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Future of 'Traditional DA': Enhanced Services and Pricing Innovation

V-Enable and the recently IPO'd mobile carrier MetroPCS announced a deal for enhanced directory assistance that offers an innovative pricing dimension. MetroPCS users receive access to "unlimited," enhanced DA at certain "premium," monthly spending levels (there are no contracts for MetroPCS): $45 and $50:

Ask all you want with Metro411 Unlimited Directory Assistance. You will hear the number, AND you will receive a text message containing the name and phone number you requested. Receive residential, business and government phone listings for anywhere in the U.S., Canada or Puerto Rico when you dial 411 from your MetroPCS phone.

While those "premium" spending levels are generally easy to hit in normal carrier service plans, the "unlimited local and long distance" nature of MetroPCS means that the company has to provide other reasons to bump up to higher-priced plans. (MetroPCS offers all-you-can-eat plans at $30, $35, $40, $45 or $50, with different options and services.)

I also recently received an interesting direct mail piece with my Sprint bill promoting enhanced DA (range of services including local mobile search) and up to three queries per $1.79 call. An interesting gambit is their exposure of the price point; historically unknown to callers expect those who scrutinize their phone bills (fewer than you think). Sprint is betting it can create a perception of value: "all these services only cost $1.79!" But the company may also be sending people out the door to free alternatives by educating its subscribers.

I've already abandoned traditional, consumer-pays mobile DA so it won't affect me and I won't use it, but it may boost volumes for some Sprint users currently unaware of of 800-Free411, Goog411, Tellme, Dial Directions and others.

In the long run, there's no way for mobile carriers to prevent consumers from learning about these free alternatives to their mobile DA services. So in order to survive they'll either have to be very innovative on the services side (reflected in the Sprint attempt) and provide something obviously and measurably better than the free options, or engage in pricing innovation (like MetroPCS above).

Some number of business users and younger users who don't pay their own phone bills and are thus not price sensitive may continue to use traditional mobile 411. However, most will not absent some of the innovations suggested.

Segmenting Local Mobile Search

Expectations of mobile search and local mobile search in particular are rising. As mobile ad networks form, mobile M&A activity heats up and the search engines pour greater attention and resources into their mobile offerings one could say we're on the cusp of a new mobile era. Indeed, as much as I'm reluctant to use the term, one could dub the forthcoming mobile Internet "Web 3.0."

Of course people have been saying and predicting the emergence of the mobile Internet for almost 10 years. Forecasts and predictions rarely come true in their original time frames, but they typically do come true eventually. And today, the resources, infrastructure and consumer demand make a mobile Internet more tangible and much closer to reality.

What took the desktop Internet roughly a decade to develop is happening in a much more condensed period of time in mobile. And for all its complexity and fragmentation, there are numerous companies working to make content access and delivery on mobile devices a much more intuitive and user-friendly experience. That's the key in my view: the user experience. Because once users adopt the mobile Internet (or variations thereof) in meaningful numbers, which is starting to happen, the ad dollars will flow and real money will be made.

Right now what I'm calling the "mobile Internet" is really four separate silos that will eventually blend to varying degrees.

Nouveau Directory Assistance & Voice Search

This category grows out of tried and true "directory assistance," the original form of local mobile search. In 2006 there were roughly 6.5 billion calls to 411 in the United States and many more billions around the world. Because of the Internet and other factors (e.g., corporations blocking 411), directory assistance continues to shift to mobile phones.

So-called "operator assisted yellow pages" (live agents helping users finding listings and other information) were repeatedly tried and failed. However, today, ad-supported directory assistance appears here to stay. Companies in this segment include (partial list):

Jingle Networks' 1-800-Free411
GOOG411
AT&T's 1-800-Yellowpages
Tellme (now owned by Microsoft)
Dial Directions

The rest of this post is at Search Engine Land.

Yahoo! Mail Now Sends SMS Messages

Yahoo! Mail (what was formerly being called the "beta" version) will now be able to send text messages to mobile phones. From the PR materials I received this evening:

The new Yahoo! Mail enables people to select how they want to communicate with their online contacts: via e-mail, instant message or text message to a mobile phone number. With the introduction of this text messaging feature, which is built on Yahoo!'s IM platform, people can now choose to send free text messages from Yahoo! Mail to mobile numbers in the US, Canada, India and the Philippines in real-time without leaving the Web mail experience. The feature is seamlessly incorporated into the new Yahoo! Mail, and is as easy as entering a mobile phone number, typing a text message and hitting send.

The new Yahoo! Mail also enables users to connect in real-time to their contacts within Yahoo! Mail, Yahoo! Messenger or Windows Live Messenger. This instant messaging interoperability connects users of one of the world's largest Web mail services with the world's largest combined IM community and facilitates quick chat conversations within the Yahoo! Mail interface. People can also easily convert their e-mail messages into IM chats or switch to a text message dialogue with the click of a button, when friends come online or go mobile, and vice-versa.

As the AP story that was published this evening points out, this enables a new form of intergenerational communication: parents sending text messages to their kids' mobile phones from their traditional Yahoo! email accounts. While that's an amusing anecdote/use case, it illustrates the larger principle of Web-mobile integration that will become standard -- and increasingly strategic for companies like Yahoo! that are in a position to leverage their massive installed base of users to their potential mobile advantage over rivals.

This and other upgrades being rolled out help boost and maintain the dominant position of Yahoo! Mail on the desktop as well (a big source of display ad inventory). Here's more on the feature upgrades from CNET's Elinor Mills.

More Rumors of an Impending 'GPhone' Launch

India's Rediff.com cites unnamed sources to assert that a Google-branded phone may be just "a fortnight away." There have been lots of rumors about a "GPhone" for many months. Those persistent rumors are based in part on speculation that Google must be up to something more in mobile and part on the fact that they indeed are.

The rumors have, over time, run the gamut from more Google mobile software development, to a Google MVNO to a Google handset. Here's what the Rediff article says:

Sources close to the development said a simultaneous launch across the US and Europe is expected, and announcements would be sent to media firms in India and other parts of the world. US regulatory approval, which is expected soon, is the only hurdle that Google is waiting to cross, they added. Google plans to invest $7-8 billion for its global telephony foray.

What is clear is that Google is being extremely aggressive in mobile and the company is not going to stay where it is. I would be quite surprised if Google were to present itself as an MVNO, however. Unless such a service were totally or almost totally ad-subsidized (something CEO Eric Schmidt has suggested is possible) few people are likely to switch carriers. But such a move has a high probably of failure for numerous reasons.

While more Google software for mobile devices is a given, it's possible that some version of a Google-branded phone will appear. It's also possible that Google will pursue multiple strategies in parallel.

Like many others, Google recognizes that the thing standing between it and mobile ad revenue is a generally bad user experience and the way that holds back user adoption of mobile data (beyond text). That recognition is partly what motivated GOOG411, the company's free directory assistance alternative.

Demo of iPhone with Voice-Enabled Local Search

Many people find the keyboard on the iPhone awkward. We suggested that voice should be used to power applications and minimize the keyboard. VoiceSignal recently hacked the iPhone and has done just that.

Watch the demo

This is what I mean when I say that as voice proliferates the free DA providers will be competing with others that offer a voice front end and a visual output.

Here's the VoiceSignal press release.

Vlingo: Voice Search and SMS

Server-side voice, embedded voice and automated directory assistance (DA) are all going to be competing for consumers in the very near future under the banner of voice-based mobile search. And, putting aside cost differences, the only thing that will matter to end-users is what are the easiest and most effective of the options.

Vlingo is a new (to me) Speech-to-Text provider that combines voice-based local search and voice-initiated SMS. Its FIND application, which appears to be available for all the major US carriers, is the local mobile search tool. At first glance it appears to offer capabilities quite similar to companies like V-Enable or Tellme, among several others.

Nokia Preloading MSFT Apps in Europe and Middle East

In 11 countries in Europe and the Middle East, Nokia is promoting a range of Microsoft "Windows Live" applications -- soon to be preloaded onto mobile devices. According to the Wall Street Journal:

Nokia handset owners in 11 European and Middle Eastern markets -- including the United Kingdom, France, Germany and Spain -- will be able to download the Microsoft applications onto their N-Series multimedia phones, allowing them to send emails and instant messages to other phone and computer users. By the start of next year, the two companies also hope to preload the Microsoft software onto Nokia's more mass-market Nokia Series 40 handsets.

Nokia owners can download the apps today on selected multimedia phones. The major search providers, including Google and Yahoo!, have also been working with handset makers and carriers to get their applications preloaded onto decks and devices.

Mobile-desktop integration and the ability to leverage desktop information or personalization onto the mobile device is a strategic advantage and something that consumers will ultimately want.

Medio Buys Mobile Ad Provider Suhari

Medio Systems has acquired mobile ad company Suhari LLC. The acquisition and technology will be used to enhance the Medio ad network called "Medio Mobile Now."

Medio started as a white label search provider to help mobile carriers compete with branded search sites like Google and Yahoo! but is increasingly putting emphasis on its mobile ad network.

Jingle Formalizes Relationship with Nuance

Jingle's 1-800-Free411 has been relying on Nuance's speech recognition for some time. Today the two companies put out a formal release announcing a strategic, long term relationship:

As part of the long-term agreement, Jingle will use technology and services from Nuance to enhance the overall consumer experience for 1-800-FREE411 callers. This agreement, which extends and deepens the previously announced relationship between the companies, also includes Nuance referring and marketing the Jingle Ad Platform to its customers for additional audio ad-serving needs.

If the recognizers don't recognize and can't fulfill the query, Jingle will forward the call to a live agent. Competitors such as Goog411 and Tellme, don't use live agents. That's a strategic differentiator currently, but as speech recognition improves the need for a live agent will diminish.

Right now, Jingle is the brand leader in the "free 411"segment, but there's a lot of competition coming very quickly. And as I suggested earlier competitors will be more than free DA providers; they will include a broader range of speech-enabled local search offerings.

CallGenie Expands Scope of Voice-Search Offering

CallGenie announced an expanded geographic scope for its Enhanced Voice Directory solution. According to the press release:

This release provides coverage for all of North America, allowing Call Genie to offer its customers and partners a local mobile search solution that covers over 350 million people in the United States and Canada. In addition, this release of EVD allows Call Genie's customers to offer their callers the ability to further refine their business search by referencing landmarks, neighborhoods, and intersections in all markets with a population larger than 300,000. This capability is built on the subtleties of voice search and specific to the underlying grammars related to how people really speak when asking for information.

Jingle Networks uses CallGenie for category search. CallGenie also powers Yellow Pages Group's mobile application Hello Yellow in Canada and has inked a deal with Verizon to provide enhanced DA services.

Correction/clarification: I was informed by CallGenie that they never in fact were providing category search for Jingle. The companies had been in discussions and some tests but that a deal never took place. Thus, the perception that CallGenie was displaced by this deal (as has been conveyed by some reports) is inaccurate.

Where/uLocate Launches on Alltel

I'm on vacation this week, but here's the release:

Whether traveling in their hometowns, or on the other side of the country, Alltel Wireless (NYSE: AT) customers will have access to WHERE's state-of-the-art location-based service (LBS) application. WHERE, created by uLocate Communications, provides detailed and customized information including maps and directions for thousands of locations, directly to Alltel phones. The application is available for download in Alltel's Axcess Shop for $2.99 per month. The application will initially launch on five phones: The Wafer, the Alltel Hue and u520 by Samsung, as well as The Wave and AX8600 by LG.

Alltel Wireless customers who download WHERE on their GPS-enabled phones will be able to easily locate gas stations, shops, restaurants, hotels, parks, golf courses, ATMs, hospitals and schools. WHERE also provides up-to-date information on local events and allows customers to customize the application by providing local weather, news, traffic conditions, directions, ski reports and more.

This is the second carrier (Sprint is the first) to offer the Where application. Here's my previous write up. Where is a platform for third-party development and mobile deployment:

The carrier relationship provides "on-deck" distribution (through Where) for the third parties and enables all widgets to benefit from GPS functionality.

Kelsey Free DA Forecast: Slim Numbers

From their release:

Annual U.S. revenues for advertiser-sponsored directory assistance, also referred to as free DA, will grow from $14 million in 2007 to $462 million in 2012.

This is considerably smaller than the Opus Research forecast, although the segments and definitions differ. But the relatively small size of the Kelsey projection suggests a loss of confidence in the growth potential of the market.

Cage Match: GOOG411 vs. Dial Directions

I met the other day Amit Desai of Dial Directions (347-328-4667). In my two conversations with Amit (the former CTO of Voxify), he's made some very strong claims about the sophistication of the startup's speech platform and capabilities. He also gave me some "roadmap" information that may take the service way beyond "free DA." But for now that's what the service is, with point-to-point directions (not to diminish it or the Free DA category in any way).

I decided to informally test GOOG411 vs. Dial Directions across category searches and a few name-in-mind searches to see how they comparatively performed. The outcome was something of a split decision.

Dial Directions doesn't have as extensive a local database as GOOG411, which is speech-enabling its Maps database. Dial Directions works well for chains/franchises and some other categories of local businesses but it's otherwise incomplete. For its part GOOG411 can't deliver point-to-point directions or provide the closest business to an address. You can call GOOG411 from a landline (or cell); Dial Directions only works for mobile phones.

Using GOOG411, you can ask, for example, for "San Francisco, Peet's Coffee" and what you'll get is eight results that have nothing to do with your precise location. If you do a category search for "cafes" or "coffee houses" you can say an intersection or enter a zip to narrow the search. Once a business is identified, you can be connected or receive a text with the contact details. However, there are no directions.

Dial Directions can't get you to all the listings that GOOG411 can, but it does a couple of things that GOOG411 cannot. It can give you the closest (type of business, with limitations) or business name in relation to where you are and provide directions via SMS. You can provide an intersection or an individual address and get that information. However, the limited local database (currently) makes it less valuable that it would otherwise be. A San Francisco search for "Mexican Restaurants" near "First and Folsom" on Dial Directions yielded a bunch of chain locations but no independent restaurants. A similar category search on GOOG411 (with an intersection) will provide a broader array of choices. But, again, there are no directions.

Dial Directions has some impressive functionality and the speech recognition was very accurate in my informal test. Also the management is thinking very creatively and expansively about what's possible with voice search. Desai and his crew also recognize that a "multi-modal" solution is much stronger than a pure voice-in/voice-out approach.

AAA Mobile: Nice Try

AAA just released a mobile application (for Sprint). It requires a download and costs $9.99 per month. It offers directions, points of interest and AAA ratings and discounts. But for all the competition (already) in local mobile search it might be a nice service. My sense is that the AAA brand and value add isn't strong enough to drive acceptance of the $10 per mo. fee on top of the carrier data fees. Where/uLocate and InfoSpace FindIt! and Ask Mobile are all $2.99, I believe.

In addition, free services (voice, text, apps and WAP) are good enough -- and getting better -- and are broader and more usable than the AAA offering. Thus I think this will have very limited adoption. It makes good sense for AAA to get into the local mobile search game, as a travel resource. This is another "bite at the apple" after they largely blew it online.

But the service will need to be much better than it appears from the online demo and/or cheaper to get consumer adoption or attention. It should probably be offered for free on a trial basis to get people to adopt it before asking for any subscription fees. It could also potentially be a way to drive additional conventional memberships, but that doesn't appear to be something they've thought through.

Given its current approach and positioning, AAA is probably overestimating the strength of its brand among consumers.

Mobile Social Networking a Growing Niche

M:Metrics released numbers on mobile social networking in the US and Europe. Here's their data:

The American audience for mobile social networking sites was the largest, with 7.5 million, or 3.5 percent, of mobile subscribers. Italy follows, with 1.3 million or 2.8 percent, then the UK with 1.1 million, or 2.5 percent, Spain with 751,000 (2.3 percent), Germany (1.9 percent) and France (1.7 percent). MySpace garnered the most mobile users in the United States and United Kingdom whereas MSN was the forum of choice for mobile Web 2.0 users in the other geographies surveyed.

MySpace and Facebook are the top two social networking sites accessed via mobile in both the U.S. and UK. MySpace attracts 3.7 million U.S. and 440,000 UK mobile users. In America, Facebook's mobile audience is about 2 million, and in Britain, about 307,000. Rounding out the top three is YouTube in the U.S., with 901,000 mobile visitors and Bebo in the UK, with 288,000.

We anticipate that mobile social networking functionality (to varying degrees) will be popular and mainstream and move beyond mobile versions of online social networking sites. It will be a layer of many mobile applications (contacts integration, presence awareness, etc.). Ask Mobile offers this and so does uLocate's Where and Loopt, among others. Indeed, mobile IM (if it becomes inter-operable and widely available) could also eat into text messaging usage over time.

Related: Facebook just released an iPhone application that is getting rave reviews.

___

Here's MediaPost's related article on the M:Metrics data.

uLocate's Where an Impressive Mobile Platform

Dan Miller and I were briefed yesterday on uLocate's Where mobile widget platform (the description doesn't really do it justice). The company is building relationships with operators/carriers and then extending itself to third parties as a development platform for mobile distribution. The recent ShopLocal mobile launch is an example. But there are many companies and brands that are already on the platform, which enables rapid development and deployment of a mobile capability. It effectively compresses to days what otherwise take more than a year of negotiation and development to create.

The carrier relationship provides "on deck" distribution (through Where) for the third parties and enables all widgets to benefit from GPS functionality. ZenZui has a similar strategy (as well as look and feel), but doesn't have the carrier relationships to extend GPS capability. uLocate currently has two U.S. carrier relationships (Sprint, Alltell) but expects to have a majority of North American carriers soon.

Right now the revenue model is a $2.99 monthly subscription (unlimited widgets) with an ad model anticipated in the not-too-distant future.

There are also very interesting social media elements to uLocate/Where, as well as a nice "drag and drop" desktop integration: widgets can be added to the mobile phone simply by dragging them on the site to an image of the user's phone after registration.

The value proposition (vs. traditional mobile search) is a better user experience with more structured information from favorite sites and brands. There's essentially no reason for sites and publishers not to develop on the Where platform which can be done in parallel with other mobile strategies (i.e., SMS, WAP, voice).

uLocate's CEO is Walt Doyle, who was formerly at MapQuest.

Gannett Rolling out Local-Mobile Sites

Newspaper publisher and TV station owner Gannett is rolling out local news oriented mobile sites for its 84 dailies and 19 (or 23) TV stations. It already has a mobile site for its flagship USA Today. MediaPost has more:

Users with handsets and data plans that allow for Internet browsing can access the sites for free by entering an 'm' before an existing Gannett site's URL (such as http://m.tennessean.com), via links from the home pages of all Gannet newspaper and broadcast Web sites, or by texting a unique daily short code to 59523. The short codes are being promoted through Gannett's print, online and broadcast news presentations.

The sites have traditional news and entertainment content with links to USAToday. The challenge will be broadening out the experience to meet user needs/demands for non-news local information, directions and so on. If they fail to do so they will have limited usage.

Gannett already owns a significant stake in 4Info, the SMS-based mobile content and advertising platform. Here's more from MediaWeek.

AOL Upgrades Mobile Search

AOL has improved its mobile search capability, especially for Windows Mobile devices. Earlier I had incorrectly reported that there had been a full relaunch of its mobile portal. Only the search functionality has been improved and relaunched.

There are now two types of search experiences: an enhanced Windows Mobile experience and a non-Windows Mobile version, which is also improved but with a slightly different presentation.AOL noticed that a disproportionate number of users were using Windows Mobile devices (and mobile search), so the company created an experience with horizontal tabs that dynamically change depending on the query or context of the search.

Here's an example for sushi, San Francisco:

ScreenHunter_660.jpg

Here's an example for movies, 94118:

ScreenHunter_661.jpg

The new AOL mobile search seeks to leverage AOL's branded content (e.g., MapQuest, AOL CityGuide, Moviefone) to attempt to deliver a better experience and more structure in search results.

Shop Online, Buy Locally: A Closer Look at Recent Survey Data

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Precis

Local Mobile Search Advisory
Last week, two studies described how Internet search is used by the large majority of consumers as a research tool before buying locally. The Web has now overtaken all other media, including printed Yellow Pages as a primary source for local business information. Directory assistance and cell phones were only used 3% of the time as a primary source. However, Local Mobile Search (LMS) expects that will change over time.

Featured Research is available to registered users only.

For more information on becoming an I2G client, please contact Pete Headrick ([email protected]).


RESEARCH: Shop Online, Buy Locally: A Closer Look at Recent Survey Data

Last week, two studies described how Internet search is used by the large majority of consumers as a research tool before buying locally. The Web has now overtaken all other media, including printed Yellow Pages as a primary source for local business information. Directory assistance and cell phones were only used 3% of the time as a primary source. However, Local Mobile Search (LMS) expects that will change over time.

Advisories are available to registered users only.

[protect]Registered CAS Clients - Click Here to View the Full Advisory[/protect]