Plaxo Does Have A Business Model… But Not Really

from the that's-it?!? dept

I’ll admit that I have not been kind to Plaxo in the past. Ever since the service was first announced, it sounded like a bubble era pointless dot com. There was a lot of hype about the young founder (previously founded Napster!) and the “service” itself didn’t seem like much of a product. At most, it was a feature of a larger product, and that larger product might just turn out to be something like Microsoft Outlook. If the system was remotely useful, you would think that Microsoft would just build it in to Outlook. However, it didn’t even seem that useful. If anything, I expected it to be annoying – and has it ever been annoying. I now block all Plaxo requests, but for a while, the amount of Plaxo spam was ridiculous. Then, of course, there’s the privacy question. While Plaxo now goes to great lengths to swear up and down that they keep your info private, they don’t seem to understand the real privacy complaint: when your friends give your address to some 3rd party service, are they violating your privacy? It’s a question that’s not entirely clear. In the meantime, this was all made worse by the fact that Plaxo still didn’t have anything remotely resembling a business model (shades of the bubble era again…). Well, now they claim they’ve solved that issue, and have announced that their business model is a $20/year paid version for which you’ll get such great features as… well, they actually don’t seem to know yet. You will get better customer support though. It always worries me when companies decide that better customer support is a premium “feature,” because they’ve just set up the incentives to mean that they give the absolute worst customer support to anyone not in that tier. This doesn’t seem particularly compelling. They’re basically saying their new business model is that they’ll annoy me less if I pay? No thanks…


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Comments on “Plaxo Does Have A Business Model… But Not Really”

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5 Comments
Hal says:

Isn't this the standard open-source business model

While I don’t agree with you about how useful plaxo has been for me, I do have to question your observations about their business model. It sure seems like the standard open-source business model to me. Give it away for free and then change for the important extra’s, such as support.

In the end, I think we’ll find this model doesn’t a business make.

–hms

Stacy Martin (user link) says:

Plaxo Does Have A Business Model - YES REALLY

Mike – It’s honest of you to admit you are not a fan and everyone is certainly entitled to their own opinion. But as our growing membership base illustrates, many people do find Plaxo EXTREMELY helpful. We also just announced a new major investor in Plaxo, Cisco Systems, who also believe in and understand our business value.

I also believe it is incorrect to imply that Microsoft should have the market cornered on providing value and usefulness to users. The fact is, Microsoft is a great company with very smart people, but if we relied upon Microsoft for all technological innovation, we’d be greatly disappointed.

As for our business plan, I believe you’ve missed what has been reported. I point you to two recent news articles which you may have seen:

  • News.com: Start-up Plaxo sketches out business plan
  • Silicon.com: Contact management venture articulates business plan

    In both articles, they detail how our business model is based on premium services as well as third party partnerships.

    Our VIP support edition ($19.95/year) is one example of a premium service that some members are willing to pay for. Specific to this premium service, I don’t believe it is unusual for a company to charge when providing a higher level of support and service over what is provided by the free version. Other premium services may include automatic synchronization for mobile phones and PDAs. Members have continually told us they would love to synchronize a single address book across all of their devices and that this is a service they would be willing to pay for.

    Our partnership with Yahoo! is another example of a 3rd party partnership that generates revenue for Plaxo. Our members have told us that many of their searches are instigated by something they have read in an email message. With Plaxo 2.0, we’ve been able to provide our members the convenience of Internet search integrated directly into their Outlook or Outlook Express environment.

    Stacy Martin
    Plaxo Privacy Officer

  • Scott (user link) says:

    Re: Plaxo Does Have A Business Model - YES REALLY

    “But as our growing membership base illustrates, many people do find Plaxo EXTREMELY helpful.”

    I’m one of those who find Plaxo helpful, though I’m not a member. Since I fix people’s PCs, it’s very helpful to my bottom-line when someone else creates a new program that tends to alter the operability and stability of Windows and Office progams. At least, this is an easy problem to solve. Thanks, Plaxo!

    terry chay says:

    Re: Re: Plaxo Does Have A Business Model - YES REALLY

    Since I fix people’s PCs, it’s very helpful to my bottom-line when someone else creates a new program that tends to alter the operability and stability of Windows and Office progams.

    Microsoft seems to have this part covered even without Plaxo’s help.

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