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InfoInteractive answers call of growing market
upside.com
Due North
May 25, 2000
by Bob Beaty
Missing voice calls because you only have one phone line and you're surfing the Web?
It was only a matter of time before some bright corporate spark, namely Nova Scotia-based InfoInteractive (IIAA), would exploit this anomaly and develop software that would allow those among us with second-line envy to effectively manage incoming calls.
InfoInteractive offers applications that allow single-line Web surfers to accept, transfer or, just as useful, avoid incoming callers with impunity.
While Nortel (NT) has a similar product, it has limited Canada-only distribution. Privately held, San Francisco-based private Pagoo Communications, also offers a call-management product -- Call Catcher -- but it merely captures voicemails and plays them over a PC.
The company's Internet Call Manager was the first of its kind on the market (initially appearing in 1997) and because the application is cheaper -- about US$5 a month -- than a second phone line, it's making money, too.
As of Wednesday, InfoInteractive moved from the Nasdaq bulletin board to a full listing. The company expects that event to bring more investor interest and analyst coverage -- the latter, to date, being virtually nil.
The next hot service?
In a 1999 report, the Yankee Group calls Internet call management "the next hot service" to join the network-based, value-added features market -- which it estimates will exceed US$10 billion by 2003. Industry analyst International Data Corp. projects an average annual sector growth rate of 30-plus percent, which would mean 20 million to 25 million users in the United States over the next three years.
Given that InfoInteractive holds patents in North America, Australia and Singapore, with 24 more pending worldwide, investors interested in the technology's potential shouldn't ignore the company.
While InfoInteractive made chump change for 1997, by the end of 1999 it delivered revenues of C$7.3 million. In the first quarter of 2000, revenues exceeded C$2 million.
While earnings are still a small net loss, steady subscriber growth -- now exceeding 100,000 -- and partnerships with the likes of Intel (INTC), Bell Atlantic (BEL), Cisco (CSCO) and Prodigy (PRGY) should serve the company and its investors well in the months to come.
InfoInteractive is constantly adding resellers worldwide and has doubled the number of employees over the last year. It has also built up a net-free cash position of C$8.2 million.
The company also has ambitious plans to go global. Through a strategic partner, the U.K.-based Witchity Corporation, the company's products will be deployed throughout Europe. Witchity intends to expand InfoInteractive's Online Call Manager to Australia, New Zealand and throughout Western Europe.
Most aggressive player
Dana Thorat, senior research analyst at IDC in Boston, categorizes InfoInteractive as "probably the most aggressive player in the space." She notes that while there are other free services, or cheaper ones, the sector is still in its infancy and has considerable growth potential.
All of the telcos are looking into these types of products and, although they are painfully slow rolling them out, they have little choice but to offer some type of call management service. Thorat agreed that, with the consumer and investor interest in wireless applications, the wireless arena would also be a significant growth area.
InfoInteractive already has wireless plans, namely its Wireless Call Manager. Working with all cellular and PCS phones, the service allows PC users to manage wireless calls -- including visual call display, currently unavailable through most networks-through their computer.
Calls are delivered to the desktop, complete with the caller's name and number. The PC user can then decide how to route the call: to voicemail or to another line for immediate answer.
The addition of this service will greatly enhance customer accessibility and call management for those who depend heavily on wireless usage.
The challenge: Stay ahead
Nobody's kidding themselves: InfoInteractive is a small company. Under no circumstances should it be considered a core holding in a balanced portfolio. But it seems to have the right products for a growing space.
The challenge for InfoInteractive will be to maintain its leadership position as some of the free services begin to morph into pay-for-play products.
InfoInteractive has yet to turn a profit, but I suspect, if this year's performance is anything like last year's, that will soon change.
Bob Beaty worked in the investment industry for 20 years in Canada and the U.K. Since 1995, he has been writing and producing content for some of the best financial sites on the Internet. He lives with his wife and three children on an island off the coast of British Columbia. His column, Due North, appears every Thursday. |
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