How the iPhone Changed Kayak's Business

A mobile app needs to be more accessible than a web site, that’s for sure. But it doesn’t necessarily need to be simpler and dumber, as travel search service Kayak learned this year. Now, the company is changing its overall business strategy to address user needs that it only became aware of from seeing how they use the Kayak iPhone app.

Kayak CMO Robert Birge and Chief Architect Bill O'Donnell

When Kayak went to build its first iPhone app earlier this year, Chief Architect Bill O’Donnell told us during a visit this week to GigaOM HQ, it stripped down its travel search functionality to the bare essentials. O’Donnell’s thinking was that the prototypical mobile user was one who just had a flight canceled and needed a replacement reservation to get home, stat. No need for non-urgent and complicated queries, like flexible date search. That strategy worked well enough; the Kayak iPhone app has had 600,000 downloads since February, and currently 5 percent of Kayak’s total search volume takes place on the iPhone, with mobile Safari the site’s third-most popular browser after IE and Firefox. (Kayak also has a BlackBerry app with 4,500 downloads; an Android app was released last week and apps for Windows Mobile and Symbian are coming.)

But users complained loud and clear that they wanted the ability to do everything they could on Kayak’s web site on their phones, so O’Donnell went back to the drawing board to amp up the app’s functionality while maintaining a simple, finger-friendly interface.

As he dug deeper to figure out how to display oversized and dynamic data such as calendar dates for version 2.0 of the iPhone app (which was just released), O’Donnell started to think about the mobile travel experience more holistically. Meanwhile, the business side of the company, according to Kayak CMO Robert Birge, was taking a hard look at the iPhone’s fast-growing user numbers.

Now that those stars have aligned, the company’s next major strategy initiative is actually coming from the iPhone. Kayak has always been a search site; its sole purpose is to help people search across vendor and aggregator sites to get the best travel deals. It makes money from referral fees and ads. But as O’Donnell explained, the leap from a friendly iPhone app interface to travel web sites in order to make reservations is an awful experience. Users have to contend with tiny, virtually unreadable text, Flash sites that don’t load, and squished pages formatted horizontally for a PC.

So starting next year, Kayak plans to offer an iPhone-friendly booking experience. The company is building a wallet system to allow users to book travel using their Kayak accounts. They’ll be able to use their saved credit card, frequent flier numbers and flight preferences, and Kayak will then go enter that data into the providers’ sites and send users an alert when everything has gone through. It’s a major new initiative for the company that should extend back to the web site as well.

It’s also a big change from Kayak’s history as a straightforward search engine that’s careful not to pressure users to even register. O’Donnell and Birge said their business model is still ads and referrals, though, and that any airlines or other vendors that feel uncomfortable with the new system can always opt out.

Still, as the iPhone helps Kayak redefine itself and how it addresses its customers, it shouldn’t stop with concierge services that address the design and usability constraints of a small touchscreen. The company could make itself even more useful by figuring out how to offer a mobile travel experience that incorporates the best and most relevant features of a phone, like real-time access, location awareness and push notifications.

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