Start-ups speed answers to perplexed PC users

"First I called the computer manufacturer, who told me to go to the operating system-maker," Schwartz said. "The OS-maker told me to go to the computer manufacturer, who told me to go to the printer maker, who told me to go to the virus company..."

And so on. Schwartz's experience with the pass-the-buck world of computer technical support inspired him to launch Service911.com and join a growing stampede of companies turning to the Web as a medium for providing technical support to frustrated computer users.

The boom of Web-based tech support start-ups comes as more consumers buy their first computer products and face their first software bugs and other computing mysteries. It also comes as computer and software makers struggle to keep up with and pay for the costly, unwieldy business of technical support.

Companies are offering consumers and businesses everything from automatic software-based diagnoses to house calls. The trend is being helped from advances in remote diagnostic software and new methods of hiring contractors on the Web, such as sites where freelance workers put up their services for auction.

In addition to Service911.com, rushing into the flurry are companies such as NoWonder.com, MyHelpdesk.com, Expertcity.com, PCsupport.com, All.com, Support.com, ZDNet: Help and How-To, and Help.com, published by News.com publisher CNET.

How many support sites can last beyond the start-up stage remains to be seen, however.

"There's probably not room for nine of them, though there's certainly demand for support," said Doug Chandler, analyst with International Data Corp. (IDC). "Web-based support is catching fire."

That fire is being fueled by sharp annual increases in support spending by businesses and consumers. Total spending on computer support topped $77 billion in 1999 and will top $83 billion this year, according to IDC. The research firm projects that spending will reach $107 billion by 2003.

Although most of that support takes place offline, either on the phone or in person, an increasing share of it is happening electronically. Up from 4 percent in 1999 and a projected 6 percent this year, online computer support will account for 13 percent of the total by 2003, according to IDC.

Despite mushrooming demand, analysts are skeptical about the prospects for profit in the online help market.

Not your typical business plan
Chandler cautioned that although Web-based help might make sense for computer manufacturers like Dell and Gateway, which are obligated to provide support for the products they sell, it may make less sense for the entrepreneur out to make a buck.

"I've never completely understood the model under which these would make money," Chandler said. "They've identified a legitimate need, but the question is, what version of these sites is going to be profitable?"

One problem facing the entrepreneurs is that consumers, having shelled out a few thousand dollars for a PC and bundled software, may be reluctant to pay extra for support. Recognizing this, sites have kept many of their offerings free in the initial stage, hoping to garner income later through subscriptions, premium services such as house calls, related e-commerce offerings, commissions on privately negotiated freelance service relationships, and advertising.

Analysts and many start-up executives agree that the best hope for these businesses is to minimize reliance on live technicians and maximize the use of automated software technologies.

Many of the new sites are structuring their whole businesses around the economics of automated Web software, which with customers' permission can diagnose problems remotely and in some cases can make fixes on its own.

When it comes to the expensive business of sending a live person to a person's door, some sites are opting to partner with existing businesses rather than come up with people on their own.

"With our technology, 85 percent of computer and technical problems can be fixed online," said Jeff Tarr, CEO of computer support site All.com. "For the remaining 15 percent, we will probably partner with someone like Service911.com or one of those guys that will provide help from a live person."

All.com, whose site is in a trial, or "beta," phase, is a spinoff of Motive Communications and uses that company's remote diagnostics and repair software. Motive also supplies technology to Dell Computer and Compaq Computer for their electronic tech support. Other Motive customers include Gateway, Hewlett-Packard, Intuit, General Electric, Kmart, Merrill Lynch, Microsoft and Visa.

Funded by Dell, All.com is in the process of assembling its second round of financing.

Another company planning to use Motive's technology is PCsupport.com. That site offers a service called Global Replace, which lets people back up their entire computers. If anything goes wrong, PCsupport will send a replacement laptop computer by overnight mail.

Beyond Global Replace, PCsupport offers email and chat help with technicians, including collaboration software that lets tech workers take control of and help fix the machine remotely. The site plans to implement Motive software to offer more in-depth diagnostic and online support services. PCsupport also offers dispatch and telephone support through partnerships with other support companies, including Micro Warranty Services.

Another source of revenue is to provide branded support sites for other businesses, such as Internet service providers. In that scenario, the ISP would answer any support questions related to the company's services and pass on general computer-related help questions to the PCsupport-provided wing.

Working around high-priced humans
One of the key problems PC sellers and help sites face is the high cost of live tech help and the difficulty of retaining skilled workers in what many consider the janitorial sector of the high-tech labor market.

NoWonder.com is tackling the labor question head-on by providing on online marketplace for tech help. Like other online labor marketplaces such as eLance.com, the start-up lets tech professionals bid on jobs posted by problem-plagued computer users.

The company, backed by Menlo Ventures, Brentwood Venture Capital, Redpoint Ventures, Bedrock Venture Capital and Integral Capital, adds proprietary technology to its bidding system. The company's Talkback system, familiar to users of America Online's Communicator browser, automates the reporting of software problems and provides tech support with detailed configuration information about the end user's computer.

Auctions for computer help services draw skeptical looks from some online computer support competitors.

"Just like someone with a medical problem wouldn't want to participate in an auction, chances are if you have a computer you particularly need, you're not going to want to either," said All.com's Tarr. In addition to questions of quality control, Tarr suggested that the time and energy of participating in a bidding process would dissuade users from using an auction-based marketplace.

"We found through our research that busy people don't want to participate in an auction any more than they want to wait on hold for 30 minutes," he said.

Chris Derossi, chief technology officer for NoWonder.com, countered that the bidding system gives people a choice based on the tech worker's reputation, as documented in client reviews such as those seen on most online auction houses. In addition, people can make choices based on price, certification, foreign language preferences and technical expertise.

NoWonder.com, which provides a service guarantee, will make money from 20 percent commissions once it starts letting tech workers charge for their services.

Another site matching independent techies with computer users is Expertcity. In a December funding round, the company collected more than $30 million from Sun Microsystems, ZDNet, Bertelsmann Ventures and Wit Capital's Arista Capital Partners.

Some sites, such as CNET Help.com and ZDNet's Help and How-To, concentrate on aggregating computer support information from around the Web and from individuals.

CNET Help.com has a nonfinancial partnership with All.com and investments in Service911 and NoWonder. Other Service911 investors include ZDNet and Ask Jeeves. NoWonder has more than $65 million in funding, including investments from eBay founder and chairman Pierre Omidyar, now a NoWonder director.