Address book apps try to shake spam label

Plaxo, the free contact application that automatically updates address books via e-mail, has gained notoriety since it was launched just over a year ago. Now its creators are pinning the application's future on a paid, business-oriented version to create the company's first significant revenue stream. However, given the privacy concerns Plaxo raises and the widely held belief that the e-mails it generates are at best annoying and at worst spam, the application might hit a wall as it tries to penetrate corporate America.

Plaxo has garnered more than 2.5 million users who copy the address books in their Microsoft Outlook e-mail clients to the Plaxo server, which generates e-mails requesting contacts update their phone numbers or addresses, and keeps the server and local copy up to date. Plaxo doesn't charge users for the software, instead collecting $20 per year from customers interested in "VIP" support. The company also says there are plenty of small businesses using the tool, especially since it added group calendaring and expanded note-taking capabilities in Version 2.0 that was released in May.

Before year-end, the company plans to release a "premium" version - Plaxo officials won't yet say how much it will cost. With both individual and per-seat pricing, this version is aimed at the business market and adds the ability to automatically clean up address books (deleting duplicate entries) and a back-up and recovery capability.

To continue reading, register here and become an Insider. You'll get free access to premium content from CIO, Computerworld, CSO, InfoWorld, and Network World. See more Insider content or sign in.

Plaxo, the free contact application that automatically updates address books via e-mail, has gained notoriety since it was launched just over a year ago. Now its creators are pinning the application's future on a paid, business-oriented version to create the company's first significant revenue stream. However, given the privacy concerns Plaxo raises and the widely held belief that the e-mails it generates are at best annoying and at worst spam, the application might hit a wall as it tries to penetrate corporate America.

Plaxo has garnered more than 2.5 million users who copy the address books in their Microsoft Outlook e-mail clients to the Plaxo server, which generates e-mails requesting contacts update their phone numbers or addresses, and keeps the server and local copy up to date. Plaxo doesn't charge users for the software, instead collecting $20 per year from customers interested in "VIP" support. The company also says there are plenty of small businesses using the tool, especially since it added group calendaring and expanded note-taking capabilities in Version 2.0 that was released in May.

Before year-end, the company plans to release a "premium" version - Plaxo officials won't yet say how much it will cost. With both individual and per-seat pricing, this version is aimed at the business market and adds the ability to automatically clean up address books (deleting duplicate entries) and a back-up and recovery capability.

Although the company thinks the premium version will appeal most to small businesses, the company also is setting its sights on larger outfits. "Our approach is going to be to enter organizations from the bottom," says Rikk Carey, Plaxo's vice president of engineering. "One day you may see us selling enterprise versions."

Yet the concerns that the Plaxo model raises - critics say collecting and storing contact information and relationships on a central server  is risky for users - it might keep Plaxo out of many small businesses, nevermind large companies that tend to be more sensitive to letting information out of their networks. "It poses a huge risk to any company," says Will Hayden, senior network administrator at All Phase Communications, a telecom dealer in Seattle with 30 users on its internal network. "You're sending your database contacts over to a third party."

Plaxo isn't alone in this category; products from Corex Technologies, GoodContacts and others use a similar model to keep address books up to date. Corex is attempting to leverage the success it has found with its business-card scanner to sell its AccuCard service, which automatically sends update requests to contacts to corporations via e-mail once a quarter.

However, one analyst notes that competing against a free product like Plaxo is an uphill climb. "The number of adopters of Corex's service is not nearly as impressive as Plaxo's," says Avi Greengart, senior analyst with Jupiter Research. Corex charges $49.95 per year for AccuCard.

Widespread adoption of these types of applications in the corporate environment is questionable, Greengart adds, because it's difficult to convince users to pay for a service that's been available for free. "I'm still somewhat skeptical that anyone can make it work, but . . . I would give Plaxo the nod. Scale does help; if you need a whole bunch of people to convert to a paid [model], it helps to have a whole bunch of people to begin with," he says.