Offering services as a strategy

A small number of companies at Internet Showcase are going the services route in an attempt to get their foot into the corporate door.

4 min read
SAN DIEGO--Here among the start-ups with raw technologies and a handful of mature companies with new products, a small number of companies at Internet Showcase are going the services route in an attempt to get their foot into the corporate door.

For Visto, Aeneid, Lernout & Hauspie (LHSPF), and others aiming to roll out subscription-based services, that isn't necessarily the final goal.

For them, a service offering can be a marketing tactic, the way to get in the door for an enterprise sale, says Todd Haedrich, who follows Internet businesses for Jupiter Communications.

"It's a way to get someone to pay attention to you," Haedrich said. "It is becoming a way to enter the marketplace."

It's also a rocky road, according to market watchers. "Services--it's a tough way to go," said David Coursey, show impresario and the man who decides who gets to come here.

Aeneid is the purest example of the strategy. Its Internet Research Assistant (IRA) is a hot topic at Coursey's show. This specialized search tool for professionals can be targeted to research specific industries, companies, or groups of Web sites. IRA also has a built-in way to organize research results for later use.

IRA's first incarnation will be as a service, but it's also working on a desktop application and an enterprise server so companies can use the technology in-house rather than signing up for a service.

"It's a wave of a strategy, from service to desktop to server," admits Justin Jed, an Aeneid product manager. "We'd have a hard time getting the server into our target customer. We had to figure out a way to cut the sales cycle."

For a cash-starved start-up, a service also provides a way to bootstrap the longer development process to create enterprise software.

Visto's Briefcase service stores an individual's personal data--email, address books, work files--on Visto's servers so users can log on from anywhere to check their address book and daily schedule. It's designed for road warriors or for employees logging in from home to do work.

While the service is designed as an ongoing business, Visto has its eye on the enterprise environment too.

"It could be both ways," said Steven Cox, Visto's vice president of marketing. "In some cases, it could move from the individual to the corporation."

Another exhibitor, General Magic (GMGC) is preparing to roll out a service this summer too, code-named Serengeti, to act as a "virtual personal assistant" for road warriors.

Subscribers can call the service and have their email read back over the phone, pick up voice mail, but all handled with voice commands, not using the phone touch pad.

General Magic CEO Steve Markman calls the service model a way to "harvest the low-hanging fruit," getting revenue early. The service model, he notes, also fits with the broader corporate trend to outsourcing, rather than handling functions in-house.

But in General Magic's case, the target is small businesses, not giant enterprises, although it expects some day to do an enterprise version of its software for corporations that want to run their own service in-house.

Lernout & Hauspie, a Belgian firm in the speech technologies business, plans to offer a subscription service too, but with Microsoft's $45 million investment in L&H last fall, it's not scraping for cash.

L&H's Coronado service is targeted at non-English speakers. It searches, summarizes, and translates Internet content into the user's preferred language. Type in an inquiry in German for beer, and the search engines find beer sites in English, then translate them on the fly to German.

Because the translation effort take so much computing horsepower, L&H's offering works as a service--desktop PCs aren't yet powerful enough to process and translate queries quickly.

L&H's service play targets the huge number of people on the globe who don't speak English, which L&H estimates is the language of about 80 percent of the world's Web sites.

"The target market is people who are not now on the Internet," said Rick Korfin, who's responsible for the Coronado service. "The content today doesn't attract them to the Net." His pitch: For a minimal investment, the service opens the vast knowledge stored on the Internet to those who don't read English.

And while multinational executives are likely to be fluent in English, many who work for them are not. L&H sees a chance those companies might buy the software behind the service to use in-house.

But Coursey, perhaps still hopeful about looking for new sources of revenue for Internet businesses, disagrees with the services approach.

"People keep trying to do a services model, and mostly it doesn't work," he said.