Zi makes progress with Qix
Zi Corporation, best known for its predictive text entry software, has secured an agreement with a ‘major multi-national’ operator for the rollout of its Qix product. It hasn’t named the new customer yet, but the deal represents a significant breakthrough: previously Virgin Mobile had been the only publicly announced deployment.
Qix is a difficult product to define. It works by indexing all of the content and applications on a handset, allowing the user to access anything from contacts to bookmarks simply by entering a few letters from the device’s idle screen. In this way it combines aspects of an on-device portal and search engine, while supplementing or altogether replacing the menu functions of a handset.
The result is extremely intuitive. It eliminates the latency caused by using different key combinations for different functions. Rather than having to remember applications are accessed by opening a menu, navigating through folders and selecting the correct icon, users can simply enter the first few letters of the application name and are presented with a direct link to the program. Qix leverages users’ familiarity with predictive text input to great effect and provides a single interface method for accessing almost all of the functions on the device.
Virgin Mobile reported a 33 percent increase in ARPU from devices equipped with Qix. That’s a compelling argument for widespread deployment.
The difficulty Zi faces is convincing operators to experiment with an interface which sounds much more complex than it really is. I too was skeptical until I tried Qix for myself and found it so useful I actually changed my handset to one which supported Zi’s software so I could continue using it day-to-day.
If Qix becomes widely adopted, it will alter Zi’s strategic position within the industry. It has previously been regarded as supplier of embedded software to handset manufacturers, generating revenues from a steady stream of licensing royalties. Qix puts Zi in competition with on-device portal vendors and an emerging breed of search tools. It has the potential to serve as the main interface for the handset and demonstrate a direct link to revenue increase for operators. As such, Zi should be able to command a premium licensing fee.
This first major operator deal will be structured as an upfront payment and ongoing royalties. That is a considerable success in itself given the tendency for on-device portal vendors to support free ‘trials’ without actually generating any revenue in an attempt to build market share and gain a competitive foot-hold.
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Zi is what I would call a pull-based service discovery product. It takes the usage paradigm of the MS Windows Mobile homescreen where you can search for contacts using T9 from the homescreen and extends that to applications, services, operator-defined keywords, etc.
It’s also been rumoured to *significantly* increase voice ARPU, since it’s much easier to make a call using a Qix input system.
On the negative side, the company has been extremely slow at expanding the product (announced Symbian version in Feb 05, UIQ version in Feb 06!) and has been having challenges selling the product to manufacturers. The company seems to be going through some internal pains as well, since the product manager responsible for Qix left the company a month ago.
Overall, very promising technology but very poorly executed. Best way out I see for the company is actually license the IP to some player that can execute.
Thanks Andreas for your kind observations on QiX. A couple of points:
1. The rumours are true
2. The execution phase is a lot more advanced and ZiCorp is executing a strategy that focuses upon MNOs and the value that QiX brings by way of ARPU increase; although I would add that we are always open to partnerships that can add value and widen the market penetration.
We are now looking to deploy QiX on a number of different platforms in partnership with MNOs and various ODMs…
To follow-up on Andreas point about execution, I think Zi has a strong track record on technical implementation through the wide range of handset partners it has worked with to embed predictive text entry software. I suspect the delay in adoption for technologies such as Qix has more to do with operators needing to be convinced of the strategic benefit than a failing on Zi’s part to execute effectively.
I’d be interested to hear which companies you think would be better placed to license something like Qix? Do you think on-device portal vendors would be a more natural fit?