You might have noticed a service called Plaxo. It’s a great way to keep your address book update without much hassle. But will it turn out to be a viable business model? Well they have managed to get 2,000,000 users, but how many are willing to pay for their service? And how easy isn’t it for competitors to launch a similar service. The most obvious and dangerous competitor is the software Plaxo makes use of - Microsoft Outlook. Microsoft could easily add a mail-out feature to all your contacts and have them reply with updated contact details. That’s the essential feature Plaxo offers, and what draws in the users. To their defense they have an excellent web-based version of Outlook which synchronizes nicely with Outlook.
The reason I am writing this, and at the same time questioning their business model is because we (24SevenOffice.com) are creating a similar service. But wait a minute, you said that Plaxo doesn’t have a sustainable business model then how come you guys will succeed? Good question. We build a web-based ERP-solution which includes a CRM-module. For us, this service is an excellent value-added feature for our customers. And since this is for a CRM-system - for business use and will give the business benefits - it provides a solid base for a successful business model for us. Plaxo only integrates with Outlook, not with any CRM-systems. Thus it has less overall business benefit for companies that use a CRM-system, only useful to consumers and individual employees.
Plaxo privacy concerns
I'll start my comparison of these services with Plaxo, because Plaxo gives me the creeps. There are several reasons for this.
See this blog post and this news article
How will 24SevenOffice.com deal with privacy concerns?
We are an ASP (application Service Provider), all data is owned by our customers and it’s their responsibility to create privacy statements. You might think this is worse than Plaxo, but in fact it’s not. When Plaxo e-mail’s you they create a record of you in their database. We don’t to that. It’s our only our customer’s database that is in use here. We just provide the technology, we don’t act as a middleman. We will however set guidelines for the service and will not allow the service to be used for spam. We will also provide opt-out options both for the specific customer and the service as a whole.
Plaxo business model questioning
"They are building a classic dot-com business," says Avi Greengart, an analyst at Jupiter Research, "where they are going after eyeballs and stickiness, and claiming that they are going to build a business model out of this later."
See this article.