Speaking, palm-size gadget to show tourists a good time

From...

May 23, 2000
Web posted at: 10:05 a.m. EDT (1405 GMT)

by Hane C. Lee

(IDG) -- Take a pet rock, add a computer chip, and you've got Tamagochi, the "smart" miniature pet. Now plop it down in the city and give it a social life, and you start to understand what Modo is.

Modo, a palm-size gadget set to debut this summer from Scout Electromedia, is actually a portable, electronic city guide that's banking on its candid editorial voice to set it apart.

"We're not trying to be CitySearch," says Geoff Pitfield, CEO and cofounder of the San Francisco startup, which earlier this month landed an $18 million second round of financing from Idealab, Chase Capital, Flatiron and TechFund Capital. "[Other city guides] make the mistake of trying to be like the Yellow Pages," he adds. "We're selective. We're critical."

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The next generation of city guides is poised to be the "killer app" for handheld devices -- an ideal resource for people out looking for something to do. The market is growing at a healthy clip; this year, more than 72 million cell phones, digital organizers and pagers will be shipped in the United States alone, up from 51 million last year, according to telecom research firm Ovum. Established players like America Online, as well as upstarts like Vindigo, are racing to figure out the best way to provide local-content services for these platforms. But they face challenges ranging from immature technology to unproven revenue streams.

Unlike most other mobile city guides, which are beginning to feed local entertainment listings to personal digital assistants and cell phones, Scout's Modo is a dedicated device built specifically to be a city guide. The company plans to sell the doodad for $95 from its Web site and at select "lifestyle boutiques." Similar to a one-way pager, it operates over inexpensive, lower-frequency paging bandwidth rather than transferring data from the Internet or using Wireless Application Protocol.

"It's an information device, not a communication device," says Pitfield. In fact, the company likes to think of it as an "antidevice," because it's designed for people who wouldn't necessarily have or even know how to use a PalmPilot.

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Despite its distinctive vision, some say Scout's approach -- essentially creating a new digital publication from scratch -- might be tough to execute. "It's hard to build a great set of listings, a great city guide," warns David Jeorg, cofounder and president of New York-based Vindigo. "What they're trying to do is very difficult."

Vindigo, which launched its "personal navigation application" in New York in February, draws local content from online city guide NYToday.com. It's the fastest way to provide information, says Jeorg, "and there's great content out there already." A surfer downloads the application from Vindigo's Web site onto her PalmPilot, and the listings are automatically updated each time she synchronizes the device with her PC. Vindigo will add Boston, Chicago, San Francisco and Washington, with new content partners in the next few weeks.

Like Scout, Vindigo relies primarily on advertising, in the form of small banners that appear on the bottom of the screen, for revenue. Because of the location-specific nature of city guide content, the company can deliver highly targeted ads based not only on who is using the service or which content category is being accessed, but also where it's being read.

"Let's say you're the Gap, and you want to reach women ages 25 to 40 on a certain day of the week when they're within two blocks of a Gap store," Jeorg offers as an example. "We can reach the right people at the right time."

By the end of the year, though, the company plans to start earning some of its revenues through wireless transactions, according to Jason Devitt, Vindigo's CEO. For example, a customer would be able to search for movies that are playing nearby, and then purchase movie tickets through the Vindigo interface, or see a particular restaurant's menu and order food on the way there. Scout representatives say they are working on partnerships that would let its customers perform transactions on the Modo.

Others are jumping into the act. Last week, Ticketmaster Online- CitySearch launched its transaction-enabled wireless city guide, Local Intelligence. TMCS Mobile VP Paul LaFontaine claims Local Intelligence's filtering and ticketing capabilities give it an edge over its rivals. "This is not a research tool," says LaFontaine. "It's a transaction tool that works with our existing Web offerings."

Rather than see a list of all the plays being performed downtown on a given night, for example, theatergoers can get the 10 best options based on TMCS editors' recommendations. Furthermore, Local Intelligence will list only plays that have tickets available, and let users purchase those tickets remotely once they set up transaction accounts at the Web site.

TMCS has yet to figure out how it will make money from its mobile offering. Among the possible revenue streams are partnerships with cellular carriers to package premium services to subscribers. LaFontaine says that the company could also sell "yield-management" services to restaurants that want to publish additional real-time information like waiting times for tables.

Likewise, Digital City -- AOL's local-portal offering, which announced its own wireless initiative last month -- hasn't settled on a revenue model. "Our philosophy is, get the products out there and figure out how to make money later," says Paul DeBenedictis, Digital City's president.

But accessing the Internet through platforms like WAP has a long way to go; according to Ovum, only 6 million people worldwide access the Web from mobile devices.

"[WAP] sucks," says Seth Goldstein, a principal at Flatiron Partners, which has investments in both Scout Electromedia and Vindigo. "It's not robust. Transactions are key, but you have to have the real estate and the user experience to make them worthwhile. We're not there yet."

Vindigo's Devitt says the real revenue potential for mobile content providers lies in driving foot traffic into physical stores. "Traffic is the key word," adds Devitt. "Frankly, that's a lot more valuable" than enabling customers to order a book through a handheld device.

CitiKey in Stockholm, Sweden, which launched its mobile city guide in February 1999, says it may supplement its ad revenues and future transaction fees by charging people for the service. So far, CitiKey claims more than 15,000 users in Stockholm and a fast-developing user base in London, where the product has soft-launched. The company plans to roll out the service to major European cities; U.S. expansion will rely on alliances, rather than organic growth, says Sushant Gupta, CitiKey's VP of business development.

With so much content being developed for devices already on the market, Scout Electromedia's Modo could be a tough sell. But Pitfield points out that back in 1985, some questioned how many people would want to tote a phone around with them. "People are willing to carry things as long as they add value to their life," he says.

And sometimes, even things that don't. Like the Pet Rock.

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