Voice portal companies overshooting demand
A new generation of Internet companies has sprung up almost overnight, aimed at providing Web-like information to people who dial up a toll-free number over the telephone.
Ranging from early-stage start-ups to giants like Lucent, the services aim to give callers quick access to things like stock quotes and movie listings, even if no Web connection is available.
Although the game has barely begun, a few companies are rising to the top of the market. Tellme Networks, which launched its beta service last month, has spent a considerable portion of its initial $53 million venture funding in creating a service that sounds like real humans reading the information. That means high production costs, particularly for a service that plans to cover every movie, restaurant, sports event and weather pattern in the United States.
Others are springing up by the day, however. Rival BeVocal has its own well-stocked war chest, with a $45 million round of funding still fresh in its account books. The whimsically named Quack.com has launched its own full national service and is getting valuable information about how people use its service. It's also beginning to bring this information to carriers.
But some smaller players are taking an inside path. PhoneRun.com has partnered with giant Lucent, aiming to ride that company's connections and technology into the carrier world. Another start-up dubbed Voice Access Technologies is working with GTE to provide voice recognition services.
While the carrier route may prove more stable in the long run--if the start-ups can break through the inertia of the traditional communications companies' buying cycle--analysts aren't confident that the deep-pocketed telephone companies can market any better than the start-ups.
"Carriers are really not good at marketing enhanced services such as voice portals," Plakias said.
The Kelsey Group has taken an optimistic look at the young market, predicting that advertising and transaction revenue for these "voice portals" will produce $5 billion in revenues by 2005 and another $6 billion for associated hardware, software and Net service provider companies.
But long before that time, the scores of companies now heading for market will have to be winnowed somehow, analysts say.
"Fifteen of these guys are going to launch," said Jupiter Communications analyst Seamus McAteer. "But there's no room for more than two or three companies in this space."