standards relevant to Television
TV screens are very different from those of PCs. To overcome these challenges, manufacturers and
industry regulators had to stretch standards and enhance technologies. This was the approach of
middleware standards that provide Web standards such as DVB-HTML and ATVEF, where Web
standards were merged and extended to form iTV standards.
DVB-MHP
Java STBs have been seen by many as the solution for STB manufacturers who would like to offer one
STB to all operators regardless of middleware standard. The Java execution engine (defined by the
DVB-J standard) offers this opportunity because the Java engine can run on top of the middleware and
run Java applications. However Java dramatically increases the cost of a STB both in Software
licensing costs and hardware components required to run java. In Opera´s opinion, operators are less
likely to be interested in subsidizing a more expensive STB.
8.3 The iTV Value Chain
Opera has traditionally been working towards the middleware and hardware part of the value chain.
With the stronger control from the iTV operators and the new Opera Platform offering, new marketing
opportunities opens up with the iTV operators. The figure below shows the iTV value chain and
Opera’s position.
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Opera’s position
Source: Opera
8.4 Competitors in the iTV Market
Opera has indirect and direct competitors in the iTV segment. Indirect competitors include substitutes
for proprietary middleware, MHP or Java based rendering engines for STBs. The largest indirect
competitors have conversion potential, to become some of Opera’s largest customer like; PowerTV,
Liberate, Microsoft, Philips, Motorola and OpenTV.
Opera´s direct competitors include Browser manufacturers who offer Browser technology for the lowend STBs and the high-end STBs. The table below provides an overview:
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Competitor
Espial
Ant
Access
Opera
OpenTV
Liberate
Ice Software
Microsoft
Mozilla.org
SA/PowerTV
Browser
Escape
Operating System
Linux, VxWorks, Windows CE OS-9, PSOS, ST 20.
ThreadX, pSOS, OS/9, VxWorks,
Fresco
Linux, QNX and ECOS and provide source code
Linux, BSD, QNX, VX Works, OS-9, Windows CE,
Netfront 3.1
Nucleus ,iTRON,
Opera
Linux, QNX, Windows XP, BSD, Montavista Linux
Mosaic Microbrowser ST20, and Proprietary OS
Liberate DTV
Navigator 1.1
ST20, VxWorks
Ice Browser
VxWorks, Linux
Internet Explorer
Windows CE, Windows XP Home Edition
Mozilla
Linux, cross platform, source code
PowerTV
PowerTV
8.5 Opera for iTV
Opera for iTV is uniquely positioned. Opera’s core technology is deployed in multiple consumer
devices on mobile phones, PDAs and STBs concurrently with a strong and growing presence in the
desktop market. This unique deployment of “desktop first” followed by embedded consumer devices,
yields Opera competitive advantages in Software quality, rendering performance, standards
compliance and engineering output efficiency through the company wide support of one code base.
In October 2000, Opera signed a long term strategic partnership with Canal Plus Technologies, to
provide browser and HTML presentation engine technology as a integrated component within their
middleware offering (MEDIAHIGHWAY) to digital television operators. Canal Plus, were acquired
by NDS, a News Corporation company in December 2003. Both companies provide advanced
middleware solutions to digital TV operators globally. The integration of the MEDIAHIGHWAY
business in combination with the NDS Core (TM) middleware should result in a world-class
middleware product family. Opera estimates that the combined active number of set-top boxes would
reach 15 millions as a result of NDS’s acquisition.
The core product is tested, deployed and used by millions of users on the web prior to it being
embedded inside electronic consumer devices; making it safe, stable and fast. Opera for iTV features
high quality, fast, flexible rendering customized for television screens.
Opera’s core is required to render million of pages of “Street HTML” every day, unlike many of its
microbrowser competitors who are bound to render specific “propriety solutions”. As a result of its
“web first” strategy, Opera’s standards support is superior to that of its competitors within the iTV
space. Opera is highly portable within the STB devices. It can add complimentary value to existing
middleware and OS vendors. By integrating Opera’s “future ready” Browser technology into their own
products, middleware vendors can gain competitive advantage. In this context Opera becomes a high
quality component that executes UI and applications faster, in full compliance to W3C standards. This
was demonstrated by Canal+ Technologies integration of Opera within their MHP/MediaHighway
Software stack in 2003. Opera’s solution is truly cross-platform and supports both Web and television
industry standards.
Product offering
Opera Platform – SDK for iTV
Using Opera’s technology, OEMs can now create their own, media-rich user interface using easy to
work with Web technologies like CSS, DOM and JavaScript. By using Opera for iTV, OEMs save
substantially on development costs, and reduce time to market. By utilizing the Opera Platform, a
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HTML page becomes the UI of the STB, displaying native controls, menus and external dynamic
content like program guides, etc.
Opera Presentation Engine
STB manufacturers and middleware vendors for low-end boxes with limited or no connection to the
internet, can choose Opera’s “super light” HTML/JavaScript/CSS presentation engine. This stipped
down version of Opera renders native applications and “Walled Garden” content like EPG, VOD,
super Teletext, subtitling, and T-commerce applications.
Opera Full-Featured Browser for iTV
Opera believes that the next generation of STBs will require an up-to-date, fully standards compliant
HTML Browser to link devices like STBs into home media networks. Opera’s portable and
customizable Browser, featuring Mid-Screen Rendering (MSR) is the most innovative solution to
display the full array of content available via the Internet on a television screen.
All offerings are backed up with high quality, responsive support and maintenance which is sold on a
per annum basis, designed to achieve recurrent revenue and to keep Opera for iTV customers satisfied.
Opera Browser Technology
Conditional Access
OS/ Middleware
Hardware
Silicon
Close to the customer: Opera is the central controlling component in TVoIP STB. Simple HTML
becomes both the user interface and the Internet Browser.
Opera’s value proposition for iTV
The Opera Home Media Browser is based on flexible modular architecture that permits efficient code
optimization for STB OEMs. Opera’s native JavaScript extension API and combined presentation
engine can complement any middleware vendors Software stack. The product can also be ported to
any Real Time Operating System (RTOS).Opera serves as a general purpose and versatile presentation
engine that transforms a STB into a fully programmable application environment. In addition to full
internet browsing on TV, Opera’s HTML rendering engine can be used for TV navigation and UI for
Interactive TV. Services can be developed by coding simple HTML rather than more complex
programming methods. This allows operators to expand offerings quickly and cost-effectively
allowing standardization to drive down costs. Opera’s multi-device deployments make interoperability
between STBs and other devices a reality whilst achieving faster rendering speeds of both local and
external content, meeting high end users expectation of on screen performance.
Existing Operators
Embracing Opera technology and standardization will drive cost reduction and improve the end
viewer experience. By adopting Opera’s iTV technology, operators can achieve a level of future
proofing readying their platforms for the transition from “proprietary” technology to “open standards”.
By this approach, massive improvements in service creation and deployment can be achieved.
78
New Platform Deployments
Browser technology is at the very core of TVoIP, with the Opera Browser/presentation engine
becoming the primary navigational Software component used to control the STB.
Redressing the “Digital Divide” and opening new markets to the Internet
Opera estimates that at best only 60% of the population ever will own a computer in Western Europe.
In new emerging and 3rd world markets, this percentage will be dramatically smaller. Through Opera’s
truly innovative Browser Software MSR and with the help of a STB, Opera can turn an old television
into an Internet-enabled devices.
The picture above shows an example of iTV applications created in
HTML and displayed by Opera presentation engine on a STB
The End of VideoTape. Pilotime PVR (Personal Video Recorder) STB C+ Technologies replaced
their internal rendering engine with Opera Deployed in France 2003
79
Opera’s Unique Benefits
Proven Technology - Millions of Users: The Opera 7 core Browser boasts one of the fastest
rendering capabilities combined with small footprint. It is used daily by millions people all around the
globe. Opera has been continually refined and improved, its’ core has had over 700,000 man hours of
development and testing since its inception. The core technology is stable, reliable and proven, able to
render “Street HTML” unlike it microbrowser competitors. This same highly portable core is
embedded within the iTV product offering.
Innovative TV Specific Functionality: For resource-constrained environments, Opera for
iTV works with set-top boxes that are either rich with memory and processing power or designed
specifically with limited resources. TV-specific features in Opera like ATVEF support, specially
developed spatial navigation, Medium Screen Rendering and zoom controls allow unique control over
HTML content on a TV screen.
Reduced Risk and Time-to-Market: Our Opera for iTV SDK features standard builds which allow
customers to make Opera work “out of the box.” Opera's QA process ensures that integration issues
are identified early in the development cycle, ensuring timely product deliveries.
Superior Standards Support: Opera’s core supports Internet standards such as HTTP, SSL, CSS1,
CSS2, DOM and JavaScript and works with emerging TV standards such as DVB-MHP, OCAP and
ATVEF. Opera is industry-wide acknowledged as a leader in implementing and adhering to open
standards.
Architectural Modularity & APIs: Opera's core is constructed in modules. This allows functionality
to be optimised and extracted if required to suit either low-end or high-end STBs. Opera is packaged
and documented as a component, allowing flexibility in user interface design. Opera provides full,
comprehensive and well-documented APIs, enabling customization, monitoring and the exertion of
native control over the STB hardware.
Future Proofing: Opera for iTV offers the possibility of dynamic upgrades to STB Software stacks.
New upgrades or applications can be deployed after a STB has been deployed, using Opera and the
power of the Web helps to future-proof STB Software and keeping hardware up-to-date.
80
9. Verticals
9.1 Introduction
The Opera for Verticals product line acts as a vehicle to assist different companies who wish to
include Opera´s Browser technology on a range of different products in their respective industries.
"As we move further into the pervasive computing model, where our phones, handhelds and even cars
become our gateways to information access, the ability to interact with technology in the most natural
and convenient way possible will be key. Together with Opera, one of the leading providers of
Browser technology, IBM aims to build an interface that will allow technology to adapt to end users,
rather than forcing them to adapt to technology."
Rod Adkins, General Manager, IBM Pervasive Computing Division
9.2 Vertical Market Opportunities
Opera sees a wide range of future opportunities for its technology in a variety of markets.
The Symbol PDT 9000 (Gemini) Barcode scanner running Opera
One example of where it is not immediately obvious that Opera’s technology is useful, is Opera’s
contract with Symbol. Symbol is a world leader in developing and selling barcode scanners. The latest
Symbol barcode scanner now runs Linux and Opera, and is being deployed in all of Loew’s outlets in
the United States and Canada. In the scanner Opera does not act as a Web Browser, but as the central
component that controls all other Software, as well as perform unique functions on its own. Here’s an
example of how it works:
1.
2.
3.
4.
5.
6.
The operator wants to scan a tag on a VCR, and clicks the “scan” button on the device
Opera tells the scanner to activate
The scanner activates and reads the tag
Opera writes the tag’s information into a HTML form, and sends it to a central server
The server returns information like the VCR’s price and how many are in stock
Opera displays the information to the operator.
Opera sees home products, automotive, building automation, health, and in-flight entertainment as
possible growth sectors in the years to come.
81
Home products
Opera foresees opportunities within appliances such as WI-FI enabled devices, consoles etc. The
console could potentially navigate or help the refrigerator order groceries. The same console might
inform users about a new dish from the “cuisine multimodal portal”.
Obviously, the customer would not be able to download Opera for their kitchen consoles or fridges,
but rather the refrigerator manufacturer could choose to offer Opera as an integral part of their
refrigerator products line.
Automotive
Multimodal applications in the automotive industry span from vehicle navigation systems in the
consumer and commercial space to fleet management in the transportation space. The most popular
multimodal applications at the time are navigation systems and entertainment systems.
Navigation systems are based on GPS and GSM technologies, offering the opportunity for drivers to
access information visually and by voice in a “hands-free” environment. For instance, if you are short
of gas, you could give a voice order to the dashboard: “Gas stations, please!” The multimodal Browser
would respond with a list of options retrieved by a portal based on your location from the on-board
GPS.
There is already a range of information systems available, but drivers could benefit from an updated
Web interface where they could search for additional information via multimodal applications.
Building automation
Different building automation systems can be controlled visually and orally, such as access control,
elevators, energy management, security, air condition and heat control (AVHC), lighting, metering
and security applications.
Health
Potential market opportunities in the health industry include companies that supply solutions to
individual doctors as well as larger solutions for hospitals.
In the future, doctors might choose to visit their patients and have all the patient journals with them via
a server-based system, filling out a prescription directly to the pharmacy via their Web pad. Journal
writing could be read into an office application on the go.
In-flight entertainment
More and more airlines are including various entertainment and information features, such as online/on-screen interactive services (accessed via touch-screen, buttons, or gamepad), including: Video
entertainment enabling passengers to "order up" their choice of movies or other programming at any
time (as opposed to directly-distributed programming, which provides a pre-established cycle/
schedule of programs), broadcast television/direct television: live, real-time video broadcast feeds via
satellite, intranet access (stored on server in cabin), and Internet access (stored on Web server).
With Opera, the airlines can provide the passengers with different entertainment packages via the
same system. Thanks to Opera for iTV, passengers can access the entertainment menu and access to
the full Internet, all via the remote control and with Opera for iTV´s spatial navigation.
The Multimodal Browser
On January 31, 2003, IBM released the first beta of the Multimodal Browser and Toolkit for download
on their pages with a link to Opera´s pages. On the basis of this beta, Opera and IBM will work
together to identify and assist companies who wish to develop multimodal applications based on the
X+V HTML standard. The companies that are already a part of this project represent different
industries and many vertical market opportunities.
82
With the help of the Multimodal Browser the developer can view and interact with multimodal
applications that have been built using the X+V mark-up language. The Multimodal Browser can be
used to run multimodal applications. The editors and utilities in the toolkit are presented in an
integrated development environment. Opera believes this makes for an efficient way of developing
multimodal applications.
In the future, Opera and IBM will license technology from each other to assist its separate clients in
building and promoting multimodal applications.
Multimodal standards
In 2001, IBM, Motorola and Opera submitted its proposal for a new open standard to the World Wide
Web Organization (W3C). The open X+V HTML standard combines IBM´s Voice XML standard
with Opera´s support for XHTML.
Opera´s value proposition
The X+V HTML standard will allow the large population of VoiceXML and XHTML developers
worldwide to extend their solutions via multimodal technology. Opera and IBM believe that this will
result in more efficient development that brings new applications to market faster – because the
developers can use existing skills and resources.
9.3 Vertical Competitors
For verticals markets competitors, please see the competitors sections for the different product lines.
Multimodal standard competitors
Microsoft is the largest and major competitor to Opera and IBM with its closed Speech Application
Language Tags (SALT) specification. With SALT standard Microsoft aims to develop a royalty-free,
platform-independent standard that will make possible multimodal and telephony-enabled access to
information, applications, and Web services from PCs, telephones, Tablet PCs, and wireless personal
digital assistants (PDAs).
The SALT standard will extend existing mark-up languages such as HTML, XHTML, and XML.
9.4 Opera´s Vertical Competitive Advantages
With Opera´s many competitive advantages in the different product lines coupled with the added
multimodal feature, Opera believes that the possibilities for success and revenue potential in this
market is great and that the relationship with IBM will help Opera in approaching this market.
So far, IBM has selected Opera as the Browser of choice for their WebSphere Everyplace Access
(WEA) project in July, 2002. WEA enables access to enterprise data and applications from a wide
range of mobile devices, and the addition of X+V-based multimodal capability to WEA allows users
to access business applications such as databases and Customer Relationship Information (CRI)
applications via multimodal devices. Additionally, IBM is working with Opera on projects in the
desktop, PDA, mobile and iTV product lines.
The X+V multimodal standard competitive advantages
Opera and IBM´s X+V HTML for multimodal access is an open standard mark-up language, and as
such, developers can use skills they already have to write programs for this specification. Opera
believes that this will make it easier for developers to choose the X+V standard instead of Microsoft’s
closed SALT standard, and ultimately increase the market presence of the X+V HTML standard.
83
10. Financial Information
10.1 Income Statements
Revenues in 2003 were NOK 78.5 million, which were 53.8% up from 2002. Refer to section 10.5
below for quarterly figures.
2003
2002
2001
PC desktop revenues
Internet Devices revenues
23,661
54,870
78,531
17,499
33,561
51,060
12,695
15,598
28,293
Payroll and related expenses
Other operating expense
Total operating expenses ex. D&A
51,315
23,227
74,542
47,016
22,307
69,323
42,221
24,468
66,689
EBITDA
3,989
(18,263)
(38,396)
Depreciation expense
EBIT
2,724
1,265
3,118
(21,380)
2,709
(41,105)
Financial income
Financial charges
EBT
1,690
1,149
1,805
1,525
2,382
(22,237)
3,158
1,709
(39,656)
(1,429)
376
6,035
(16,202)
10,329
(29,327)
0.005
0.005
0.00
78,143,212
82,259,462
(0.263)
(0.263)
0.00
61,641,420
61,641,420
(0.480)
(0.480)
0.00
61,005,490
61,005,490
Tax expense
Net income / (loss)
Earnings per share
Earnings per share fully diluted
Dividend per share
Outstanding shares
Fully diluted shares
84
10.2 Balance Sheet
ASSETS
Fixed assets
Deferred tax asset
Goodwill
Tangible fixed assets
Total fixed assets
Dec. 31, 2003
Dec. 31, 2002
Dec. 31, 2001
21,348
3,143
1,483
25,974
21,679
4,715
2,041
28,435
15,526
6,286
3,296
25,108
Current assets
Accounts receivable
Unbilled revenue
Other receivables
Cash and cash equivalents
Total current assets
14,226
19,941
3,245
28,388
65,800
6,662
2,090
2,721
9,016
20,489
4,264
0
2,108
16,909
23,281
TOTAL ASSETS
91,774
48,924
48,389
Dec. 31, 2003
Dec. 31, 2002
Dec. 31, 2001
1,693
0
76,869
954
1,233
(3)
25,276
0
1,220
(3)
37,469
0
461
79,977
0
26,506
0
38,686
Short term debt
Convertible debt
Accounts payable
Taxes payable
Public duties payable
Other current liabilities
Total current liabilities
0
1,971
67
4,357
5,402
11,797
11,850
2,417
0
2,999
5,152
22,418
0
1,595
0
2,658
5,450
9,703
TOTAL EQUITY & LIABILITY
91,774
48,924
48,389
EQUITY & LIABILITIES
Equity
Share capital
Treasury stocks
Share premium reserve
Approved, but not registered capital
increase
Retained earnings
Total equity capital
85
10.3 Cash Flow Analysis
Cash flow from operating activities
Net profit/loss before taxes
Taxes paid
2003
2002
2001
1,805
(417)
2,724
(22,237)
0
3,118
(39,656)
0
2,709
0
(25,415)
(446)
812
(20,937)
233
(2,398)
822
(2,733)
(23,195)
0
9,451
(534)
3,737
(24,293)
(594)
0
(594)
(315)
(233)
(548)
(2,764)
0
(2,764)
Cash flow from financing activities
Proceeds from issuance of short-term debt
Payments on long-term debt
Payments of equity
Repayments of equity
Net cash flow from financing activities
0
0
39,482
1,421
40,903
11,850
0
4,000
0
15,850
0
(117)
28,791
(96)
28,578
Net change in cash and cash equivalents
Cash and cash equivalents 01.01
Cash and cash equivalents 31.12
19,372
9,016
28,388
(7,893)
16,909
9,016
1,521
15,388
16,909
Depreciation expenses
Impairment of financial fixed assets
Changes in accounts receivable
Changes in accounts payable
Changes in other accruals
Net cash flow from operating activities
Cash flow from investment activities
Purchase of business assets
Purchase of amortizable assets
Net cash flow from investment activities
10.4 Comments to Section 10.1, 10.2 and 10.3
The revenue increased from NOK 51.1 million in 2002 to NOK 78.5 million in 2003, a growth of
53.8%. The operating result (EBIT) was NOK 1.3 million compared to NOK -21.4 million in 2002.
The revenue from Internet devices increased by 63%, from NOK 33.6 million in 2002 to NOK 54.9
million in 2003. All sales agreements are structured to give Opera a development fee as well as a
license income per unit sold. The increase in revenue on Internet devices in 2003 was mainly driven
by growth in the number of development-based projects. The Company expects an increase in the
number of products launched in 2004. Although the Company expects an increase in license revenue
in 2004, a substantial increase in license revenue is not expected before 2005 and 2006, in line with
expected mass-market deployment for mobile Web solutions and digital television.
The revenue on Desktop increased from NOK 17.5 million in 2002 to NOK 23.7 million in 2003, a
growth of 35.4%. The increase is mainly due to an increase in the number of licenses sold and
increased advertising revenue. Approximately 64% of the total desktop income came from license
sales. The board expects further growth in revenue from desktop in 2004.
Opera’s total assets as of December 31, 2003, are NOK 91.8 million of which NOK 28.4 million are
cash and cash equivalents. Goodwill and deferred taxes totaled NOK 24.5 million.
86
Of the 2003 revenues, 36% where generated in the US/Canada, 16% in Asia, 1% in Norway and the
remaining 47% in Europe and other countries world-wide.
In 2003, 50% of the revenues are in USD while the remaining in 49% are in EUR. Opera does not
hedge this currency exposure, and is therefore exposed to changes in currency rates.
The Company has in the past not used financial instruments for currency hedging, and does not plan to
use such in the future.
10.5 Product Segment Analysis
Figures in NOK 1,000
PC desktop
Mobile Internet
Revenues
2003
2002
2001
23,661
54,870
78,531
17,499
33,561
51,060
12,695
15,598
28,293
10.6 Quarterly Income Statements
(unaudited)
Total operating revenues
EBIT
Sales growth by quarter
Q4 2003
Q3 2003
Q2 2003
Q1 2003
Q4 2002
Q3 2002
28.803
6,462
59.7%
18,041
(1,015)
-6.3%
19,248
2,169
54,7%
12,439
(6,351)
-9.8%
13,794
(6,381)
15.1%
11,984
(7,934)
-12.3%
10.7 Investments
Investments
87
2003
2002
2001
595
315
2,764
11. Risk Factors
A purchase of shares of the Company’s common stock offered by this Prospectus involves a high
degree of risk. The following factors, in addition to the other information contained in this Prospectus,
should be carefully considered before making any such purchase. Included in this Prospectus are
various “forward-looking statements”, including statements regarding the intent, opinion, belief or
current expectations of the Company or its management with respect to, among other things, (i) goals
and strategies, (ii) plans for new product development, (iii) marketing plans, the Company’s target
market, (iv) evaluation of the Company’s markets, competition and competitive position, (v) trends
which may be expressed or implied by financial or other information or statements contained herein,
and (vi) outcomes of disputes. Such forward-looking statements are not guarantees of future
performance and involve known and unknown risks, uncertainties and other factors that may cause the
actual results, performance and outcomes to be materially different from any future results,
performance or outcomes expressed or implied by such forward-looking statements. Such factors
include, but are not limited to, the risk factors described below and elsewhere in this Prospectus.
Technology Risk – Rapid Technological Change
Opera believes that its current technological approach will serve the Company well in the coming
years and will provide sufficient capacity and flexibility to remain viable and to justify the Company’s
and its shareholder’s technology investments. However, there can be no assurance that the Company’s
Browser will continue to be an attractive alternative to Microsoft and other Browsers that may emerge.
It could have a material adverse effect on the Company’s business, operating results, or financial
condition if the Company’s technology becomes obsolete. This could also be the case if the Company
is unable to successfully integrate the various technological solutions that it is employing, or the
Company’s Browser fails to provide sufficient capacity to accommodate the customer’s future needs.
The market segments in which the Company operates and plans to operate in the future are
characterized by rapidly changing technology, evolving industry standards, emerging competition, and
frequent new product and service introductions. There can be no assurance that the Company will be
able to successfully and quickly take advantage of technological developments, respond to new
sources of competition, identify market opportunities, and develop and bring new services to market.
Moreover, it is conceivable that one or more technological breakthroughs will radically change the
manner in which Browser services are marketed and delivered. Future technological breakthroughs
could have a material adverse effect on the Company’s business, results of operations, and financial
condition. In addition, the Company’s efforts to respond to technological innovations and a changing
marketplace may require significant investments of time and money. There is no guarantee that the
Company will possess the necessary resources to make such investments in a timely manner.
Competitive Industry
The market for the Company’s products is competitive. The Company believes that it is well
positioned to strengthen its position as a worldwide leading Browser Company. However, the
Company’s competitive position may be harmed if new competitors with similar services establish
themselves in the same segments of the market. Microsoft and potential other competitors have far
greater financial, personnel, technical, marketing, and other resources than the Company. As a result,
they may be able to react more quickly to emerging technologies and changes in customer
requirements, or to devote greater resources to the promotion and sale of their products than can the
Company.
The failure of the Company to maintain competitiveness through the successful management of its
product and services strategy could have a material adverse effect on the Company’s business,
operating results or financial condition.
88
Management of Growth
The Company’s future performance will depend in large part upon its ability to manage its growth
effectively. Any business combinations into which the Company enters, as well as the Company’s
anticipated organic growth in the coming years, will place a significant strain on the Company’s
administrative, operational, and financial resources. The Company will have to integrate a significant
number of new employees, operations, and assets in the course of its growth in the coming years. If
the Company fails to retain and/or attract management personnel who can manage the Company’s
growth effectively, it could have a material adverse effect on the Company and its growth. In addition,
the Company will need to expand and improve its sales and marketing activities in conjunction with its
anticipated growth and possible expansion into new product areas. A failure to attract, retain or
effectively manage such personnel or to successfully market the Company’s services could have a
material adverse effect on the Company’s business, operating results, and financial condition.
Dependence on Recruiting and Retaining Knowledgeable Employees
The Company’s success depends in a large part upon its ability to recruit, motivate and retain highly
skilled employees with the functional and technical skills and experience necessary to develop and
deliver the Company’s products. The limited supply of such qualified employee candidates means that
the competition for such employees is intense. The Company is using incentive schemes such as
employee stock ownership and options in order to encourage employee loyalty. However, there can be
no assurance that the Company will be able to recruit, motivate and retain sufficient numbers of highly
skilled employees in the future. A failure to do so could have a material adverse effect on the
Company’s business, operating results, or financial condition.
Development Timeline Risk
The Company has an aggressive schedule for Software development of very complex program
systems on multiple operating system platforms. Several of these platforms are new to the Company,
i.e. the Company has never before delivered any product on them. Furthermore, the nature of the
Company’s Software products is increasingly complex. Notwithstanding the Company’s plans and
best efforts, there is no assurance that the Company will be able to meet its Software development
schedule as outlined in this Prospectus.
Difficulties in Enforcing the Company’s Intellectual Property and Proprietary Rights
The Company’s success depends significantly on its proprietary Software technology. The Company
relies on a combination of trade secret, copyright and trademark laws, non-disclosure agreements and
contractual provisions to protect its proprietary rights. International copyright and trademark laws
protect Opera’s technology, and the Company has filed for some patents in Norway and the U.S and
additionally an international patent application (PCT) for the Small Screen Rendering technology. All
the patent applications are still pending. Existing trade secrets and copyright laws afford only limited
protection, and unauthorized parties may attempt to copy aspects of the Company’s proprietary rights or
to obtain and use information that the Company regards as proprietary. In addition, the laws of some
foreign jurisdictions do not protect the Company’s proprietary rights in the same manner and to the same
extent, as do the laws of Norway. There can be no assurance that the steps taken by the Company to
protect its proprietary rights will be adequate or that the Company’s competitors will not independently
develop technologies that are substantially equivalent or superior to the Company’s technologies.
Intellectual Property Rights held by other companies
The Company operates in a competitive industry. Technology is evolving at a fast pace and innovating
companies develop solutions in relatively close technological proximity. This poses the risk that one
could inadvertently encroach upon the protected rights of others, including rights protected by patents.
This is the nature of the industry in which the Company operates.
The Company is cognizant of the fact that there could be a number of patents out there potentially
founding basis for infringement claims. U.S. patents and/or litigation in the U.S. are particularly
worrisome because there are a large number of US Software patents in existence. There is also to a
greater extent a culture for aggressive patent enforcement in the USA.
89
An example of a patent case that has caused concern in the Web community is the so-called "EOLASpatent/ Plug-in patent". There is a lot of controversy surrounding this patent and it is widely assumed
that the patented method was not novel at the time of filing. If the patent was fully enforced against all
potential infringers it would impose a severe impediment on today's operation of the Web. There is
currently ongoing litigation in the US over the patent and The United States Patent and Trademark
Office has initiated a re-examination of the validity of the patent.
Infringement on copyrights and design rights is also conceivable. However, claims would most likely
arise in connection with the user interface level and would not relate to key technology which could
not be modified without significant detriment to the quality and appearance of the Browser. Claims
based on trademark law could surface as well, but the Company is well protected in this area and has a
fairly good overview of potential conflicts with other companies through trademarks searches and
applications.
The Company is in a process of formalizing its procedures and policies in respect of intellectual
property rights. However the Company has good insight into the technological landscape and has
conducted itself with prudence when new technology is developed. The Company has conducted
limited infringement analysis on numerous occasions, by itself and via consulting firms. Major
customers have also performed technology clearance exercises. At the same time, there is a
recognition that the full picture would be extremely difficult, if not impossible, to obtain.
There is always an inherent risk of substantial claims related to infringement of intellectual property
rights. Such claims could also have a negative impact on the various contracts of the company because
infringement of intellectual property rights is likely to be construed as material breach of contract.
The Company has on a few occasions been in contact with other companies regarding possible
infringement of intellectual property rights, but this has not materialized into any legal action. See
further Section 13.5 below.
Risks Associated with International Operations
Sales in international markets are subject to risks inherent in international business activities,
including, in particular, general economic conditions in each such country, overlapping differing tax
structures, managing an organization spread over various jurisdictions, unexpected changes in
regulatory requirements, complying with a variety of foreign laws and regulations, and the longer
accounts receivable payment cycles in certain countries. Other risks associated with international
operations in general include import and export licensing requirements, trade restrictions, changes in
tariff and freight rates, the difficulty and expense of maintaining foreign distribution channels, legal
differences, political instability, and currency fluctuations. In addition, review of international
customer and vendor agreements by local counsel is not routinely obtained, because, in the Company’s
view, the potential incremental improvement to the Company’s standard forms or other applicable
agreements does not generally outweigh the costs, when the likelihood of dispute is considered.
Currency fluctuations
Because a portion of Opera’s business is conducted in currencies other than Norwegian Kroner, the
Company will be exposed to volatility associated with foreign currency exchange rates in the course of
business. There can be no assurance that the Company will not experience currency losses in the
future.
Variability of Operating Results
The Company’s operating income/loss and operating results can vary from month to month. The
Company’s operating income is difficult to forecast due to the fact that the Company is expecting
rapid growth, the Company’s ongoing investments in infrastructure, changes in technology, the
competitive environment, and other general economic and market conditions. Unanticipated
difficulties in pursuing the Company’s business strategy as described in this Prospectus could have a
material adverse effect on the Company’s business, operating results, or financial condition.
90
Consumer adoption and market success of Internet devices
The Company supplies Browser solutions to OEM’s of Internet devices. There can be no assurance as
to whether the sales of such devices will grow as strongly as predicted by many industry experts. Also,
there is no guarantee as to which market share Opera’s particular OEM customers will obtain.
91
12. Share Capital and Shareholder Matters
12.1 Current share capital
The Company’s share capital of NOK 1,693,054.94 consists of 84,652,747 shares, each at a par value
of NOK 0.02. In addition, there are 8,760,000 options and 6,319,998 warrants outstanding. The
warrant holders have a right to have a total of 6,669,997 shares issued.
In case all the options and all the warrants were exercised as granted, this would change the
Company's share capital with NOK 308,599.94.
12.2 Development of the share capital
The following table shows the development of the Company’s share capital since its incorporation.
Year
1995
1998
1999
1999
2000
2000
2000
2000
2000
2001
2001
2001
2002
2003
2003
2003
Type of change in
share capital
Changes in
Par value
Total share
Total no of
Share capital per share
Capital
shares
(NOK)
(NOK)
(NOK)
Incorporation
50,000.00
500.00
50,000.00
100
Split 1:50
10.00
50,000.00
5,000
Employee Issue and split 1:100
2,965.00
0.10
52,965.00
529,650
Employee Issue
100.00
0.10
53,065.00
530,650
Split 1:10
0.01
53,065.00
5,306,500
Private placing
4,028.14
0.01
57,093.14
5,709,300
Bond conversion
1,271.86
0.01
58,365.00
5,836,500
Increase in share capital, transfer
1,108,935.00
0.20
1,167,300.00
5,836,500
from Company funds
Private placement directed towards
4,068.00
0.20
1,171,368.00
5,856,840
employees
New issue related to acquisition of
18,741.80
0.20
1,190,109.80
5,950,549
Hern Labs
Private placement of new shares
30,000.00
0.20
1,220,109.80
6,100,549
Split 1:10
0.00
0.02
1,220,109.80
61,005,490
Conversion of warrants
12,718.60
0.02
1,232,828.40
61,641,420
Private placement
305,000.00
0.02
1,537,828.40
76,891,420
Private placement
28,826.60
0.02
1,566,655.00
78,332,750
Bond conversion
126,399.94
0.02
1,693,054.94
84,652,747
Please refer to Section 13.9 for a description of outstanding warrants.
12.3 Shareholder structure
The Company had 223 shareholders per February 25, 2004. The table below shows the largest
shareholders as of February 25, 2004.
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Shareholders
Shares
Geir Ivarsøy
20,512,120
19,482,110
KS Teknoinvest VII
4,266,666
Teknoinvest VIII KS
4,000,000
4,000,000
JPMorgan Chase Bank
3,292,000
2,682,287
Håkon Wium Lie
2,587,645
KS Teknoinvest VI
2,386,041
Caprice AS
2,129,470
Sanner Industries Ltd
1,399,300
Karl Anders Øygaard
950,000
Christian Thommessen
845,000
Sollund AS 1)
765,000
Ole Petter Lorentzen
750,000
Intellus A.S
671,386
Rolf Assev
649,820
Marit Bjørnvold 2)
574,000
Norgesinvestor Vekst
537,690
JP Morgan Bank Lux
520,000
Total 20 largest shareholders
73,000,535
Others
11,652,212
Total
84,652,747
1)
Controlled by Christian H. Thommessen, chairman of Opera
2)
Rolf Assev’s wife
Share (%)
24.2%
23.0%
5.0%
4.7%
4.7%
3.9%
3.2%
3.1%
2.8%
2.5%
1.7%
1.1%
1.0%
0.9%
0.9%
0.8%
0.8%
0.7%
0.6%
0.6%
86.3%
13.7%
100.0%
12.4 Listing on Oslo Børs
The Company submitted an application to Oslo Børs on January 26, 2004 for listing on the Main List
of Oslo Børs, including a subsidiary application for listing on the SMB List in the event that the
conditions for listing on the Main List are not satisfied. The board of Oslo Børs resolved at its meeting
on February 25, 2004, provided that certain requirements are complied with, that the Company’s
shares can be listed at Oslo Børs’ Main List. It is expected that the first quotation and trading day will
be on or around March 11, 2004. A round lot in the Company’s shares will be dependent on the Offer
Price, but is expected to consist of 1,000 shares. The Company’s ticker code will be OPERA.
12.5 Board authorization to issue shares
At the Extra Ordinary General Meeting of January 30, 2004 the Board was granted authorization to
increase the share capital with a total of NOK 846,000 valid until June 30 2005 (or the ordinary
general meeting in 2005 whichever comes first). Through the Share Issue the Company will issue
12,500,000 new shares under this authorization. With the current face value of NOK 0.02 the Board is
authorized to issue up to 29,800,000 new shares in the Company.
The existing shareholders pre-emptive rights may be waived. The authorization may be used for one or
more issues of new shares and is given for the purpose of providing financing for the Company’s
future operations, to issue shares pursuant to the Greenshoe option, to ensure the availability of shares
to be used in connection with possible acquisitions and mergers and to be used to issue shares in
relation to stock options granted to the employees, directors and consultants of the Company. The
subscription for new shares may be by cash payment or by non-cash contribution. The Board of
Directors is given authorization to determine terms and price of new issues.
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12.6 Shares and options held by Opera’s directors and management
The table below shows an overview of shares and options held by Opera’s directors and management
(including companies owned by such persons).
Shares
Directors
Christian Thommessen
Christian Thommessen (Sollund)1)
John R. Patrick
Tore Mengshoel3)
Lars Bjørn Thoresen
Michael von Tetzschner
Snorre Grimsby
Live Leer
Share %
Options
Strike
Total
1.0%
0.9%
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
0
0
100,000
0
0
100,000
40,000
50,000
10.00
2.50
2.50
2.50
845,000
765,000
100,000
40,000
0
134,280
42,400
50,000
845,000
765,000
100,000
40,000
0
34,280
2,400
0
Management:
Rolf Assev4)
Lars Boilesen
Christian Jebsen (Sanner Industries)2)
Christian Jebsen
1,223,820
1.5%
400,000
7.20
1,623,820
29,400
0.0%
800,000
2.50
829,400
1,399,300
1.7%
0
1,399,300
0
0.0%
150,000
2.50
150.000
0
0.0%
250,000
7.20
250,000
Christen Krogh
24,000
0.0%
350,000
2.50
374,000
0
0.0%
100,000
10.00
100,000
19,482,110
23.0%
400,000
7.20 19,882,110
Håkon Wium Lie
2,587,645
3.1%
400,000
7.20
2,987,645
Total
26,432,955
31.2% 3,040,000
29,472,955
1)
Christian Thommessen owns 50% of Sollund AS
2)
Jebsen with family owns 83.4% of Sanner Industries
3)
In addition, Teknoinvest Management AS, where Mengshoel owns 11.16%, owns 132,564 shares in
Opera
4)
Includes the shares owned by Rolf Assev’s wife, Marit Bjørnvold
12.7 Employee Option Plan
The Company has established an option program for selected employees. In total, 97 employees (or
previous employees) and 5 board members (including the two employee representatives in the board)
have been granted share options. Of the options, 6,535,000 have a strike price of NOK 2.50, 1,850,000
have a strike price of NOK 7.20, 125,000 have a strike price of NOK 8.50, 100,000 have a strike price
of NOK 10.00, and 50,000 have a strike price of NOK 20. A total of 42 employees hold shares in the
Company.
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The table below shows the number of options issued to employees at various strike prices and exercise
dates.
NOK 2.50
Mar 2004
Jun 2004
Nov 2004
Jun 2005
Nov 2005
Jun 2006
Nov 2006
Jun 2007
Nov 2007
Total
NOK 7.20
Strike price
NOK 8.50 NOK 10.00
125,000
NOK 20.00
50,000
Total
175,000
2,082,250
512,500
1,484,250
512,500
1,484,250
512,500
1,484,250
512,500
50,000
8,760,000
2,082,250
462,500
50,000
462,500
50,000
462,500
50,000
462,500
50,000
1,484,250
1,484,250
1,484,250
6,535,000
1,850,000
125,000
200,000
The Company’s board of directors administers the Employee Option Plan. The option plan runs over a
four years period. A total of 25% of the options may be exercised every year (with some exceptions
where it is agreed that the option holder can exercise 40% of the option the first year and thereafter
20% for consecutive years). The options may for most of the options be exercised in whole or part 1
June each year. Some of the options have an exercise period of 1 month in the relevant year. In the
event the option is not exercised for all 25% in each relevant year, the remaining part of the 25% will
be annulled. However, the board of directors may in separate agreement prolong the duration of the
individual parts of the option.
The option agreement is non-transferable. The employee loses the right to exercise any parts of the
option if his or her employment is terminated by the employee or the Company for whatever reason.
The employee is entitled to keep any shares exercised during the period he or she was employed.
The number of shares and the strike price shall be adjusted correspondingly in the event of a split of
the Company's shares.
Any “profits” any employee or board member make on the option program is likely to be considered
as taxable income for the employee and board member (and not as a capital gain). The Company will
have an obligation to report any such profits to the authorities, and is likely to be liable to pay payroll
tax (“arbeidsgiveravgift”) for such profits. Currently the rates of such payroll tax are 14.1% for annual
income less than NOK 895,424 (including the “profits” from the options) and 26.6% of income in
excess of such amount.
12.8 Convertible loan
There are no outstanding convertible loans in the Company.
12.9 Warrants
There are registered warrants issued to Teknoinvest and Four Seasons (and others). The warrants
entitle the holders to subscribe for 6,319,997 new shares. The strike price is NOK 1.875 pr. share. The
exercise period is until December 31 2005. In VPS there is registered 6,319,997 warrants each
representing a right to have one share issued. These warrants may increase the Company's share
capital with a total of NOK 126,399.94. The warrants shall in case the Company is participating in an
merger as the asignee in the merger, ensure that the conversion rate is adjusted to reflect the
conversion rate of the merger. Save for the foregoing, the warrant holders have no right to be treated
as a shareholder in case the share capital or number of shares in the Company is altered
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Opera has issued warrants to IBM for the issue of 350,000 shares in the Company in a period of up to
five years from August 28 2002 or 2.5 years from an IPO of the Company (whichever comes first). In
VPS the right to have up to 350,000 shares issued is registered as 1 warrant. The strike price is NOK
2,50 per share. This may increase the Company's share capital with a total of NOK 7,000. IBM has the
option to have shares issued at par value as an alternative to exercising the option with cash payment
(“Par value exercise”). In such case IBM will instead of receiving 350,000 shares, receive the profit of
the difference between the market price when the warrant is exercised and the strike price in form of
shares in the Company. If the market price at the exercise date is NOK 10, IBM will consequently
receive 0.75 shares per warrant in addition to paying the par value price per share. The warrant holder
shall be treated as a shareholder in case of alterations of the number of shares in the Company and in
case of merger/demerger in the Company. In case of capital increase or decrease or issuance of new
warrants, the warrant holder is not to be treated similar to a shareholder. However, in case of a stock
listing of the Company, the warrant holder is in conjunction with the listing and thereafter to be
provided with equal rights as other shareholders in the Company.
As of February 25, 2004, neither of the warrant holders have sold any of their warrants.
12.10 Shareholder agreements
The Company is not aware of any outstanding shareholder agreements.
12.11 Lock-up agreement
In connection with the Share Offer, all board members of the Company except board members
representing external financial investors, all members of the management of the Company, and Mr.
Geir Ivarsøy, have accepted a lock-up period for all shares and other securities in the Company owned
by each of the key persons, or any company such key person represents or controls. The Board
members representing external investors that are not covered by the lock-up agreement are Lars Bjørn
Thoresen and Tore Mengshoel.
During a period of six months commencing on the date when the Share Offer is completed, each of the
key persons undertakes not to pledge, sell, transfer or otherwise part with the ownership of any shares
or other instruments in the Company owned by the said key person. This applies to shares owned at
the date of this statement, purchased through the Placement, or purchased during the lock-up period,
irrespective of whether the contemplated transferee is already a shareholder or not. Any such
transactions may only take place with the prior written consent of the Managers.
The lock-up agreement covers shares representing a minimum of 52,788,458 shares (corresponding to
62.4% of the share capital prior the Share Offer).
12.12 Own shares
As of February 25, 2004 the Company held no own shares.
The Company has no authority to purchase its own shares.
12.13 Dividend policy
Dividend payments will be subject to approval by the shareholders at the Company's annual General
Meetings. In view of the Company's planned expansion and growth of its business, the Company does
not expect to pay dividend over the next few years
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12.14 Transfer of shares
According to the Company articles of association, there are no general limitations on transfer of the
Company’s shares.
12.15 Signatory rights
The chairman and the managing director have signatory rights separately.
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13. Tax and Legal Matters
13.1 Taxation of shareholders
The following statements on Norwegian taxation are of a general nature and are based on Norwegian
tax legislation at the time this Prospectus was published. This legislation may be the subject of
changes that can have an impact on the tax implications described below. Such changes can at times
be retroactive. The following is intended as a general summary and does not purport to be - and must
not be construed as - legal or tax advice. It does not cover all aspects of tax issues related to the shares
that may be relevant to current and prospective shareholders. The following applies only to
shareholders that have legal title to the shares. Current and prospective shareholders are advised to
consult their own tax advisers on the overall tax implications of investing in, owning, or managing
shares in the Company.
13.2 Taxation of dividend income
Shareholders resident in Norway
Normally dividends paid to shareholders resident in Norway for tax purposes are effectively taxexempt. This is due to the present full imputation tax credit system, which allows shareholders to
offset the tax paid by the company against their own liability. A working group appointed by the
government (“Skauge-utvalget”) has proposed a new system for taxation of shares held by individuals
resident in Norway. The system will reintroduce taxation of dividends at shareholder-level that exceed
a base profit (“grunnavkastning”) on invested capital of each shareholder. The excess will be taxed as
ordinary income at 28%. New legislation has yet to be formally proposed by the government, and it is
not currently known whether the Norwegian Parliament will vote in favour of eventual proposed
changes.
Shareholders resident outside Norway
Dividends distributed to shareholders resident outside Norway for tax purposes (“non-resident
shareholders/investors”) are paid net of withholding tax. The Company is responsible for deducting
withholding tax from dividend distributions to non-resident shareholders. The standard withholding
tax rate is 25%, but most of Norway's international tax treaties have reduced rates, most commonly 15
%. Non-resident shareholders may also be liable to pay domestic taxes on dividend income, but
withholding tax paid in Norway can often be offset against such taxes.
Where a Non-resident investor holds shares in connection with a business operated from a permanent
establishment in Norway, any dividends received are covered by the limited liability to pay taxes in
Norway which applies to such businesses. However, these investors are also entitled to offset the tax
already paid by the Company in line with Norwegian shareholders.
In the case of shares registered with a nominee, withholding tax will be deducted at a rate of 25 %
unless the nominee has obtained approval in advance from the Central Office – foreign tax affairs
(Sentralskattekontoret for utenlandssaker) for the dividends to be subject to a lower rate of tax
according to applicable tax treaty. To obtain such approval, the nominee must - among other things undertake to submit to the Norwegian tax authorities on request an overview of all beneficial owners
that receive dividends at reduced treaty rate.
Non-resident shareholders who suffer a higher rate of withholding tax than that which follows from an
applicable tax treaty, may apply to the Central Office – foreign tax affairs for a refund of the excess
withholding tax deducted.
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13.3 Taxation of capital gains
Shareholders resident in Norway
Shareholders resident in Norway for tax purposes will be liable to capital gains tax arising from the
sale of shares irrespective of the period of time the shares have been held and the number of shares
sold. Capital gains are currently taxed as ordinary income at a flat rate of 28 %. Correspondingly,
losses on the sale of the shares will be deductible against ordinary income.
The capital gain or loss on each share will be equal to the difference between the consideration
received and the adjusted tax base, with subsequent RISK-adjustments. The adjusted tax base is the
acquisition price adjusted up or down in accordance with the changes in the company's retained
earnings after tax during the time the shareholder has held the share ("RISK adjustment"). The RISKadjustment of the tax base for each tax year is allocated to the owner of the shares on January 1 of the
following year (the assessment year). It should be noted that the propositions made by Skauge-utvalget
as mentioned in section 13.2 may also affect the RISK-system of taxing capital gains.
If the shareholder sells Shares acquired at different times and at different cost prices, the shares that
were acquired first shall be considered to be the shares first realised ("FIFO"- principle).
Costs in connection with both the acquisition and realisation of Shares (including brokerage etc.) are
deductible when calculating capital gains or losses.
Shareholders resident outside Norway
Shareholders who are not resident in Norway for tax purposes are not normally liable to pay tax to
Norway on capital gains unless the shares are (i) held in connection with a business which is liable to
pay tax in Norway, or (ii) unless the shareholder has previously been resident in Norway for tax
purposes, and the shares are sold within five years of the end of the calendar year in which the
shareholder ceased to be resident in Norway for tax purposes. The tax liability may be limited by
applicable tax treaty.
13.4 Wealth tax
Shareholders resident in Norway for tax purposes are required to pay wealth tax, subject to more
detailed rules and regulations. However, limited liability companies and various other types of
business and organizations are exempted. Shares held by shareholders liable to pay wealth tax will be
included in their taxable assets. Listed shares are valued for wealth tax purposes at 100 % of the
quoted value at 1 January in the year of assessment (i.e. the year after the income year).
Shareholders who are not resident in Norway for tax purposes are not liable to pay wealth tax unless
the shares relate specifically to a business operated by the shareholder in Norway. Such tax liability
may be limited by applicable tax treaty. Note that shareholders may still be required to pay wealth tax
in their country of residence.
13.5 Legal issues
License claims
The Company has used compression/decompression technology for image conversion for nonewireless applications, i.e. the desktop Browser. The technology used may be protected by patents in
Canada, United Kingdom, Germany, France, Italy, Japan (all patents expiring by June 2004) and USA
(expired June 2003). In 2001 the Company made contact with the patentee, a multinational IT
company, in order to come to agreement about a license fee.
The Company and the patentee had discussions during 2001 about a license fee for the use of the
technology for the Company's desktop Browser. The desktop Browsers have mainly been distributed
as free ad-sponsored copies. The Company has been of the opinion that a license fee should reflect
99
this. However no agreement was reached because the Company was of the opinion that the licence fee
suggested by the patentee was exorbitant. The patentee's proposed license fee was USD 0.15 per copy
of the Opera Browser or a one time payment for a paid up license for USD 2.3 million, irrespective of
whether the copy has been obtained as a free ad-sponsored copy or as a copy subject to payment of
consideration to the Company. The discussions were discontinued by the patentee in October 2001.
The patentee did revert to the Company in the spring of 2003 and claimed license fees for the
Company's alleged use of the patented technology in the Opera Browser embedded in wireless
devices. The patentee claimed a license fee in the amount of USD 0.35 per copy of the distributed
embedded Opera Browsers. The Company is of the opinion that the claim is only relevant for a very
limited numbers of embedded Browsers distributed by the Company. Further, the Company has
reasons to believe that the license fee claimed both for the desktop Browsers and the embedded
Browsers are much higher than the fees paid by other licensees with similar products. Any license fee
payable by the Company should presumably be at the same level as license fees paid by others. When
the Company in September 2003 asked the patentee to provide information as to the contents of the
patentee's licence agreements with other parties, and informed the patentee that the Browser is
delivered without the allegedly patented technology on wireless devices, the patentee discontinued its
correspondence. The claim has not subsequently been followed up by the patentee.
It is difficult to quantify the upper limit of the claims put forward in 2001 and 2003 because the size of
the claim has varied and because the distribution of copies of the Browser in the area of the patent is
unknown. The numbers of distributed copies of the desktop Browser are however substantial as it has
been downloaded approximately 30-35 million copies of the free ad-sponsored version worldwide and
the number of desktop Browsers distributed via CD-ROM range in the hundreds of millions. It should
be noted that the installation rate is very low; a general industry assessment is 2 %. The Company
estimates that it has around 8 million active users worldwide of the desktop version. Hence, should the
patentee succeed in a court proceeding, or should the circumstances deem it required or desirable to
settle amicably, the result could be that the Company would have to pay substantial amounts in license
fees.
The potential claim will only have a limited effect on the future earnings of the Company since the
patents in question expired in the US in June 2003 and its foreign counterparts will expire by June
2004.
In a letter dated February 13, 2004, a Japanese company has asserted that the Company infringes upon
a Japanese and an U.S. patent related to WAP/WML. The Japanese company claims a license fee. The
size of the proposed license fee is either USD 135,000 or USD 270,000 annually, depending on an
interpretation of the letter from the patentee. In addition, there is a claim for a retroactive license fee
covering all past production and distribution of USD 500,000.
After a preliminary examination the Company does not believe that this is a case of infringement.
However the Company has not had sufficient time to examine the claim thoroughly and the patentee
has not substantiated its claim. Hence the Company has responded to the patentee and asked for
further explanation of the claim and the alleged infringement.
The abovementioned gives examples of the nature of the industry in which the Company operates;
there are always certain risks connected with patents held by others. See also section 11 above.
VAT investigation
The Company is currently subject to official audit investigations by the Norwegian Internal Revenue
Service for the years 2000, 2001 and 2002, specifically addressing VAT and investment taxes
("MVA" and "Investeringsavgift”) in relation to the advertising-sponsored desktop Browser and
registration of users. The Internal Revenue Service has raised questions as to whether the Company
should have calculated VAT on every free ad-sponsored version of the desktop Browser downloaded
100
in Norway at the similar price as the ad-free version. The Company estimates that approx. 350,000
Browsers have been distributed in Norway.
The Company is of the opinion that the VAT and investment taxes issues have been treated correctly,
and the Company has presented its views in letters and in meetings with the Internal Revenue Service.
In an undated draft report written by the tax auditor the fall 2003, the tax auditor does not give any
assessment as to whether the free downloading of the advertising-sponsored desktop Browser qualifies
for VAT. According to the tax auditor the Internal Revenue Service should consider whether the free
downloading shall be considered as a gift or marketing according to the VAT-act § 14, second
paragraph no 4) and hence qualifies for VAT. Since VAT is to be calculated on the basis of the sales
value of each Browser, such a value has to be established. The Company is of the opinion that the
Browser as free Software has a marginal sales value. This is supported by the fact that approx. 99% of
the desktop market consists of free Browsers. Hence the Company is of the opinion that VAT will not
apply to a product without any sales value or to a product with a marginal sales value.
The Internal Revenue Service has not made any decision in this respect, and there is a risk that the
Company will become liable for VAT and/or investment taxes on every free ad-sponsored version of
the desktop Browser downloaded in Norway. It is impossible to quantify such a possible liability
because there is no established sales value for free Software.
Legal proceedings
The Company is not involved in any legal proceedings.
101
14. Other Information
14.1 Registered address and organization number
The business address of Opera is:
Opera Software ASA
Waldemar Thranesgate 98
N-0175 Oslo
The telephone number is + 47 24 16 40 00 and the fax number is +47 24 16 40 01.
The shares are registered with the Norwegian Register of Business Enterprises as a public limited
liability company under registration number NO 974 529 459 MVA.
14.2 Company legislation
The Company is a Norwegian public limited liability company and is governed by Norwegian law.
14.3 VPS registrar and securities number
Opera’s shares are registered with VPS under ISIN NO 001 0040611. The Company’s registrar is:
DNB NoR Bank Verdipapirservice
Kirkegaten 18, Postboks 1172 Sentrum,
N-0107 Oslo
14.4 Auditors
The Company's auditors for 2000, 2001, 2002 and 2003 were KPMG AS, state authorized public
accountant. The auditors' address is Sørkedalsveien 6, P.O. Box 7000 Majorstuen Skøyen, 0306 Oslo.
Except for one explanatory paragraph regarding the equity situation in Opera from the auditors in the
auditor’s report for the year 2002, with was made prior to the Company’s last equity issue, there are no
other qualifications during the last three years.
For the financial year 2000, KPMG made a qualified opinion regarding the internal control in Opera.
Prior to KPMG, Svindal Leidland Myhrer & Co was auditor for the Company.
14.5 Transactions with related parties
There are no material transactions with related parties.
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15. Norwegian Summary
Det norske sammendraget er underordnet den engelske teksten og den mer detaljerte informasjonen i
Prospektet forøvrig, samt vedleggene. Den enkelte investor oppfordres til å lese hele Prospektet,
herunder kapittel 11 om risikoforhold, for å kunne gjøre seg opp en vurdering med hensyn til en
eventuell tegning av aksjer i emisjonen.
15.1 Selskapsbeskrivelse
Historie
Opera Software ASA ble grunnlagt i 1995 for å utvikle og selge nettleser programvareløsninger for det
stasjonære PC markedet. Siden 1998 har Selskapet i tillegg begynt å fokusere på nettleser og relaterte
programvareløsninger for markedet for nettlesere til andre internett enheter, spesielt innenfor
interaktiv TV (”iTV”) segmentet. I løpet av de siste fire årene har Selskapet gått gjennom en betydelig
utvikling både organisatorisk og finansielt, og har etablert en sterk posisjon i sine kjernemarkeder.
Ettersom Selskapet nå har nådd sine på forhånd definerte målsetninger om:
• Profitabilitet
• Visibilitet på lisensinntekter
• God vekst, og
• en transparent forretningsmodell
søker Opera nå en børsnotering på Oslo Børs.
Beskrivelse av Selskapet
Opera utvikler og selger nettlesere og nettleser relatert programvare.
En nettleser er en programvare som er nødvendig for å aksessere og vise informasjons og innhold fra
internett.
En nettleser kan også bli brukt for å ligge mellom internett enhetene og kjerneapplikasjonene for å
levere en konsistent brukeropplevelse, såvel som å benyttes som en hjemmeside på internett enheten
ved å benytte nettleserens brukergrensesnitt.
Opera fokuserer på fire markedssegmenter:
• Stasjonære PC’er (f.eks. programvare for å aksessere internett fra en stasjonær PC)
• Mobilt internett (f.eks. programvare for å aksessere innhold og internett fra en mobiltelefon
eller PDA)
• Interaktiv TV (f.eks. programvare for å aksessere innhold og internett fra TV’en)
• Vertikaler (f.eks. programvare for å aksessere innhold og internett fra nye internettenheter som
f.eks. biler)
Mens markedet for stasjonære PC’er er grunnlaget for Selskapets suksess i andre markedssegmenter,
er det viktigste markedssegmentet for Opera i dag mobilt internett, som er det segmentet som Opera
estimerer vil generere de høyeste inntektene i de nærmeste årene.
Opera mener at Selskapets største konkurransefortrinn er sine ni års erfaring fra å lage nettlesere for
stasjonære PC’er. Ettersom få web utviklere følger W3C’s standarder nøyaktig, har det blitt bevist at
det er essensielt å forstå markedet for stasjonære PC’er og å ha kompetanse til å vise ”Street HTML”.
Det sterke Opera samfunnet teller ca. åtte millioner aktive brukere og har kontribuert aktivt til å lage
Opera nettleseren bedre, raskere og mer sikker.
103
Opera ser på seg selv som en teknologileder innen markedene for mobilt internett, stasjonære PC’er og
interaktiv TV.
I løpet av de siste få årene har Opera inngått partneravtaler og kommersielle avtaler med noen av
verdens ledende teknologiselskaper. I perioden fra 2001 til 2003 økte Operas årlige inntekter fra NOK
28,3 millioner i 2001 til NOK 78,5 millioner i 2003.
Innovasjon
Opera er et innovativt selskap som har en historie med å introdusere nye effekter og funksjoner til sin
nettleserprogramvare. Opera tror at nye produktlanseringer og andre verdiøkende funksjoner, som
Opera Platform og Small-Screen RenderingTM , vil hjelpe Opera i å beholde de gjennomsnittlige
lisensinntektene per bruker på dagens nivåer også i fremtiden. Opera bemerker også at
nettleserprogramvare har blitt en viktig strategisk applikasjon på internett enheter, og i den grad at
mobiloperatører ser potensialet for økt ARPU ved å benytte en nettleser, vil Opera kunne klatre høyere
i verdikjeden for mobilt internett.
Organisasjon
Opera har sitt hovedkvarter i Oslo, Norge og har et heleiet datterselskap i Linköping, Sverige. Per 31.
desember 2003 har Selskapet 128 ansatte. Ca. 45% av de ansatte har en annen nasjonalitet enn norsk.
15.2 Finansielle Hovedtall
De følgende tabellene gir et sammendrag av resultatregnskapet, balanseregnskapet og utvalgte
nøkkeltall for Selskapet for årene 2001, 2002 og 2003. En mer utfyllende beskrivelse av Selskapets
finansielle situasjon finnes i kapittel 10 i dette prospektet og Selskapets årsrapport og årsregnskap for
2003 (vedlegg 2 til prospektet).
Reviderte tall i NOK 1.000
EBITDA
EBIT
EBT
Resultat etter skatt
Netto inntekt per aksje
Netto inntekt per utvannet aksje
Utbytte per aksje
Utestående aksjer
Fullt utvannet antall aksjer
2003
78.531
3.989
1.265
1.805
376
2002
51.060
(18.263)
(21.380)
(22.237)
(16.202)
2001
28.293
(38.396)
(41.105)
(39.656)
(29.327)
0,005
0,005
0,00
78.143.212
82.259.462
(0,263)
(0,263)
0,00
61.641.420
61.641.420
(0,480)
(0,480)
0,00
61.005.490
61.005.490
104
Reviderte tall i NOK 1.000
Anleggsmidler
Omløpsmidler
Totale Eiendeler
31. des. 2003
25.974
65.800
91.774
31. des. 2002
28.435
20.489
48.924
31. des. 2001
25.108
23.281
48.389
Reviderte tall i NOK 1,000
Egenkapital
Langsiktig gjeld
Kortsiktig gjeld
Sum gjeld og egenkapital
31. des. 2003
79.977
0
11.797
91.774
31. des. 2002
26.506
0
22.418
48.924
31. des. 2001
38.686
0
9.703
48.389
15.3 Aksjetilbudet og Børsnotering
Styret i Opera besluttet den 21. januar 2004 å søke en børsnotering av Selskapets aksjer på Oslo Børs,
og en søknad ble sendt til Oslo Børs den 26. januar 2004. Styret i Oslo Børs vedtok på sitt møte den
25. februar 2004, gitt at enkelte krav er oppfylt, at Selskapets aksjer kan bli listet på Oslo Børs’
hovedliste. Det er forventet at den første noterings- og handelsdagen vil være ca. 11. mars 2004. Styret
i Opera mener at aksjene i Selskapet vil attrahere god interesse fra både store og mindre investorer og
aksjemarkedet generelt. I tillegg mener styret i Opera at en børsnotering av Selskapets aksjer vil styrke
Operas profil og rykte i markedet Selskapet operer i.
I sammenheng med børssøknaden planlegger Selskapet å gjennomføre et tilbud av aksjer som består
av:
• Et offentlig tilbud i Norge med en øvre og nedre grense på antall aksjer som kan tegnes
•
Et tilbud til institusjoner og andre profesjonelle investorer med en nedre grense på antall aksjer
som kan tegnes
Tabellen under viser et sammendrag av betingelsene i aksjetilbudet.
Størrelse på aksjetilbudet:
Minimum 24,344,900 aksjer og maksimum 27,944,900
nye og eksisterende aksjer, under forutsetning av full
utøvelse av Greenshoe opsjonen, i annenhåndssalget og
emisjonen, hver med en pålydende på NOK 0,02
Størrelse på emisjonen:
Minimum 12,5 millioner aksjer og maksimum 16,1
millioner nye aksjer, under forutsetning av full utøvelse
av Greenshoe opsjonen, hver med en pålydende på
NOK 0,02
Størrelse på annenhåndssalget:
11,844,900eksisterende aksjer, hver med en pålydende
på NOK 0,02
Indikativ pris i emisjonen og
annenhåndssalget:
NOK 8,00 – 10,00 per aksje
Tegningsperiode for the offentlige tilbudet Fra og inkludert 26. februar til kl. 12.00 den 10 mars
i Norge:
2004
Tegningsperiode for tilbudet til
institusjoner/profesjonelle investorer
Fra og inkludert 26. februar til kl. 15.00 den 10 mars
2004
Betalingsdato for det offentlige tilbudet i 15. mars 2004
Norge
105
Antall aksjer før emisjonen:
84.652.747 aksjer, hver med en nominell verdi på NOK
0,02
Antall aksjer etter emisjonen:
Minimum 97,152,747 aksjer og maksimum
100,752,747 aksjer, under forutsetning av full utøvelse
av Greenshoe opsjonen
Bruttoproveny fra aksjetilbudet:
Minimum NOK 194,759,200 og maksimum NOK
279,449,000, under forutsetning av full utøvelse av
Greenshoe opsjonen
Bruttoproveny for emisjonen:
Minimum NOK 100 millioner og maksimum NOK 161
millioner, under forutsetning av full utøvelse av
Greenshoe opsjonen
Bruttoproveny fra annenhåndssalget:
Minimum NOK 94,759,200 og maksimum NOK
118,449,000
Styret i Opera mener at en emisjon i tillegg til å finansiere Selskapets planlagte ekspansjon også vil
sikre at Selskapet blir sett på av kunder og det offentlige som en troverdig langsiktig spiller i internett
programvaremarkedet.
106
Appendix 1: Articles of Association
VEDTEKTER
FOR
OPERA SOFTWARE ASA
(etter endring i ekstraordinær generalforsamling 30.01.2004)
1.
2.
3.
4.
5.
6.
7.
8.
9.
Selskapets navn skal være OPERA SOFTWARE ASA. Selskapet er et allmennaksjeselskap.
Selskapets forretningskontor er i Oslo kommune.
Selskapets virksomhet skal være å utvikle, produsere og selge programvare og tilhørende
tjenester, samt hva hermed står i forbindelse, herunder å delta i andre selskaper og annen
virksomhet med tilsvarende formål.
Selskapets aksjekapital er NOK 1.693.054,94 fordelt på 84.652.747 aksjer à NOK 0,02.
Selskapets aksjer er registrert i Verdipapirsentralen.
Selskapets styre skal bestå av 5 til 9 medlemmer, etter generalforsamlingen nærmere
beslutning.
Den ordinære generalforsamling skal behandle:
1. Godkjennelse av årsregnskapet og årsberetningen
2. Anvendelsen av overskudd eller dekning av underskudd i henhold til den
fastsatte balanse, samt utdeling av utbytte
3. Valg av styre
4. Andre saker som i henhold til lov hører under generalforsamlingen
Selskapets aksjer er fritt omsettelige.
Selskapet skal ha en valgkomité. Valgkomiteens oppgave skal være å avgi innstilling til
generalforsamlingen om valg av aksjonærvalgte medlemmer og varamedlemmer til styret og
om honorar til styrets medlemmer. Valgkomiteen skal bestå av tre medlemmer som skal være
aksjeeiere eller representanter for aksjeeiere. I tillegg kan det velges inntil tre personlige
varamedlemmer.
Valgkomiteens
medlemmer
og
varamedlemmer
velges
av
generalforsamlingen for perioder på to år av gangen.
For øvrig henvises til den enhver tid gjeldende aksjelovgivning.
107
Office translation to English:
ARTICLES OF INCORPORATION
FOR
OPERA SOFTWARE ASA
(after change in extraordinary general meeting January 30, 2003)
1.
2.
3.
4.
5.
6.
7.
8.
9.
The name of the company should be OPERA SOFTWARE ASA. The company is a public
limited company.
The company’s registered address is in municipality Oslo
The business of the company is to develop, manufacture and sell software and related services,
including participating in other companies and other business activity.
The share capital of the company is NOK 1,693,054.94, divided on 84,652,747 shares of NOK
0.02 each. The company’s shares are registered in Verdipapirsentralen.
The board of directors shall consist of 5 to 9 members as the shareholders meeting decides
The ordinary shareholders meeting shall approve and decide:
1. The company’s profit and loss statement and balance sheet
2. Allocation of net profit or loss in accordance with the approved balance
sheet, and declaration of dividends
3. The composition of the board of directors
4. Other issues which according to law is the business of the shareholders meeting
The company’s shares may be bought, sold or dispositioned over freely
The company shall have an election committee. The committee’s duty is to give a nomination
to the general meeting regarding choice of board members and deputy members and regarding
remuneration to the members of the board. The election committee shall consist of three
members that shall be shareholders or shareholder representatives. In addition, up to three
personal deputy members could be chosen. The members and deputy members of the election
committee shall be elected by the general meeting for a period of two years.
Other matters shall be governed in accordance with the Norwegian Share Act
108
Appendix 2: Annual Report for 2003
109
110
111
112
113
114
115
116
117
118
119
Appendix 3: Subscription Form / Tegningsblankett
120
240361_prosp_opera 25.02.04 22:09 Side 1
PROSPECTUS
Opera Software ASA
Listing prospectus in connection with an application for listing of the
company’s shares on the Main List of Oslo Børs
Share Issue of a minimum of 12,500,000
and a maximum of 16,100,000 new shares
Secondary Sale of 11,844,900 existing shares
Indicative Price NOK 8.00 - 10.00 per share,
each of nominal value NOK 0.02
Application Period from and including
February 26 to and including March 10, 2004
Opera Software ASA
Waldemar Thranes gt. 98
N-0175 Oslo
Tel. +47 24 16 40 00
Fax +47 24 16 40 01
Filipstad Brygge 1
P.O. Box 1363 Vika
N-0113 Oslo
Tel. +47 21 00 85 00
Fax +47 21 00 89 62
Munkedamsvn. 45 d
P.O. Box 1444 Vika
N-0115 Oslo
Tel. +47 22 01 60 00
Fax +47 22 01 60 62
Managers:
February 25, 2004
signatur.no

prospectus

Transcription

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