NetEconomie Interview

CEO Howard Gutowitz in an interview with NetEconomie.

The interview was originally conducted in French and can be found here. This is its English translation.

April 29, 2002 12:22PM

AB - Good Morning, Mr. Gutowitz. Can you tell us a little bit about yourself and Eatoni Ergonomics, a company which you founded in 1999 in New York City?

HG - Good Morning, and thanks for having me. My background is as a scientist, I have a Ph.D. in Mathematical Physics from Rockefeller University in New York, and a degree in Computer Science from the University of Paris 8.

Before starting Eatoni, I was an Associate Professor of Mathematics at the ESPCI (École supérieure de physique et de chimie industrielles). My research was mainly on the behavior of so-called "complex systems", chaos theory, among other things.

The inspiration for Eatoni came to me in March 1998, while dining with a friend who worked as an operator at SFR. Her job consisted of transcribing orally dictated messages, and sending them out to pagers. It struck me that her work could be automated and it should be possible for someone to write a message directly, using the telephone keypad. So I started looking for a "code" for the keypad, which would be optimal in the sense of needed the fewest number of keystrokes.

I worked on this problem with a collaborator in Russia, Eugene Skepner, for about a year and half. From the various research results, we selected two products for commercialization: LetterWise and WordWise.

Once the patents were submitted, I made the rounds on the VC circuit, and in May 2000, we signed an agreement with BG Media, in New York.

Our first product is currently on sale in Italy, and was brought to market with the help of a French company, Inventel (wireless and bluetooth products), a company founded by Jacques Lewiner, who was Dean of Science of ESPCI from 1987 to 2000.

AB - What is Eatoni's business model?

HG - Classic: "software-as-product". We are paid for each installed copy of our software. In addition, of course, there are non-recurring engineering costs.

Like many other software vendors, what we're trying to to is move toward a "software-as-service" model, where we are paid according to the usage of the product: a monthly subscription fee, for example, or a percentage on each SMS sent using our system.

This would be a win-win situation for everyone involved: for us, since we would make much more, and for the manufacturers and carriers, who would share the revenue with us. This model has not yet been implemented due to infrastructure limitations.

However, the industry is moving in the right direction, notably with cell phones which allow software downloads, third-generation handsets, i-mode, etc.

For certain products, for example remote controls, "software-as-service" probably doesn't make a lot of sense. I think that both models will always be used, depending on the circumstances.

AB - What are the major selling points of your multi-lingual software LetterWise, for predictive text entry on PDAs and mobile devices?

HG - For the end user: it's easier, faster, and easier to learn. The user enters "tel", for instance, and the software guesses that the next letter is "é" as in "teléphone".

We've proven it with scientific tests. We have also done market studies which show that the most widely used method (AOL's T9) is not very well liked by consumers. For the manufacturer: our software is smaller than t9 (1/2th the size), and faster. We can put many languages in a single device. This allows a single product to be used throughout Europe, notably.

Now, with T9, the manufacturer has to develop a manufacturing and distribution chain which is more complex, since a single device doesn't have enough memory to hold all of the languages at once.The speed advantage combined with the size advantage means that our software can be integrated into devices which cannot run T9: cordless phones, for example.

AB - The short message market, SMS, premium SMS, MMS, is expanding rapidly, in the US and in Europe. What is Eatoni's strategy for these market segments?

HG - The easier it is to send SMS, the more SMS will be sent. Repeating this short message is essence of our strategy. Who benefits, besides the consumer? The network operators, above all, since they make money on each SMS sent. Therefore, we strive above all to get the attention of the carriers. Once they are convinced, they can put pressure on the manufacturers to install our software.

We have developed our predictive text system for 125 languages. For most of these languages, we are the only ones on the market with such a product: the various languages of India, in particular.

The SMS phenomenon is global, with the US trailing badly. What we want is that where ever SMS is sent, it is sent using our system!

AB - What is Eatoni doing for interactive television?

HG - Interactive television is a beautiful idea, but doesn't work too well in practice.

A QWERTY keyboard is often supplied, but who wants to keep a big keyboard on their lap during their relaxing moments in front of the TV screen?

We're all used to using a remote control to control a TV.

Eatoni wants to not break these habits, by using the remote control itself to write text. In collaboration with Sanyo, we developed a prototype of real interactive TV, based on this concept. So stay tuned.

AB - Panasonic, Philips, and Siemens are among your clients. Which applications are they using your software for?

HG - For Panasonic, Philips, and Siemens, the interest is in offering SMS services from cordless phones. The carriers, including France Telecom, are attracted by this application. They hope that, in the near future, all devices which could be connected to their network would also be capable of sending SMS. The fixed-line carriers are keenly aware that SMS generates considerable revenue, with strong growth potential, and they want their share of the pie.

By the same token, a large number of consumers have already abandoned their fixed line phones, since the mobile phone satisfies their needs. You know, in France, there are now more mobile phone subscribers than fixed-line subscribers.

To stop the hemorrhaging, the fixed-line operators need to offer services which make the fixed-line phone more attractive.

For the most part, households buy a computer to be able to send email from home. The possibility to send SMS could incite the same desire.

All those who are either too young or too old for the mobile phone market might still want to send SMS from home.

Moreover, the fixed-line phone is the natural center of a home network. One can imagine a network linking the frig to the toaster to the internet. The connection to the internet could be via cable, in which case the TV would be natural gateway. Currently, however, most surfing is done via a fixed line (RTC, RNIS, ADSL), and so the cordless phone plays the role of gateway.

AB - Do you work with content providers or financial service providers?

HG - No, not yet.

There are very few applications of mobile phones which couldn't be improved by our text entry system. A search engine for content, or financial information, among others.

We are completely open to working with such companies, but for the moment we remain focused on looking for partners tightly linked into the creation of telecommunications infrastructure: carriers and manufacturers.

Once Eatoni is better integrated in this sector, we will undertake projects with more direct connection to applications.

AB - How is your product line going to evolve with the arrival of GPRS and then UMTS?

HG - Our products are independent of transmission technology.

If some technological advance makes for an increased need for textual information, so much the better for us. If the promise of the new transmission technologies is kept, if there is really more interaction with content, more games, more creative applications, then there will really be more need for our technology as well.

All of these services, in one way or another, require that the text entry method be improved.

AB - To conclude, after setting up offices in Barcelona and Moscow, isn't Eatoni going to open an office in Paris?

HG - That would be a big home coming, and the idea of living in Paris again, in a completely different way, attracts me of course.

AB - Mr. Gutowitz, thank you for agreeing to answer my questions in French.

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