BUSINESSWEEK ONLINE : NOVEMBER 13, 2000 ISSUE
TECH BUYING GUIDE

Vortal Combat: The Early Years
Voice portals aren't perfect yet, but they're not useless, either

How do you get to Carnegie Hall? For Theodore J. (Ted) Leonsis, this was a business trip from hell. While driving to a dinner meeting in Los Angeles, he couldn't fire up his laptop to get his e-mail, couldn't find the score for his favorite hockey team, the Washington Capitals (which he owns), and had trouble finding the restaurant where he was supposed to go for dinner. All of this he could have handled if he had been able to get on the Web. He certainly knows how: Leonsis is president of America Online Inc.'s interactive services division.

Unlike the average information-starved business traveler schlepping through Los Angeles though, Leonsis could do something about his frustrations. Back at headquarters in Virginia, he set in motion the dealmaking that led to the Oct. 25 unveiling by AOL by Phone, the latest entry in a new wave of Internet-like services delivering information, messaging, and commerce over the phone. These services use voice-recognition technology to let people navigate with simple spoken commands to check their e-mail, make dinner reservations, or get driving directions. To Leonsis, whose company's marketing promotes making the Web simple, the appeal is obvious. ''Everyone has a phone, and everyone knows how to use it,'' he says. ''When we tested this, everybody got it.''

Certainly, everyone in Silicon Valley got it: As many as a dozen ''voice portals''--or, pardon the buzzword, vortals--have been funded in the past 20 months or so, including Tellme Networks, HeyAnita, and BeVocal. Other established Web services are getting into the act, too. Yahoo! Inc. ( YHOO) introduced its voice service two weeks before AOL ( AOL) did. Basic services are free from most of these outfits, although AOL charges $4.95 a month on top of its regular $21.95 fee.

Several of the companies charge--or plan to charge--for premium services. Yahoo, for instance, offers free basic service but bills for extras such as disk space or long-distance calls patched through from 1-800-MY-YAHOO.

SKETCHY. But is this stuff any good? The short answer: It's O.K., and getting better. There have been big advances in voice-recognition software recently, making these services easier to use and more powerful. The main hangup isn't technical. There's not a whole lot offered yet at any of the leading vortals. Says Jupiter Research analyst Seamus McAteer: ''It's more like a collection of services than a complete offering.'' And it's likely to stay that way for a while.

In fact, voice portals will never be everything the Web is. It takes time to listen to people or to have computers read you information. That means users are likely to use voice portals mostly for things they can do quickly. Since most phones don't have graphic displays, this medium is even more limited than the Web in showing off products. So commerce is likely to be confined to narrow areas--such as movie tickets--where you don't need to see what you're buying.

Those limitations aside, Tellme does the best job of offering an array of useful services. It has a database of about 450,000 restaurants nationwide. Plus it has Zagat's reviews for the 20,000 restaurants covered in Zagat's 31 city restaurant guides. When I gave it a whirl, the system delivered 10 choices of Italian restaurants in Pocatello, Idaho. Tellme is also the only one with a service that lets people call taxis wherever they are--a plus, since travelers almost never know how to find the local cab company.

CHEAP CALLS. Each of the major voice services offers something the others don't. BeVocal Inc. has a nifty ''Business Finder'' feature that lets you simply say ''Starbucks'' to get the nearest location, be connected to it by phone, and place a take-out order in one fell swoop. Yahoo lets people keep voice-mail boxes as well as have their e-mail read to them. Tellme offers free, two-minute phone calls that beat the heck out of the collect calls that many travelers have to make to accomplish the same tasks.

There's still much more you can't do than you can do. News and information reporting is shallow. Stock quotes usually aren't linked to news: On Oct. 24, the day Nortel Networks Corp.'s ( NT) stock fell more than 20%, I couldn't move from the quote to a summary of the earnings report that sent the shares reeling on HeyAnita or BeVocal. I was also bitterly disappointed by several services for driving directions: Asked how to get to Carnegie Hall, not one told me to practice.

While the technology makes the services more convenient than plugging in a laptop somewhere, it's a long way from refined. Consider my adventure finding a Manhattan restaurant through BeVocal's Business Finder feature. I asked for Le Bernardin, a four-star French restaurant two blocks from my office. ''Olive Garden. Is that right?'' came the response. Plus, to make it work, it helps to speak in a loud, distinct voice. My test drove the guy in the next cubicle nuts.

Add some background noise, and the fun with voice recognition really begins. I tried to use Tellme and BeVocal in Penn Station at rush hour to check movie times. Both systems dished up wrong listings because they couldn't make out what I was saying. Tellme's taxi service, for example, naturally draws a number of calls from bars late at night. But Tellme CEO Mike McCue cheerfully admits that one problem is that ''the voice recognizer thinks the band is talking.''

None of this is fatal. And the vortals say they're improving technology and the breadth of their offerings. But with free or low-price services, it's fair to wonder how these companies plan on staying in business. Originally, most hoped to rely on advertisers to pay a good chunk of the bills. That seems to be a no-go. Tellme gets most of its revenue from selling its technology to customer-support call centers and to what McCue calls ''big e-commerce companies, the ones that are stable anyway.'' BeVocal is focusing on selling its service through deals with telephone carriers that will charge for it as an extra service, the way they do for Caller ID and call waiting. Qwest Communications International Inc.'s ( Q) wireless unit became BeVocal's first distribution partner in late October.

To help pave the way to profitability, vortals are marketing themselves differently. Entrepreneurs are beginning to promote themselves as next-generation phone services, which people will pay for, rather than Web services, which people tend to want for free. McCue emphasizes how his technology can let a brick-and-mortar company cut costs in customer service, while BeVocal co-founder Amol Joshi says his service is a way to let Qwest and other carriers reduce customer churn. Ads? What ads? ''It's not a dot-com,'' insists Joshi. ''It's a telecom-enhanced-services business, and the call volume is potentially huge.''

He's right about that, if you remember the key word is ''potentially.'' Even though the services aren't perfect, they're good enough to be useful. Next year, we'll check in to see if they're better--and worth paying for.

By Timothy J. Mullaney in New York

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