in revenue ($5.7 directory; $6.6 network-
ing).^23 And while Jupiter Communications
remained bullish on technological advances,
Forrester Research predicted that both the
technical and human limitations for Tellme’s
technology had been reached. Forrester felt
that only a small set of firms would eventual-
ly need these services.^24
The network business turned out to be the
more lucrative and stable for Tellme, which
claims the largest and most reliable
VoiceXML platform in the world. (see
Exhibit 6). As it developed, directory tech-
nology led to significant networking
improvements. The software and technology
constituted a complex bundle with important
overlapping applications. Also, Tellme’s
clients spent about 30 cents to 50 cents per
minute in total professional service fees and
charges to use the voice network. If these
clients had used human beings to answer the
phones, the costs were estimated to be
between $2 and $5 per phone call. As the
average phone call lasted four minutes, the
spread was high, as was the resulting savings
to clients. Therefore, this is the direction that
the business took. More information on the
current Tellme can be found at its Web site:
http://Tellme.com
But not all is settled and certain for the
company as it faces the future. Demographic
differences indicate that the use of the phone
is changing. A Harris Interactive® survey
commissioned by Tellme indicates varied
needs and tastes in the use of directory assis-
tance (411 calls). Some of these results are
presented in Exhibit 7. Tellme management
has to make sense of these data and develop
new products, services, networks, and
alliances.
Another issue facing the company now is
whether to go public and sell stock in an ini-
tial public offering (IPO). Tellme might have
gone public early in 2001 or 2002 if the
stock-market Internet bubble had not burst
and the IPO market had not tanked. Now,
half a decade later, there is a good deal more
rationality among investors and underwrit-
ers. Tellme has reached sales of more than
$100 million. It has 340 employees and that
number is expected to increase by 30 percent
this year. The company is now established
and has proven it can handle large corporate
accounts as well as manage the directory
business. Voice recognition is now accurate
to 99.4 percent.
There is still competition from companies
like BeVocal, Intervoice, and Voxeo. And
other firms like Convergys, Avaya, and
Nortel are moving into voice applications.
Nuance Communications owns the leading
computer speech recognition product,
Naturally Speaking. But Tellme is now con-
sidered the leader in voice ASPs.^25
However, new initiatives are being
launched all the time. On January 10, 2007,
Steve Jobs of Apple, Inc. announced the
introduction of the iPhone.^26 In a partnership
with AT&T’s Cingular cellular carrier, the
iPhone may threaten Tellme’s success. The
iPhone is able to search the Web, customize
dialing and settings, provide data services,
and offer e-commerce and downloading capa-
bilities; it also has a user-friendly touch
screen. The phone is being called visual voice
mail. Apple is hailing the product as being on
a par in importance with the Macintosh com-
puter and the iPod. It estimates sales of 10
million units by 2008 at $499 to $599 per
unit. Other potential partners for the iPhone
are Viacom and Disney for movie downloads,
and Motorola for hardware.^27
Perhaps Tellme will find its opportunities
broadened by the iPhone and the imitators
that are sure to follow. In May 2006, Tellme
announced that Avadis Tevanian had retired
from Apple and was joining the Tellme
board. Tevanian was the software whiz
behind Apple’s OS 10 operating system and
is considered a business and technology
genius. “I believe their technology could rev-
olutionize the way we use telephones. My
goal is to really take the company to the next
level in terms of revenue growth and their
profits,” said Tevanian.^28 In fact, Tellme
already works with Cingular by providing it
with automated voice directory assistance.
Could Tellme be part of the alliance network496 ENTREPRENEURSHIP CASE