Interview: Daniel Mendez, Visto

According to Daniel Mendez, co-founder and CTO of mobile email provider Visto, the key barrier to wider adoption of its services is not cost, but user experience. “If operators were to charge nothing for email, we wouldn’t suddenly see a doubling of user numbers,” he told me when we met in London recently. Instead, Mendez is focusing Visto’s efforts on making email easier to use on mobile devices.

Given that Visto likes to differentiate itself from its key competitor – RIM – by highlighting its commitment to consumer markets, this focus on simplicity and ease-of-use is essential. It is a strategy which has already paid dividends, landing Visto a global deal with Vodafone, as well as launches with Cingular, Telus, Sprint and Rogers in North America.

Mendez jokes that he employs some of the most talented engineers in the business and they spend their days trying to make Visto’s product ‘stupidly easy’.

They are already making considerable progress. Mendez’s colleague demonstrated Visto 5.5 running on a Nokia E61 device over the Vodafone network. Visto’s deal with Vodafone means they have pre-installed the client on all E61s, so when you switch on the device for the first time, there is an icon on the idle screen captioned ‘Get business email’.

This set-up process is where Visto continues to focus its engineering efforts and Mendez believes it is key to wider usage of mobile email. The result is a truly impressive user experience.

The customer is presented with a brief information screen explaining what the service does and then prompted to complete an automated installation of the application. This is followed by a simple choice between setting up a consumer or a corporate email account and entering the existing email address and password. Within seconds, the user’s emails are downloaded to the Nokia email client and a link permenently established. Emails will now arrive on the mobile automatically and any actions taken on the device will be replicated on the server or desktop.

Visto’s server also keeps track of previous set-up procedures, so a company which deploys the solution will only ever have to enter their corporate email server details once – additional users will be automatically configured just by entering their email address.

With its focus on ease-of-setup, Visto sees its carrier partnerships as crucial. Mendez believes the operator will always have a role to play in mobile email, because they can work with manufacturers to pre-install the client software and make the set-up process so much smoother. They are also in a position to control other key elements of the user experience, including pricing and marketing.

Mobile email has attracted enormous amounts of venture capital. Investors have seen RIM’s success in business markets and believe it can be replicated on a much larger scale with consumers. Visto itself has USD 250m in funding to-date. The market has also seen some large M&A deals, with Visto’s rivals Good Technology and IntelliSync acquired by Motorola and Nokia respectively. Supporting the investment case is a basic calculation often quoted by industry executives: there are several hundred million active email accounts worldwide, of which a single digit percentage are accessed by mobile devices – therefore if this can be increased by only a few percentage points, there must be huge revenue opportunities.

However, this is a simplistic approach, which assumes demand for mobile email – and consequently the amount users are willing to pay for it – is equal across the potential customer base. While instant access to email may be worth USD 100 per month to a business customer, it’s value to the average recreational user is obviously much lower.

Mendez may well be correct that making mobile email free is less of a barrier to adoption than improving the user experience, but that doesn’t mean customers won’t expect it to be zero cost in the long-term. Think about it: email is the ultimate free communication tool. Users do not equate email with premium pricing because it has always been free on the web. All it takes is one operator to make this available free of charge as a way of attracting new subscribers and the business case for premium mobile email is undermined. Hutchison 3G has already demonstrated it is very willing to do this and Apple and Cingular will offer Yahoo email as an integrated part of the iPhone.

This will have a knock-on effect for businesses like Visto – if operators can’t directly monetise a service, they are likely to be much more aggressive on ‘per user’ license costs, driving down potential revenues for mobile email providers.

Mendez and I also talked about the dynamics of the consumer relationship with mobile messaging. I put it to him that many users in the mobile environment do not think about mobile email services persay, but instead are content to use whatever messaging system allows them to reach their contacts. For instance, given the limitations of text entry on most handsets and the time users have available when they’re on the move, most messages are only a couple of sentences long. In this situation, SMS is often perfectly sufficient. If a user’s messaging requirements are already being met by texting, why would they see the need for mobile email.

This is clearly something Mendez has spent some time thinking about, not least because it is one of the key concerns Visto has to address among an operator community which derives much of its data revenue from SMS. Anything with the potential to canabalise this is viewed with great suspicion.

Mendez believes the big driver is access to a different sort of information loop. Email and SMS usage scenarios differ considerably. Where an email conversation may include several participants and last over a few days, SMS is usually much more direct and short-lived. Mobile access to email keeps users connected to their social and business networks.

I find myself in agreement with this, but it also raises another concern. If mobile email access is all about staying connected to particular information streams, will the big email providers like Google, Yahoo and MSN – each with significant installed bases – be better positioned to drive adoption than companies like Visto? Google, for instance, already offers a Java-based email client compatible with over 100 handsets and it’s free. These companies could also see mobile email as an opportunity to expand their advertising-based business models.

“There are some well funded companies out there that could certainly develop these capabilities,” admits Mendez, “But it takes time.” He thinks Visto’s experience and superior engineering put it in a strong position to expand its role in the mobile industry.

I’m impressed by Visto’s approach. Mendez seems genuinely focused on user experience and he frequently referenced examples where the company has prioritised ease-of-use over adding flashy new features. The set-up process is a particularly slick piece of engineering and one which is certain to win Visto a loyal customer base. If anything, my concern is whether Visto’s investors will ultimately be rewarded. Even without the massive litigation risks in this sector, which has already seen RIM paying USD 650m to patent holding company NTP and Visto filing suits against Microsoft and Seven, the competitive and strategic pressures may conspire to limit the revenue opportunity.

I can’t see how operators are going to make the kind of returns from mobile email that justify the amount of VC investment poured into this sector. Mobile email usage will certainly expand and Visto is playing a key role in enhancing that experience, but I suspect the monetary rewards for doing so will not be as stellar as many expected.


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