Who Will Answer? : Pac Bell opens a technological war by test-marketing a new telephone message service. But home machines have their advantages and may prove tough to displace.
Just 21 years ago, the telephone answering machine was born in a Torrance garage. Since PhoneMate bought the license to that invention, which now has many competing versions, the answering machine has found ready acceptance, first among businesses that welcomed having telephones answered after hours and, since 1980, in a growing number of homes.
But now California’s largest local phone company, Pacific Bell, is testing the market for what it calls its “answer to the answering machine”--voice mail, a phone-answering and message-sending service built into the telephone network and requiring no special equipment other than a push-button phone.
What seems to lie ahead is a major marketing war between competing telephone technologies. Pacific Bell, which is conducting market tests with its new service in the port community of San Pedro and the Silicon Valley town of Milpitas, is confronting the answering machine head on. On buttons distributed at a San Pedro gathering called March 31 to introduce the service to the community, the company declared that its new system “puts the answering machine where it belongs--inside your phone.”
A Pacific Bell video played hilariously garbled answering machine messages and emphasized that its service requires the purchase of no equipment--as long as the customer has a push-button telephone that “speaks” to computers. “It’s a service built into the telephone system,” the narrator explained. “There’s nothing at all! Just a blank spot where the answering machine used to be.”
But PhoneMate, which parlayed the Torrance invention into nearly a 19% slice of today’s answering-machine market and annual sales approaching $120 million, is far from throwing in the towel. Indeed, the company (since last year a wholly owned subsidiary of Japan’s Asahi Corp.) regards Pacific Bell as “just another competitor in a very competitive field,” said Larry Kloman, PhoneMate vice president of marketing.
“They will certainly capture some share of market,” he acknowledged, “and we will direct our marketing strategies accordingly. But there’s plenty of room.”
U.S. consumers last year bought nearly 9 million answering machines. That’s nearly double the total of three years earlier. Industry sales have grown about 20% annually in most of the 1980s, but market penetration remains only 20%. Analysts estimate, however, that at the present pace of sales, penetration will reach 35% in 1990.
But by then Pacific Bell and many other local phone companies across the nation will be moving beyond market tests. And the phone companies enjoy real marketing advantages, Kloman said, notably, a directory full of readily identifiable customers. “That’s a huge advantage.”
There are other advantages, too.
“A lot of people are scared of technology and won’t buy an answering machine,” said Steve Kropper, a senior consultant with International Data Corp. in Framingham, Mass. Such people, he suggested, might find an answering service offered by their local phone company attractive.
On the other hand, Casey Dworkin of Personal Technology Research in nearby Waltham, Mass., maintained that residential customers will be a very hard sell for the phone companies--particularly if they already have answering machines.
“Voice messaging is just not going to take off in the home,” Dworkin predicted. “There may be some niche marketing for a home-office situation,” but most households, he said, value such phone machine features as the screening of incoming calls. Voice mail can’t do that.
Plus, he said, buying a machine is not a continuing expense, such as voice mail, but a one-time cost--and as little as $50 to $75, including such features as remote access to messages.
So far, the experience of Contel of California, which first brought residential voice mail to the state last year, tends to bear out the difficulty of reaching that market. Alice Camuti, marketing coordinator for the Victorville-based phone company, has signed up only about 2% of 50,000 potential customers who could subscribe to voice mail, though the company claims to be making progress--by stressing the answering-machine elements of the service and leaving other capabilities, such as message sending, for customers to grow into.
But, Camuti acknowledged, “if they have an answering machine and it’s not offering any problems, it’s a hard sell. They say, ‘It works fine, why do I need yours?’ ”
Lisa French, an analyst with Dataquest in San Jose, is bullish about the future of voice mail. Nonetheless, she predicted that answering machines “will be around a long time . . . for folks who just want to have their telephone answered.”
Meanwhile, Pacific Bell’s entry into the ring is not PhoneMate’s first David-and-Goliath match. In 1973, PhoneMate took on American Telephone & Telegraph after AT&T; tried to force its customers with answering machines to lease a special device to connect them to the network. When the dust settled three years later, the court ruled that answering machines could be plugged directly into any phone jack.
Pacific Bell chose its two test communities with great care, said Lee Camp, vice president and general manager of information services.
“San Pedro is in many ways a unique community,” he said. “but it also offers a balance that we expect to find throughout California.”
The “balance” includes a Latino population that makes up 29% of the 101,000 residents, plus San Pedro’s original core of Yugoslavs and Greeks drawn to the harbor and its commercial fishery. There are 35,000 households and 2,500 small businesses--Pacific Bell’s prime targets in the marketing tests. Such tightly defined communities, whose members keep in very close contact with one another, hold the greatest potential for voice messaging, Camp said.
The other test market, Milpitas, has a populace that is technologically sophisticated and therefore unlikely to be awed by the new service.
Camp said he expects the two tests to last at least six months.
