I thought the part I highlighted was interesting and might be useful to discuss.
Bob
Message 8796066
To: +bobp (28116 )
From: +J.Y. Wang Thursday, Apr 8 1999 11:17PM ET
Reply # of 28317
Efax is in a business where it doesn't belong. It does not have a profitable business model and probably never will. The service Efax provides will be provided by the baby bells -- for example, in my area it's Ameritech.
Ameritech will be doing what Efax is doing on your voice line. Ameritech will easily determine if an incoming call is a fax call or voice call. If it's voice, it sends it to the voice line. If it's a fax, it receives it, converts it to a .pdf or .jpg or whatever format you dictate and then sends it to a predetermined email address.
Efax right now is paying how much per month for each unique phone number? Geez, I wonder how much Ameritech's variable cost is to do the same thing on your voice line... If I am doing business in the 734 area code and a lot of my business is in the 734 area code, how professional will it be to to have an 818 area code fax number? It's like having "DWEEB" in highlighted capital letters on my business card.
Let's face it -- most of the people who would use Efax's service would not be multi-national corporations but individuals, independent contractors, traveling salesmen, etc. Since Efax's service is free, how much money can Efax get out of those people in terms of advertising revenues and charges for additional services? It's obvious that Efax does not have a viable business model but is selling its stock more than anything else.
Even if Efax were serious, what happens *when* (not "if") baby bells like Ameritech add services like the ability to forward voice mails as .wav or as converted text to your email address? You mean I can have one voice phone number where I can receive regular phone calls and faxes and voicemails as .wav or as text anywhere in the world where I can access my email? This technology is not rocket science. You don't think Ameritech and other baby bells have these services in the pipeline?
The bottomline is: Efax does not have a viable business model. Its product is a money losing proposition which the baby bells can provide with far higher quality for either no charge or a minimal charge (how many people pay for call-waiting, caller-ID, call-forwarding, etc. right now?). Its product has a high fixed cost *and* a substantial variable cost (cost per line); The baby bells would have a high fixed cost but no variable cost. Efax is worth dirt, and that is if it's lucky.
The problem is that the market for stocks like Efax.com right now is *all* momentum and hype. Efax.com even has the quintessential hype name -- it's got "e" as a prefix and ".com" as a suffix. If I started a company called ecowchip.com, it would probably fetch a market cap of at least $100 million -- $500 million if I pay for advertisement on Yahoo (oops, not "advertisement" but "strategic marketing alliance").
I challenge someone to explain why Efax.com has a viable business model.
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