Friday, August 28, 2009

Arming all sides in war on switching costs

This month the NYT and Walt Mossberg both mentioned TrueSwitch, a company whose services make it easy for people to switch email services. The system imports address books, mail messages and sends change of address notices.

Normally software vendors count on switching costs to encourage lock-in for their customers. People who use mail clients (like me but not our tween) find it easy to switch mail accounts since all the mail and addressbooks stay in the same mail program, but webmail users are left out in the cold.

TrueSwitch is being purchased by Google, Yahoo, Hotmail, AOL, Netscape, Comcast and Verizon. (Only SBC is conspicuously absent). People once joked about Swiss arms merchants selling to both sides in a war, but I don’t recall many 8-way wars.

The software is developed by Esaya, Inc., a 9-year-old NYC firm that specializes in “account migration.” (The stale website — with 4½ year old news articles — doesn’t make clear whether it’s bootstrapped or VC-funded).

While I wonder about the long-term value of the email switching market, it seems like a clever market niche: in any market, write a tool for Company B to make it easy to steal all of Company A’s customers, and then sell the reverse direction tool to Company A when they pony up the money.

No comments: