Finnish start-up set to benefit from mobile video

Last year alone, 257 million mobile phones, 38 percent of the total, were sold with a built-in camera. A rising portion of these can capture small video clips, using software developed by small technology companies such as closely held Hantro, based in the Finnish town of Oulu near the polar circle.

"At the moment there is a huge rush to the market. Everyone has understood that next year there will be 400 million small video camcorders sold, and everyone wants a piece of it," said Eero Kaikkonen, Hantro's chief executive.

"The market is being divided right now. Last autumn there was a kind of a wake up in the market. Now demand is surging and also competition has gotten tougher," he said.

Hantro's technology is in 20 million mobile phones already, and the firm's smaller rivals are mostly based in Japan and South Korea, Kaikkonen said.

Hantro sells its technology and software, which allows small mobile phones to process huge amounts of data needed for quality video picture, to mobile phone chip makers like Agere (AGR.N: Quote, Profile, Research) , Freescale (FSL.N: Quote, Profile, Research) , and Sanyo (6764.T: Quote, Profile, Research) , as well as to the world's top handset maker Nokia (NOK1V.HE: Quote, Profile, Research) , also from Finland.

"To simplify it to the extremes, our technology takes a first picture of a video scene and in the subsequent frames the software saves only the pixels which have been changed from the previous frame. Usually when you film, there is no sudden movements 15 or 30 times a second," Kaikkonen said.

Until now, videofilming has been possible mainly on expensive smartphones, which run computer-like applications like e-mail, but Kaikkonen noted that in coming years it will be on most of the mid-priced phones.

Improved camera phones and faster networks are the key drivers for the market, Kaikkonen said.

"(Low quality) camera lenses have been a bottleneck, but these have improved a lot lately," he said.

"This year, the first mobile phones will come to shops which allow you to record VHS quality video. This will happen in Asia. The strongest multimedia drive at the moment is in Japan and Korea," Kaikkonen said, referring to analog VHS video quality. "Next year it will be VGA quality," he added, referring to the Video Graphic Array standard, with a resolution of 640 by 480 pixels per individual picture.

Hantro's biggest owner, CapMan (CPMBV.HE: Quote, Profile, Research) , and other venture firms have injected about 20 million euros in the firm since it focused on mobile video technologies six years ago.

Full-year 2005 results will be in the red due to investments in growth at the beginning of the year, but Hantro expects to report a fourth-quarter profit, Kaikkonen said.

Hantro employs 80 staff and aims to reach 2005 sales of 8 million euros. He expects annual sales to reach 30-50 million euros in 2009, boosted by strong market growth.Kaikkonen said Hantro is being built to be ready for stock market listing.