Firm Makes Getting the Message Simpler.

The computer is screaming, "You've got mail." There are 14 messages on the voicemail system. The fax machine is spitting out papers, and the pager won't stop beeping.

If these sights and sounds seem familiar, it's because many workers have become deluged with message systems. With voicemail on office phones and cell phones, office e-mail and personal e-mail, electronic pages and faxes, keeping up with correspondence is a job unto itself.

That's why unified messaging, a system that collects all communications - voicemail, e-mail, faxes and pages - and allows them to be accessed through a centralized format, is a rapidly growing market.

How it works

With unified messaging, each message is collected and stored in a central system. The system contains voice-recognition software capable of turning voicemail, pager or fax messages into text and storing them along with a user's e-mail, so users can check everything at the same time. It can also operate the other way - converting e-mails, faxes or pager messages into audio messages by a computerized voice, then stored along with other voicemail.

Users have a choice of accessing their messages either in text or voice. The system is particularly convenient for business people who want to check their messages while on the road; one call or download does it all.

A key local competitor in the unified messaging business is Tornado Development Inc. based in El Segundo. Tornado doesn't directly target consumers. Instead, it markets its unified messaging technology to telephone companies, Internet service providers and portals, which in turn offer those services to individuals and small businesses.

"A couple of different telephone companies have similar technologies, but their primary (unified messaging) business is to offer this to a consumer, (rather than to businesses, as Tornado does)," said Kevin Torf, who founded Tornado in 1995 and is the company's chairman.

But Tornado does have hefty competition. From 12 to 20 companies, including giant Lucent Technologies Inc., offer unified messaging technology to other businesses.

Tornado officials believe their system has a competitive advantage. Most service providers have a technology that converts every received message into each message format. So, for example, a voicemail message would be automatically converted initially into fax, pager and e-mail versions, regardless of the format the user preferred. And all that data would be stored on the system until the messages were retrieved. This takes up an enormous amount of computer memory.

Tornado's technology allows a message to be stored only once, as what Torf calls a "neutral object." When the messages are accessed, they are converted only at that time. This means lower costs for storing all that data.

While some companies offering unified messaging technology have targeted traditional phone companies and wireless providers, others - including Tornado - see a growing client base in Internet outfits looking to offer unified messaging to their business users.

"A lot of portals are beginning to offer unified messaging, and that's an area where Tornado has been particularly successful," said Roger Walton, senior analyst with research firm Ovum Group.

Tornado, for example, recently sealed a deal with OfficeMax Inc.'s Web site, OfficeMax.com, so small-business owners using the site can sign up for unified messaging services.

Tornado's formula has worked so far. "Revenue from 1998 to 1999 grew at least four-fold," Torf said. "From '99 to 2000, it will (grow) at least 10-fold."

Being a privately held company, Tornado does not release its financial results, and Torf declined to be more specific about company revenues. But those revenues, while ramping up rapidly, are likely no more than a few million, considering the entire unified messaging industry generated only about $3 million in 1998 revenues, the most recent figure available.

Huge potential for growth

While the industry is still in its fledgling stage, it is booming. A report by research firm International Data Corp. estimated that end users would pour more than $1.9 billion into unified messaging service providers in 2003, and that doesn't include the amount that will be spent by service providers acquiring the technology.

According to a report by the Ovum Group, total direct revenues from unified messaging are expected to hit $2.2 billion by 2002. In 2006, unified messaging will generate estimated direct revenues of $12 billion worldwide.

The Ovum Group also projected that more than 14 million unified messaging accounts will have been established by 2002, and 170 million will be in use by 2006. Business users will be a key market for unified messaging, the report said. Individual consumer accounts will outnumber business accounts by 2006, but businesses will account for a greater percentage of revenues.

Ovum's Walton said some market factors have changed since the report was released just over a year ago.

"If anything, we see the amount of messaging measured actually growing faster than we predicted, but at the same time, we've seen a growth in the number of free services," said Walton. "So it's kind of a two-edged sword. It's grown faster than we (originally) predicted, but in terms of the total market revenue, we're probably on track."

That's good news for Tornado and companies like it.

"Even though there are hundreds of thousands of users, it's still in its early emerging stages," Walton said. "In the next two to three years, it's going to grow from an emerging market to a mass-market phenomenon."