Back in April, I posted a review of Hotxt, a downloadable Java application that allowed you to send all the sms-type messages you wanted for £1 ($1.79) a week. This concluded with the view that:
So, is Hotxt hot? To be honest, I’d go for lukewarm with lots of potential. If they sort out their usability/copy writing issues and went for a free service at the core, I think they’d be red hot.
While I’m sure that my review didn’t have anything whatsoever to do with it, I’m delighted to say that the site is hugely improved in terms of usability and clear copy and today, they announced that they’d be going free.
Today I met with founders Doug Richard (famous for his role as a panelist Dragon’s Den - a TV programme where wannabe entrepreneurs pitch their wares to VCs) and David Whitewood and had a good chat about the industry and a briefing about the product, company and new direction.
The free strategy seems to have evolved as much to overcome cumbersome ICSTIS subscription regulations introduced as a result of errr….over-enthusiasm by certain ringtone companies, as well as the ability to offer the service globally from now on. Billing still remains a core competency of the company and will be able to be utilised when selling the premium products that they’ll now have to introduce to be part of their new business model.
A business like Hotxt has 3 main challenges (if we ignore that porting Java applications across many handsets is, and will remain, a nightmare):
1. Get people to want to download in the first place - what I call, putting your product in danger of being sold.
2. Getting them to download the product once they’ve expressed that interest. I’ve written about this before on a widely commented post about how difficult this is. Maybe 50% - 75% of requested WAP Push messages are never responded to. Don’t forget, at that point, the user has requested details of how to download and then, for whatever reason, simply does click on the link to complete the install process.
3. Getting them to use the product once it’s downloaded. You’d have assumed that if users had jumped nimbly and knowledgeably through the first two hoops, they’d gracefully dive through the final one, wouldn’t you? Well, my friends, “never assume” is the lesson here.
Doug and David weren’t prepared to discuss numbers at each of these stages and understandably. But if they’re following anything near industry averages, there is a significant and intensely frustrating drop off at each stage. This is caused by issues such as WAP Push not being delivered, the message arriving but storing somewhere other than the Inbox, download issues, handset compatibility, the application being filed in a less than obvious/obscure place. I could go on (and on) with this list and it’s sadly typical for any company trying to operate in this kind of area.
My experience, for what it’s worth, is to send a WAP Push and if it’s not clicked within an hour, send the same link embedded in an sms. While some might be tempted to abandon WAP Push altogether, I’d say, the double whammy approach gives the best results. But that’s not the overall solution - lots of experimenting and tweaking each part of the process is essential.
Hotxt clearly have a smart team and are very focused on the various metrics I’ve described above. If you’re in this kind of business, you just have to be obsessed with making incremental improvements at every stage of the process and to develop an internal best practice process, in the absence of any available industry standards.
Speaking of which, if you are UK based, run this kind of business and are interested in sharing learning (as opposed to nicking other people’s ideas - give, then take, please) drop me an email using the link above. I’m thinking about getting a small group of non-competing companies together to see how they can improve their results by applying the wisdom of crowds.
So, back to Hotxt. They still face considerable challenges, as any entrepreneurs do, as well as the issues I’ve outlined above. But now they’ve (inadvertently) taken my advice, I have to conclude that, yes, they are now Red Hot. Moreover, the new strategy means that the answer to Doug Richard’s own catchphrase “Where’s the exit?” now has many potential responses, with the proviso that they execute well.
Finally, on a personal note, it’s rather nice doing a Doug Richard on Doug Richard. Ha.
Ok… I have a question. If the service is now free, what’s the revenue model. Exactly how do they make money?
Peter - “selling the premium products that they’ll now have to introduce to be part of their new business model”. They didn’t say what these were, but that’s the answer.
Russell
Isn’t SMS close enough to free already? Not sure there’s enough benefit to using a java app just to save the odd penny.
I have a tremendous amount of respect for Doug. And as an entrepeneur he’s the sort of guy I hope to be lucky enough to bump into someday. So I better not say anything to upset him LOL.
So … (deep breath) I see this as a 100% free product. Just like Yahoo/MSN Messenger. Monetized by contextual mobile ads, in this case delivered by AdMob. Russell, you must have had your journalist hat on. That was what the interview was meant to be about my friend.
Having said that, I would actually use the product (if it was easy to use) because at a very deep level I dislike paying these astronomical sums for sending minuscle amounts of Sms data. But Peter has a fair point though, the consumer sees value in Sms as it exists and cut throat competition among telcos means all prices are trending downwards. Getting consumers to change behaviour may be quite challenging.
My personal opinion is that the real winners in mobile will come from other directions. Places where it is harder for telcos to compete. But I digress. I do think HotTxt is monetizable (ads) and that it has an exit (if it succeeds an operator would have to buy it, if only to shut it down).
Dear Russell
I an one of the team who run a similar application to Hottext, called Tex2me. We have worked on the kind of step-by-step improvements on our download to reach 60% from initial enquiry to successful install and operation (including Internet APN access for the Java app). I would be interested in contributing to your group.
Timi - with all due respect, I think I can distinguish between a press briefing and a pitch to include AdMob’s advertising in their application.
I mean, one starts with “let me tell you about Hotxt and what we’ve been up to”, is organised by their PR people and involves multiple briefings of multiple bloggers and journo’s on the day.
The other starts with “Can we run AdMob ads in our application?” and I say “Yep, sign here.”
Russell
That and the fact that they gave interviews to at least 2 other well read industry blogs, neither of whom are connected to a mobile advertising service.
[...] [Hotxt via MobHappy] [...]
[...] This focus on messaging puts Report into Hotxt territory (or vice versa), who I wrote about last week and it’s clearly a fast-growth area right now, with other players starting to emerge too. The key difference between the services currently is that Reporo is taking more of a portal strategy, bundling other services along with the messaging, such as the original shopping idea and news, sports and information. [...]
[...] Doug and David [Hotxt MDs] weren’t prepared to discuss numbers at each of these stages and understandably. But if they’re following anything near industry averages, there is a significant and intensely frustrating drop off at each stage.” Read more [...]
Your comments about the obstacles Hotxt faces were interesting. Beta Bunny, a community of UK beta testers, recently reviewed Hotxt (see here: http://www.reachstudents.co.uk/blog/2007/03/01/hotxt-hot-or-not/) and lots of what you say cropped up for our student testers.