Technology

Tellme Tries a New Trick


Before Mike McCue co-founded Tellme Networks in 1999, the former vice-president for technology at browser pioneer Netscape Communications set an extremely high bar for his next venture. He kept rejecting ideas until he settled on a really big one: the notion of using the Internet so people could pick up a phone, say what they want, and get it. Rather than PCs and browsers, they'd use their voices to navigate the Net. McCue called his vision DialTone 2.0.

Then came the dot-com bust, which stunted McCue's plans. Tellme switched its focus to business customers. Today, when you call such companies as American Airlines (AMR), AT&T (T), and Verizon (VZ), you're hearing Tellme's voice-automation system.

Now McCue's dream of word-of-mouth Web service may finally come true. Tellme is in discussions with Web portals, search engines, and wireless carriers about melding its voice products with their services and distribution.

INSTANT MAPPING. One potential partner is Microsoft (MSFT), which is looking for ways to extend its Windows Live online services and MSN portal to the phone. "We have a vast array of content. Tellme had great expertise in voice applications," says John DeVitis, product unit manager for Windows Live Mobile Search.

The idea is to create mobile search services that can make it easy for those on the go to find people, businesses, and information. That goes for any phone, but especially those equipped with browsers. A tourist might bark "restaurants," "sushi," and "downtown" into his cell phone and then see listings, read online reviews, make reservations, and retrieve a map with directions. "It has taken us six years to get to this point, but now we can really start to deliver on our original mission," says McCue, Tellme's CEO.

What changed? Early on, Tellme launched a "voice portal," 1-800-555-TELL, that lets you speak commands into any phone and hear automated responses about things like sports scores and movie schedules. But demand for voice-only directions is limited: Only about 1 million people use the service.

VOICES OF THE FUTURE. With more than 2 billion cell phones in use world-wide (many with Web browsers) and carriers and Internet portals looking for new ways to make money, Microsoft and McCue are betting that voice-driven Web information will become much more popular. "Your voice can be the mouse of the mobile phone," says analyst Seamus McAteer at researcher M:Metrics.

Microsoft is looking to Tellme to help accelerate its efforts in mobile search and to leapfrog archrival Google. (GOOG) But Web search and mobile search are different beasts. When someone is using a Web browser on a PC, they're casting a wide net for information and willing to look at a long list of results. When standing on the street with a cell phone, they want snippets of immediately useful info, not a list of Web pages they have to click through to find what they want. "Mobile is clearly the next battleground in the search arena," says DeVitis.

Skeptics point out that despite technology advances, voice recognition still turns off many consumers, who remember past glitches. But experts say that will change when systems combine voice, text messaging, and graphic info from Web pages. Each mode will be used for what it does best. "People will be using voice to launch into their search, and they'll want to see the information on a screen," says David Albright, executive director for marketing for Cingular Wireless, which is working with Tellme.

"WILLING TO PAY." In any case, the demand for easy-to-find information combined with the huge base of mobile-phone users bestow more money-making potential on mobile search than most new Web media ideas. An April survey by the Pew Internet & American Life Project, for instance, showed that half of mobile-phone users want access to maps.

And they're willing to pay: Americans log 6.5 billion calls per year for directory assistance and enhanced 411 services, paying from 50 cents to $1.50 a pop. Also, as Google's success has shown, there's great advertising potential.

That's why Tellme is being hyped by bankers as a potential hot initial public offering. But even though Tellme has been cash-flow positive for three years, McCue says he is in no rush to go public. After waiting seven years to get traction in the search business, he wants to see how fast it can grow.


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