To: K9 who wrote (3483 ) 3/6/1999 12:15:00 PM From: Brooks Jackson Read Replies (2) | Respond to
This Barron's Article is TOO MUCH!! It's basically just a self-serving interview with FDC CEO Ric Duques -- but useful for what it tells us about MSFT strategy (and failures to date) It doesn't take a supercomputer to figure out why Duques is so excited. According to Dove Associates, there are 14 billion bills mailed out every year. If electronic bill presenters charge 30 cents apiece for their service, that works out to $4.2 billion. If First Data could capture 10% of this market in five years, that works out to be an additional $420 million. Translation: This is a huge business. But we knew that. To get there from here, Duques enlisted a partner: Microsoft. Steve Ballmer, Bill Gates' right-hand man, was enthusiastic, he says. According to Duques, Microsoft's interest was piqued because it saw electronic bill presentment as the first "real application" for the 'Net that had mass appeal. Duques claims Microsoft is pulling out all the stops to make it a success. "They told me they put the 'A' Team on it," he says proudly. The service is being beta-tested through May, and a summer rollout is scheduled. Translation: Another four to six months before TransPoint and the "A" team can have a real product -- unless there is MORE slippage, of course. And "summer" will be just in time for the banking industry's Y2K lockdown on new projects. Once Microsoft was on board, Duques also got Citibank to take a minority interest (between 10% and 20%) in TransPoint. Notwithstanding Gates' characterization of banks a couple of years ago as technological dinosaurs, Duques says that for customers to embrace electronic billing, banks need to be involved. "You have to have an intermediary in there that the customer trusts," he says. Duques says he's also asked Gates to back off on the anti-bank rhetoric. "I got him to promise me not to make any more dinosaur comments," he laughs. Translation: Since this journalist is obviously an idiot, I'll pass off our failure to create a pay-anyone system -- requiring us to bring in Citi to bail us out -- as a corporate master stroke. The other absolute necessity: Flawless customer service. If customers have no problems with the service, or problems are taken care of immediately, the word-of-mouth from early adopters will be positive. Translation: First Data "gets it" about the need for "dial-tone quality." Now lets see if MSFT does. First Data hopes to be first to market with the new system, although Duques admits that the competition won't be far behind. CheckFree figures to be the biggest competitor, and by some accounts, it already has more billers than Transpoint. There's also been some speculation from industry types that CheckFree has been in talks with a portal company like Yahoo. Translation: Boy, this reporter is a REAL idiot! ...First Data anticipates a $50-$100 million investment in the system. $100 million will just be the beginning for FDC. FDC should prepare for a corporate Vietnam.
