CallVine: Its Like Deja Vu All Over Again

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When I first read about Callvine, a company that makes an eponymously named group calling and texting application for iOS 4, I remembered what New York Yankees legend Yogi Berra once said: it’s like déjà vu all over again.

Callvine is a decent looking app; I’ll give them that. It’s simple. It’s fairly easy to add contacts to this app, and it’s equally easy to send text messages and phone calls to a group. But that isn’t enough for this company to carve up a sizable business.

The company, founded by Rudy Prince, founder and chief executive of eFax, a popular web-based faxing service, has $4 million in funding from S3 Ventures and is trying to find success in a market that, despite making theoretical sense, is hard to monetize. At a DEMO event in 2006, a Canadian company called iotum launched a similar service.

iotum’s app did a lot of the same things Callvine does. It too had a seasoned and well-regarded expert as its chief executive. It also had a decent amount of funding, and launched at a time when there was a lot of interest in IP-based voice startups. Suffice to say, they eventually realized that group calling is nothing but a euphemism for conference calls. They changed the focus of their business to a service: Calliflower, a tool for simple-to-use conference calling.

What was the reason all the fancy stuff didn’t work? My theory: there aren’t that many users who are looking to make group calls to more than 10 (or even 20) people on an ongoing basis.

Group calls with more than 20 people are the domain of large conference-calling services catering to the ideal customers: large companies. Small business owners, consultants, analysts and other such most likely customers of Callvine aren’t going to be making that many calls. Ironically, Callvine’s screenshots show a lot of consumers using the service. I’m not so sure — the group calls my distributed family makes at best involve three or four people — easily facilitated by conference features on pretty much any smartphone.

Assuming that this service gets serious traction, it would need to sign up a lot of users and have them make lots of calls to generate a sizeable amount of sales, never mind profits. Of all the VoIP services, only Skype has evolved enough to get scale.

What about texting? The company offers group texting to 100 or more people which makes it less ideal for consumers, and perfect for marketers. I guess this is where skills learned when building up eFax come in handy. Even in this business, the company has many competitors. Gogii (the company behind TextPlus) and TextFree are two well-established competitors.

I wish Callvine good luck in their endeavor, but I have a sneaking suspicion they may have to rethink their business soon enough.

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