iNix targets security

BY THEAN LEE CHENG

THERE are two parts to iNix Technologies Holdings Bhd which is going for a listing on Mesdaq in September. The first is computers, a throwback from the rush and heady days of the dotcom. The second part is security, what most home owners want and what developers are pitching. In essence, Inix is a result of the gelling of these two elements, and the entrepreneurial spirit of its two founders. 

Jimmy Tok Soon Guan, from Terengganu, previously operated a sole proprietorship called Compustor, where he serviced computers and sold peripherals. He’s gone through the job mill, from waiting on tables to being part of a technical support team. 

Cheong Kok Yai has a diploma in electronic engineering and was a technician before setting up his computer repair business. Both Tok and Cheong worked in a little room on the first floor of Cheong’s sister’s stationery shop in Subang Jaya. Both would have happily shuffled along, riding on the Internet craze if not for a break-in into Tok’s house in 1994. 

“My wife and I came back from dinner and discovered someone had broken in from the back door. For three days and nights, we did not sleep because we could not get anyone to fix the door,” says Tok, 35. 

Tok, with Chong on his left

“People take security for granted, until their house has been broken into,” he continues. 

From that one experience, he began discussing with Cheong about coming up with a home security system.  

“I wanted a system which will call back when something happens, which means you need something to respond to you. The next thing you will want is to see your house, and that is where the CCTV (close circuit TV) came in. If you are working late, or overseas, you will need the lights to be turned on. 

“That means a three-in-one system which integrates security, automation and surveillance,” says Tok. 

Says Cheong, 45: “He will give me the ideas and recommendations, and I will incorporate and integrate them into the system.” 

But both of them did not have money. Although each had their own business, they were actually operating from a storeroom and delivering computers which they have repaired using public transport. 

“Do you know how heavy a computer is, and you have to carry two of them, with both hands and the minibus ticket seller is telling you to “masuk, masuk (go in, go in)?” But we had no address, no funds, no brand name. We were repairing, and at times, assembling computers that we hope people would buy.” 

Both of them were just surviving. They began designing their security system at night, also from that little storeroom which eventually became very hot, because fixing an air-conditioner would give them a deficit. “We knew business will come, but we did not know how or when,” says Tok. 

Today, iNix is located at the same place. But instead of a storeroom, it occupies the first and second floors of five shoplots. Tok gives several reasons why they succeeded. 

“We believed in the home security business, because I went through it. We wanted a product that will help people, we liked technology but we had no education to back us up. 

“We either succeed, or we dig drains. With just Form 5, I told Cheong, ‘I have no options, you don’t have much options’,” recalls Tok, who has been fiddling with computers since 12. 

The years 1995 to 1997 were their toughest. They were working in their respective computer repair business in the day and coming together in the night for the home security system. 

Tok continues: “When I went around trying to get my computer supplies, I told my suppliers to hold my identification card, as collateral. That was all I had. The banks would not want to lend to folks like me – no brand name, no recommendation. 

“But those suppliers who believed in me are still with me today. I am grateful for the trust they put in me,” says Tok. 

By the end of 2001 and 2002, they really needed funds and they turned to venture capitalists who provided them with seed money of RM2mil.  

They expanded their research and development (R & D), still in the same little room, and began to turn their ugly product into a swan. They also made it more cost effective to produce. 

By the time security became a strategy and trend among housing developers, they were promoting their product anywhere they could. “It could be beside a “kain songket” stall, or one selling titbits, we were there as long as it was free. Which is why I am still so frugal today,” says Tok. 

The company is making a public issue of 14.49 million new ordinary shares of 10 sen each comprising 2.85 million for the public, 4.99 million for private placement and 6.65 million for eligible employees and directors at an issue price of 70 sen per share. The exercise will raise slightly more than RM10mil. 

“We are not listing for the sake of listing. We have zero borrowings, other than my car,” says Tok. 

About a quarter of its proceeds will be used for R & D, a tenth is for advertising and promotions (A & P), and slightly less than half for working capital. 

Says chief financial officer Fred Chong Chen Fah: “We have been working with developers thus far, but now we would like to move on to our second thrust, which is the retail market, which means A & P. This system works with both houses under construction as well as completed units. The third thrust is international, which is what we have been doing a bit.” 

The product is sold in Australia, parts of Europe, Sri Lanka and China. Going by the brand name SecureSmith, the system can be wireless or otherwise.  

It rides on the existing wires in the house. It can also be a “Do It Yourself” kit that one can install. 

“One just needs to stick the sensors with double-sided tape,” says Tok. 

The company has a 17% share of the home security system market, the third largest, after only 6 months in the market as at December, 2003. About three-quarter of the foreign brands were assembled locally to suit local taste. 

“Our growth drivers are the importance people put on security today, whether they are buying into a gated and guarded development or living in an established area without security. This will be the trend as the years move on. Not everyone will want to pay for security guards. The other driver is the property market,” says Tok. 

Its main market today are Penang, Sg Petani in Kedah, Johor, Nilai, Malacca and the Klang Valley. It currently has about 30 dealers. By the end of this year, it will have four show rooms.  

“We are working with TV and air-conditioner makers to incorporate elements of our technology. All electrical products must communicate with each other, then only will you have a smart home,” says Tok who is pitching the system as “the intelligent home in a box.” 

Although iNix has only one product, there are variants to it. The basic home system is priced at around RM1,200 but its main board allows one to upgrade the system up to 120 sensors. Its competitor's cheapest set retails at RM1,800. 

“We have many ways to market it – be it to retailers, housing developers or the international market,” says Tok, adding that the system is quite popular in Australia.