Simplicity and good timing

Written by Rebecca Gardiner

Instant messaging was not such an instant success for Oz Communications. In fact, when the Montreal-based software company first pursued the idea of adding instant messaging (IM) and e-mail capabilities to mobile phones, the venture almost cost Skuli Mogensen, the firm’s Icelandic-born CEO, his company. It took five years and some hard-learned lessons before Oz successfully entered the IM market.

Oz’s IM venture started in 1998 when the company realized that text (e-mails, silent messaging, IM, etc.) on mobile phones could be huge. To commercialize the idea, it partnered with Mobile phone maker Ericsson to create Ipulse, software that allowed consumers to log on to a single address book and communicate with each other via text or voice over their mobile phones and computers. A good idea in principle, but not so good in reality. Oz and Ericsson overlooked a few major factors when considering the software’s potential success: average consumers did not buy mobile phones with the technical capability to run Ipulse, nor did they want to pay more to get it. Moreover, telecommunications networks were not equipped to run the application on cell phones.

The result was devastating. Ericsson ended its contract with Oz and the company was left on the brink of bankruptcy. But it wasn’t all doom and gloom for Mogensen—he learned two basic, yet valuable business lessons that account for his success today: First, a great idea is useless if you launch it at the wrong time. Second, a product can be a technological marvel, but if your customers don’t want it, why bother?

“It’s so easy to build an application that will do a great demonstration in a lab, but to actually get it into the hands of the consumer is phenomenally challenging,” admits Mogensen. “We misjudged and misunderstood the external limitations of our ecosystem. It didn’t matter that we had a great product or that we had great people. The market and the infrastructure weren’t there.”

Instead of giving up, Oz pared down its thinking, forgot about voice on computers and Ipulse, and focused on getting Instant Messaging on phones. In 2003, it launched the Oz Mobile IM Gateway and Client, software that allows consumers to turn on their mobile phones and log on to the same Instant Messaging account they have on their computers—that’s it.

“We needed to have the discipline to become dead simple in our thinking,” says Mogensen. “We needed to have the discipline not to go feature crazy. Because [we realized] that doesn’t matter to a consumer. Yes, it meant that our product doesn’t look as great. And we were frustrated because we knew we could do a much cooler thing. But at the end of the day, if that’s not what drives your consumer, forget about it. It’s a waste of time.”

The new software has been a huge success. In the past two years, Oz has signed deals with major mobile phone companies such as Nokia and Samsung, and even Sony Ericsson is back on board. The company has also partnered with major telecommunications providers such as T-mobile and signed agreements with IM-hosting gateways such as America Online. It has also launched new software that allows consumers to check their e-mail accounts on their cell phones. And, last September, San Francisco-based venture capital company Vantage Point Ventures invested US $27.3 million in the company.

What’s next? Although it’s too soon for Mogensen to reveal exactly which new software idea he’s working on, he offers this hint: whatever communication application you currently see on a computer could very well show up on your phone in the near future.

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