Inside Zipwhip’s Plan to Free Texting from the Phone

7/30/12Follow @curtwoodward

Text messages aren’t usually anyone’s idea of an innovative communication medium. But then again, most people probably haven’t used a text to remotely command a robotic coffee machine.

That kind of thing is possible in the office of Seattle startup Zipwhip.

Send a message to a special phone number, and the company’s hacked-together “Textspresso” machine will brew a fresh cup of java in just a few minutes—complete with digits from your phone number “printed” on the surface in edible ink. The machine even texts you back when the brew is ready.

The Texspresso machine was a fun little side project for the company’s engineers, and video of it in action has actually prompted inquiries from around the globe. But it also represents the serious mission that Zipwhip is hoping to accomplish.

The venture-backed company is attempting to do what the wireless carriers should have done long ago (and what Apple is busy doing with its iMessage service): Free the humble SMS from the phone and route it through the Internet, making the simple communication medium available on any connected device.

Taking texts to the cloud makes person-to-person messaging more convenient, of course—why shouldn’t those efficient conversations be continued on your laptop or other non-smartphone? But, as the Textspresso experiment shows, there are a lot more possibilities for the medium.

“Every carrier should have a Gmail of text messaging. If Google was running a carrier, they would absolutely let you log into all of your texts and see all of them in real time,” Zipwhip CEO John Lauer says. But the carriers, he says, “haven’t done with the medium what real, modern-day, Internet-savvy companies would have done. So we’re trying to help them get there.”

The SMS, or short message service, was developed as part of the initial global standard for mobile communications in the 1980s.

As the L.A. Times reported in this history of SMS, the first text messages were routed through a slice of radio spectrum that was otherwise used to send information about signals and incoming calls to the handset itself.

But the medium wasn’t primed for truly broad adoption in the U.S. until 1999, when carriers developed a standard network that allowed their customers to send texts to people on another carrier’s system.

Lauer says that development is the key to the text message’s longevity, and why it will be around for a long time to come: It’s a public standard that others can plug into, not a private, controlled network.

That means text messaging (and the modern versions that allow for multimedia messages) can survive the ebbs and flows of popularity that can doom other messaging services.

Remember when AOL Instant Messenger or MSN Messenger were dominant?

“I believe that public networks win over the long term and private, closed networks lose,” Lauer says, pointing to the longevity of e-mail and voice network standards. “Any [company] that is creating a closed network will have success in the short term. But in the long term, they will lose. I even predict that for Facebook Messenger.”

Texting is, however, under pressure from more modern services—whether they’re baked into mobile devices, like Apple’s iMessage, or part of a completely separate walled garden with hundreds of millions of users, like Facebook Messenger.

There is evidence that the rate of text messaging could be peaking, or even declining, depending on where in the world you operate. The medium also is ebbing as a source of revenue for wireless carriers, part of a long-term trend of the carriers drawing less money from their communication services and more from charging for access to their data networks.

As mobile industry consultant Chetan Sharma notes, the carriers are starting to get more competitive with outside services that are eroding their traditional communication revenue streams. That includes messaging services like AT&T’s Huddle, partnerships with IP messaging providers like Whatsapp, and T-Mobile’s Internet-based Bobsled service, which includes both voice calls and messaging.

Zipwhip, founded in early 2008, has typically focused on providing cloud-messaging services to the carriers. It has notable deals to run Web-based texting services for Sprint and T-Mobile, including being pre-installed on T-Mobile’s Sidekick 4G phone.

But, just as other startups trying to work with the legacy carriers have found, the pace of innovation inside wireless carriers can be very slow—much too slow for startups, which thrive on quick growth and the ability to make rapid changes.

That’s reflected in Zipwhip’s ongoing quest to get access to the actual networks run by the carriers. That would allow the startup to get a copy of a text as it goes through the carrier network, but “that turned out to be an enormously complicated conversation, and really expensive for the carrier,” Lauer says.

So Zipwhip has turned instead to short codes, those special strings of digits that can let a mobile user donate money to a nonprofit or vote for a reality TV competitor with a simple text. In this case, the short codes are used as go-betweens—send a text from the Zipwhip app, and a short code is swapped in behind the scenes, allowing the program to plug into the carriers’ networks.

That’s good enough to power the gee-whiz features of Zipwhip’s service, including group texting, the ability to search texts, and instant syncing between desktop, tablet, and smartphone systems so you know which messages have been read already.

But it’s still not the most ideal situation. Without network-level access, Lauer says, Zipwhip relies on the user’s phone being turned on.

“If your phone is turned off, it breaks our network. The only way to fix that is to work with the carrier, to have the carrier let us to connect to their network, so if your phone is turned off it still works.”

That’s why Zipwhip has begun taking its case directly to consumers. Earlier this month, the company added a desktop app to its lineup, which also features Android tablet and Web apps to manage texts on other devices.

Lauer says that, despite the overall trend of computing moving online and to mobile devices, the desktop app showed a real audience: Users who installed the program read 42 percent of their texts through that interface, as opposed to a meager 7 percent in the Web-browser version.

“We’re arguing that you’ve always had that as a pent-up demand,” Lauer says. “This is why we have a lot of our stuff available directly to the consumer. It’s to make the consumer realize they wanted this forever.” And by freeing text messages from their phone-only world, Lauer says, the volume of texts goes up—something that could make the carriers happy.

Zipwhip has raised $3 million in financing to date, but has also been able to use the money generated from its partnerships to pay for ongoing developments—Lauer says the company has reinvested a total of $6 million.

“All of it’s been reinvested back in the product as if it was all purely VC money,” he says. For a team of just over 20 people, “That’s a lot of gunpowder … Basically, we have unlimited runway right now.”

So what about those grander plans? Lauer says the next frontiers of innovation for SMS will likely involve something like incorporating the service into landline phones. And no, he says, those aren’t dying—at least not in the local businesses that rely on them for their main communication with customers and suppliers.

If texting can be tied into a merchant’s landline number, it could allow much easier communication with customers. “Why shouldn’t we be able to make our reservations over texting?” Lauer asks.

Payments are another possible area where new services could be added to the texting medium—after all, the phone number is one of the original unique IDs we have in the communications world, and combined with carrier billing, there are intriguing possibilities for transactions.

Lauer says more detailed instructions could be given to connected devices as well, like a drop-down menu that allows the Textspresso machine to order up a cappuccino in addition to a straight-up coffee.

“There’s a lot of really exciting stuff in the works,” he says. “With how connected these devices are, we should have stuff like that. That’s where we think we can add this level of innovation to the texting medium.”

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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