NEW YORK-InPhonic, still in its corporate infancy, has skipped over baby steps and is making major strides as an outsourced, behind-the-scenes distributor of private-labeled wireless and mobile-commerce services.
In mid-September, the Washington, D.C.-based company announced a one-year agreement, valued at an estimated $20 million, to provide Snowball-branded wireless phones to this online network targeted at members of the Baby Boom Echo generation.
Snowball, a publicly traded company headquartered in San Francisco, is the 28th largest Internet company in terms of audience reach, according to a July report by Media Matrix. Its primary networks include ChickClick.com, IGN.com, HighSchool Alumni.com, PowerStudents.com and SportsUniversity.com.
Snowball will place banner advertisements for its branded phones and services on its Web sites. Interested readers who click on the appropriate icon will connect to a site InPhonic will develop and maintain. There, they will be offered low-priced wireless services and receive an activated handset directly from InPhonic’s 25,000-square-foot fulfillment center in Maryland.
Kolin Morlatt, former vice president of fulfillment for Americom Wireless Services, has joined InPhonic as its vice president of fulfillment operations, and Doug Carswell, former director of affinity distribution for GTE Wireless Corp., recently became InPhonic’s vice president of affinity distribution.
In August, amid a hotly contested election season, InPhonic announced an agreement to provide the Democratic National Committee with its private-label brand of customized wireless telecommunications products and services. Those who buy via InPhonic’s invisible link to the DNC Web site also will have the option to receive updates about local and regional events, political news, press releases and grassroots organizing updates.
“This innovative approach to wireless communication makes it possible for us to reach our members and activists in an instant, something that is critical in this election year,” said Joe Andrew, national chairman of the DNC.
This enhanced wireless message and information service for the DNC is just one example of the specialized applications InPhonic can load into a phone, said David Steinberg, chief executive officer. For-profit companies like Lycos, another InPhonic client, want to market various goods and services unrelated to telecommunications over their private-labeled wireless phones or pagers. Using various platforms, InPhonic can offer interactive voice response portals connected to toll-free numbers, text-to-voice mail, two-way messaging, full electronic mail connectivity.
“We provide the secure m-commerce transaction environment. We compile the order, do the credit check, generate a wire transfer so consumer credit information is kept secure,” Steinberg said.
“We see ourselves as a middleman to content providers and carriers, and we want to be an enabler of mobile commerce in conjunction with them. Our value proposition is to monetize the back end-of m-commerce.”
In cases where there are multiple orders for the same products, InPhonic aggregates them and buys in bulk, obtaining a volume discount, much of which it passes on to end users and portal companies, he said.
When it signed its agreement with InPhonic in late June, Lycos said it had become the first Web portal to have its own branded wireless phone.
“It rounds out the strategy that we are building … to be a leader in terms of providing content for the phones and personalization for the wireless platform,” said Terrence Gray, director of e-commerce sales for Lycos.
The Lycos agreement is worth an estimated $20 million in yearly revenues to InPhonic, which had made public 34 such partnerships with online companies and affinity groups by mid-September.
When InPhonic began full-scale operations this spring, its founders projected arrangements with companies accounting for a total of 100 million Internet advertising impressions monthly during the first fiscal year and 160 million during the second, Steinberg said.
“We just crossed the 1-billion mark,” he noted earlier this month.
InPhonic also plans to cross the border, and it has its eye on Mexico, Canada and Europe, he said.
On the handset side, InPhonic so far has forged alliances with Ericsson Inc., Motorola Inc. and Nokia Corp. It also hopes to add Audiovox Corp. and Samsung Electronics Co. to its client roster.
By early September, it had established carrier relationships with Alltel Corp., AT&T Wireless Services Inc., CellularOne, Southwestern Bell Mobile Systems and Verizon Communications Inc.
“We will be at 10 carriers in the next 30 to 40 days. I would love to talk to the smaller carriers, but we haven’t had time yet,” Steinberg said.
Telecommunications services providers pay InPhonic a customer-acquisition fee and, in some cases, a fee based on individual customers’ airtime usage. Carriers bill the end users directly.
“We do the credit check, load the customer onto the network of a (particular) carrier depending on where the consumer is located and what price plan they pick … and program, configure and ship the phone,” Steinberg said.
“We never flip a customer coming out of contract. We won’t proactively market a competing carrier to them. But if they decide they want a different carrier, they can drill down (into the database) to any carrier we offer. It’s in our best interest to keep that customer with us.”
