The Hindu Business Line : Beyond communication

But Geodesic Information Systems' Managing Director, Kiran Kulkarni, doesn't even touch upon the creative part, as he launches animatedly into describing the products his company has developed, of which IMAround is one. And, he hasn't changed since we met him last in 2000 — the same focus on utility rather than flamboyance.

It's time to take Geodesic seriously. Not only because the value of Geodesic's market price has soared to a four-digit figure (prior to a stock split) in the past year. Not only because foreign institutional investors hold nearly 40 per cent in Geodesic — and that is an indication of faith in what it does. But also because the company's customers love its products.

As we seat ourselves in his office, Kulkarni shoves an Italian magazine across and asks us if we know the language. When we confess our inability to translate, he says it is a mention of praise for his flagship product, the Mundu Instant Messenger.

"I just typed the stuff into one of those translation sites on the Web and it said that ours was a good product and a must-have."

Taking Mundu beyond its utility as a communications tool, the Geodesic team has built several value-added features on top of the instant messaging platform that help companies improve productivity, enhance customer acquisition and retention, and reduce overall communication costs. Geodesic has targeted this product mainly at publishing portals, financial services and mobile companies at present.

What has your market positioning been in the consumers' instant messaging market (IM)?

Industry research reports say, that by 2007, every corporate e-mail will shift to instant messaging. I don't believe that. Today, faxes haven't become redundant. E-mail would still exist. Through my offering, I would complement an email/fax system. It's yet another communication medium. Communication costs would come down, obviously.

A report by a renowned university says that for any organisation with an employee base of 5,000 people having an average annual salary of $80,000, an instant messaging solution would save $37.5 million a year in communication costs. But, IM cannot be seen only as a communication tool. It has to have a lot of value add.

Geodesic has just moved away from positioning IM as just a communication tool. If you look at our positioning, among the 20-25 slides we have in our presentation, there's only one slide that says that it also helps you communicate. Communication (ability) is a given. The Internet browser segment has reached peak innovation at this point, with Mozilla Firefox and Opera. They claim they are much faster than Internet Explorer and have all the functionality you need.

Now, IM does everything that a browser does and also communicates. In IM, it is possible for a server to push information onto the user as soon as he logs onto the Net, unlike in a browser where the user chooses to receive information.

We have linked up the accounts, administration, marketing and creative departments in an organisation (through IM). It enables people to instantly interact, check news and other information culled from pre-chosen sites. It also helps keep a log of interaction that has taken place, as against oral conversations that typically float away.

For instance, the human resources application (offered by IM) has multiple sub applications. We do not build an HR application but integrate our messaging tool with an existing application.

When an employee writes out a leave request on our tool, the system throws up everything about the employee's past leave record and related information, to his superior. The duo debates over the leave. This application for leave and the transcript of dialogue goes to the HR department for record keeping.

At the end of the year, when the employee's appraisal comes to the fore, it's not based on the boss' bias that month, but is part of work that has happened that year.

Then, is interoperability a barrier to entry in this space?

It is one kind of barrier. It is complex, but not an impossibility. There are other tools in the market. If MSN or Yahoo! decide to get into this market, it would take them at least 24 months (to be ready). Here's why: They are media companies and not software companies. They cater to a market that is at once 100 million strong, in terms of users.

Addressing an enterprise with 3,000 people is another thing. Microsoft has seriously got into the enterprise space, but its offerings work around the Windows platform and do not interoperate. Also, it is not available on the Palm, the Blackberry. Our system interoperates. We have also built a layer that allows interaction with text and voice. Video is now being integrated.

Security was an issue. So were logging and tracking. Corporates didn't use IM earlier because they saw it as a gossip or frivolous tool. They thought that it would waste people's time. But the phone also was a compulsive gossip tool. Once that problem was resolved, they pointed out security. So we took this up and complied with SEC guidelines. So this tool can now be used for financial transactions. Our tool also helps you control your desktop from your mobile phone.

IM does not make money directly as a business model. MSN does that through ads. For us, we had to offer a way to make money. We brought in the ability to send an SMS from an IM window and back. From IM to SMS, the portal that is publishing this service pays to carrier. Because of the bulk, costs per SMS are low. On the return path, because of low volumes, the carrier pays more.

How are you building your model given the value add you offer? Is patents one way?

There is a patent pending for IMAround. The concept of using applications as a buddy instead of humans is also patent pending. The applications, such as Word and Excel, can also become my buddies, provided you grant me permission. In a sense, this is a peer-to-peer phenomenon. Also, there is only so much you can load on the server. So, you have to get creative. Every client tool we have has a small server component.

Value addition is not about more features. IM as a framework also could get commoditised over time. How do you get a spike when it's on a downward slide? We think up new products. Some have been lined up for announcement in 2005. Patents for these should come in 18-24 months' time. We want to add value with IM (along with) an ad engine. Publishers certainly are interested in this.

What IMAround does is gives you a small GIF (12Kb) that embeds itself in signature file of an email. You send this mail to me and 10,000 others. Assume that I get it and read it even after 10 days. If you are logged on, I can still see your presence on the system at the time. I don't need software on my side. It automatically opens up a browser and we can chat. If we accept the request to chat, then we can chat. It is good for fund managers who get several reports every day. If they want to send a question to the analysts, they can straightaway establish contact.

The important thing is, how do we derive revenues? If you click on this, and chat, you'd be charged per session. We can license our product out and that would fetch us $50,000 to $275,000 per annum. The next mode is branding and application integration. The third model is per hour per operator. The fourth model is hosting and management upgrade.

IMAround doesn't qualify for a per user model. Ideas in the IM space are coming in because of the product framework. (The key is to) mix and match components built earlier on.

IM sounds like an amazing concept but is it one that may never take off big time? Is this a possibility?

Not true. Between November last and February this year, we have sold four licences. The first installation is in mid-February. We are not addressing the search engine marketing but at publishers who have lost market share and want their customers back. We have also learnt to address the number 2,3 and 4 publishers in a market. Number One is generally more resistant (to change) but follows suit. Our second target is the wireless market. We work with OEMs (original equipment manufacturers) such as Palm Inc (which retains 40 pc of revenues in every sale it makes, with Geodesic's software package) and service providers. Customers are used to paying for SMS and so retail users paying here is not an issue. Third, we look at the Dot.Net segment. We embed our product with OEM products and address financial users such as banks. Motorola has an iPod like device that it sells for $99, with a Qwerty keyboard. It only does AOL messaging and has sold 0.5 million units. You can roam around in your house and do it.

But what about competition in this space?

Our biggest competitor is Lotus SameTime. They are entrenched. We will co-exist with them. But the market is so huge that if we capture 5 per cent of it, it's good enough for us.

Leaving new products aside, is there a possibility of a significant ramp-up in sales and marketing expenses? For us, recurring revenue is 55 per cent of total revenues. We don't pay anything for recurring revenue. Our representative (in Sweden, HK or Spain) model is working fine. We will also optimise Internet marketing channels. We are comparable on the sales and marketing as a per cent of sales, when you look at other product companies. n

maverick@thehindu.co.in

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