iTouch makes mobile pay

26 Sep 2002

Going against the grain in the mobile and telecommunications industry means generating real revenues and showing clear signs of growth — two attributes of iTouch, a multinational technology company that specialises in commercial and corporate solutions.

The key to its success is variety, according to Gillian Taylor, managing director of the Irish subsidiary. “It’s a tough economic climate and a tough time for the tech industry, so a breadth of business units is vital,” she says.

The range of services is very visible in a brand portfolio that ranges from youth orientated ringtones and graphics to sophisticated corporate solutions. What all the strands of the operation have in common is that they are built for the here and now rather than speculative technology, a moot point in the mobile sector where delays are a dirty word and an ongoing reality.

“From day one when we set up, we saw the advantage of SMS [short messaging service] and thought it would be around for a long time ,” she says. “We focused on existing technologies while working on future developments in the background. Getting into the market at the beginning of 2000 was good timing. I wouldn’t like to be trying to get in now.”

Such an approach has also enabled iTouch to bring its clients along with it as the technology has developed. A case in point is its voice information service based on IVR (interactive voice response) technology. This is where callers, to competition lines for example, are invited to choose options from a series of automated voice prompts by pressing keys on landline or mobile phones.

“The fact we’re generating good revenues from premium rate IVR services is vital and it’s also a model that facilitates a smooth introduction into premium rate SMS,” explains Taylor. “We do have core revenues that are building all the time. We’ve got key brands, such as Weatherdial from Met Éireann, with established services that were originally on IVR and then moved on to fax and then text and now over to premium rate SMS.”

When iTouch published its interim results at the beginning of the month, many business pages focused on the losses rather than on the growth. In a climate when any company based around mobile services gets short thrift from analysts and observers, it was an unsurprising reaction but one that missed the real story of a relatively young company that floated two years ago and has been ramping up its revenues ever since.

In the first half of this year revenues grew 127pc compared to same period in 2001. Losses for the same period had grown by 14pc to £5.6m sterling, a figure that the company is confident will fall when the benefits of a cost saving programme become effective.

The losses have partly been attributed to integration costs as iTouch continues in its programme of acquisition. Most recently it bought UK firm Telescope, a specialist multi-channel communications agency, which gives iTouch several new high profile media clients and brands such as ITV’s Pop Idol.

“Cost reductions were announced in the results and what wasn’t picked up was that the effect of them won’t take place until the second half of the year. That’s when we’ll see the impact come through,” explains Taylor.

Although she wouldn’t go into any detail she also made it clear that the company’s books were healthier in Ireland than some other territories and identified some core elements of the local business. Unsurprisingly, the Republic, with its young population, registers as one of Europe’s most active SMS countries. This is reflected in iTouch.

“It does differ across territories,” says Taylor. “For example, we’ve done very well on premium rate consumer services in Ireland and the UK. In Australia and South Africa they’ve done huge volumes on two-way corporate messaging, which is introduced as part of a company’s CRM strategy with direct marketing to their customer base.”

Taylor says that this corporate side of the business is slowly building in Ireland: “You get some early adopters here, especially among more youth brands.”

Has some of the negative commentary of the mobile market affected corporate enthusiasm for iTouch style solutions? “It’s not damaged our business,” says Taylor emphatically. “At the end of the day there’s so much that can be done right now to automate existing corporate systems. Some of the larger companies are still heavily paper-based. With our solution there are huge cost savings to be made and customers can see a return on investment in 3-6 months — that’s just using to 2.5G [also known as GPRS — the halfway house between GSM and 3G]. It’s our job to sell it to as many companies as possible.”

Next up for iTouch are consumer services that utilise the soon-to-be-launched MMS (multimedia messaging services) system. Realistically, Taylor doesn’t see it taking off until after Christmas, by which time she hopes the handsets will have reached a more acceptable mass market price point. “They need to come down to €100-150 to be a Christmas gift, then in January you’d start to see our services,” she estimates.

The first MMS phones are expected to retail at around € 350, which Taylor thinks too high for the all important consumer market. “We will be doing business applications on MMS but initially we will launch with a whole range of consumer offerings,” she explains.

In the long term, is she concerned that operators will squeeze out players like iTouch by their own acquisition of content — such as Hutchison buying the mobile rights to Premiership soccer? “I wouldn’t see it as a danger. At least they’re beginning to see the value of going down that road and they can’t do it all themselves. Operators will use us when they need someone to plug content into their applications or they will tie us up with content deals. They won’t be able to cover everything themselves,” she adds.

“It’s a breadth of content that’s needed. Consumers are going to need a huge shopping basket of services that they can choose from. Networks will need to work with third parties like iTouch to provide that,” she concludes.