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Web messaging moves for the money

The recent stream of companies offering free Web-based voice mail, email and fax services are mostly aimed at consumers and small businesses, but now a few of the market leaders are aiming elsewhere.

The ground under the young Web messaging market is shifting.

A stream of companies has flowed online in recent months offering free Web-based voice mail, email and fax services. Most of these companies have focused on consumers and small businesses, but now a few of the market leaders are looking elsewhere for their bread and butter: revenues.

OneBox.com, one of the first of these online "unified messaging" companies to make a dent in the consumer market, is taking a lead in this turnaround, saying it's now focused on selling its services to wireless phone companies and big Web sites.

"We're going after the major telecom and Web companies, with a specific focus on wireless," said OneBox chief executive Ross Bott. "This is not a business-to-consumer play."

The change in focus comes as the large telephone companies are increasingly offering their own Web messaging services such as fax, email and online voice mail, and shifting more of their marketing energy to their Internet businesses. Some, such as US West, are both developing in-house technology and hiring Web companies to fill in the gaps.

Although these young unified messaging companies are benefiting now from filling in the gaps, the development of in-house technology at phone companies could pose a serious future threat to these firms.

But new Web messaging companies are coming online at an astonishing rate. The list of sites offering free email, voice mail and fax service through a single personal number has grown quickly, as companies such as uReach, Jfax, OneBox and ThinkLink fight for customers' loyalty.

While most of these new companies have focused on signing up individual customers online, a few older players are already grounded solidly in the outsourcing market. Critical Path, which has established a strong reputation providing free email services for large Web companies, recently expanded its portfolio to include online fax services, and is already serving several of the large telephone companies.

Mail.com, which also has focused on the email business, this week bought Lansoft, another Web messaging company focused on the corporate market. That deal brought on board a new list of valuable corporate customers such as Wilson Sporting Goods and Oriol HealthCare.

Like most of its peers, OneBox already has a few partnerships with Web companies such as Amazon.com and ZDNet, but still gains most of its revenues from advertising, and has looked ahead to selling its non-paying customers new "premium" services. But the percentage of people signing up for the pay services has been as low as 5 percent of the customer base, making it difficult to rely on this revenue stream, analysts say.

OneBox says it now wants to take a Critical Path-like approach to the unified messaging market, with its Net voice mail and email-by-phone software technology underlying the services of third-party mobile phone companies, for example.

The company's executives say they had the switch in mind all along; their initial consumer focus was designed as a "proof of concept" to show that a market for Web messaging existed. Now that they've signed up close to 1 million users, they're taking that proof to big mobile phone companies.

They've hired a former senior Microsoft sales executive to serve as director of telecom sales, and executives claim they are close to signing their first big outsourcing deals.

"From a public perception, this has to be viewed as a switch," Bott said. "But you can not go after big carriers who have millions of users without first establishing credibility." OneBox's 1 million customers have brought that credibility, and put the company--and the unified messaging market--on the carriers' radar screens, he said.

Analysts are applauding the move to an outsourcing model, noting that it will be difficult for any of the new services to capture a large market share, particularly once big telephone brands like AT&T or US West begin selling their own similar services using consumers' existing telephone numbers. Most of the new services require customers to use a new phone number to receive messages.

"Going after consumers is a tough model for individual services," said Andrew Schroepfer, senior research analyst for U.S. Bancorp Piper Jaffray. "It's tough to spend the right amount of marketing dollars to get to consumers."

OneBox also will have competition from more established companies like Critical Path that have already built relationships and reputations in the telecom arena. But it already has a leg up with technology tightly geared toward the wireless voice market, analysts note. That will be difficult for any competitors to replicate quickly, analysts say.

"Right now, anything wireless is sizzling," Schroepfer said. "And (OneBox's) strong point is wireless voice, which is the hardest technology to tackle."

Others in the unified messaging market aren't ready to give up their consumer focus, however.

UReach CEO Krishnamurty Kambhampati says his service, which also includes a feature allowing customers to specify the phone at which they receive direct calls through a uReach telephone number, is still dedicated to building its own online reputation.

"We're going to keep our focus on selling directly to consumers," he said. "We're not going to do what Critical Path does. We want to focus on our own brand."