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February 9, 2002

InfoNow Corp. Research (INOW)

INOW is a very thinly traded penny stock which only just now is seeing positive earnings. That's two strikes against it.

From Yahoo!'s Multex Investor:

Partner relationship management software and service providers that compete with the Company include Allegis, ChannelWave, OnDemand, Partnerware and Webridge. The Company also competes with customer relationship management software companies, such as Siebel Systems, Pivotal, ONYX and Sales Logic, and with companies with enterprise channel management capabilities, such as Click Commerce, Comergent and iMediation.

Business Analisys

Those are the negatives but there seem to be a lot of positives as well. They have a very respectable customer list, 58 of them at the last quarterly report. I wonder what it is that attracted them. Here is a partial list:

Technology Financial Services Manufacturing/Other
3Com ABN AMRO Ariens
Adaptec Allstate Insurance Federal Express
Apple Computer Bank of America Kenwood
Avaya/Lucent Bank One Maytag
Compaq BB&T Meredith
Hewlett-Packard Citicorp Diners Club Miller Electric
IBM First Union Shell
Intel First USA Snapper
Lexmark H&R Block Suzuki
Novell Juniper UPS
Sony UK Royal Bank Group
U S Robotics Security First Network Bank
Toronto Dominion
The Hartford
Visa International

The reason I liked ARM Holdings early on was also on account of their customer list. Let's face it, customers are better able to evaluate a company than just about anyone else and they vote with their dollars.

The question still remains, the companies that selected InfoNow Corp., why did they do so?

What exactly is Channel Conflict?

Let me illustrate channel conflict with a well know example. Most PC makers sell their wares though traditional channels such as superstores, mail order houses and other retail outlets. The one big exception is DELL and DELL has beaten the pants off of the competition. One of the reasons is channel conflict, not theirs, their competitors' channel conflicts.

In the early days of the PC, customers needed a lot of hand holding and the only way to do this was by selling the PC in what came to be known as MicroComputer Boutiques. Of course, the mark-up was quite high to pay for all the personalized service. When a customer is on this third or fourth machine, he no longer needs the hand holding and prefers a lower price. This is what allowed superstores and mail order houses to take over from the computer boutiques. With the exception of DELL, all the other PC makers have traditional sales channels and if they want to sell direct to the end customer, they will antagonize these sales channels. DELL has been a direct seller from day one so it has no sales channels to antagonize. When DELL's success finally became evident, a lot of the other PC makers said that they too would sell direct. But they were never really successful at it. The reason? Channel conflict. Their channel partners told them; "If you sell direct then we will push other brands instead of your." The PC makers backed down and DELL is king of the hill.

This is the problem that InfoNow is solving, how to leverage the WWW while working closer with your channel partners.

Hurwitz Group's Analysis - Link expired

The strength of InfoNow's solution lies in the business problem that it solves: channel conflict. Enterprises have labored over the issue and lure of direct access to end users/consumers. iChannel represents a well thought out answer that multidirectionally focuses on the issues facing each constituent and successfully places the appropriate commitments in the hands of each player.

Evolving the Channel with InfoNow - Link expired -- Patricia Seybold Group

Manufacturers are getting savvy about their channels. While some companies still think their channel partners are their customers, others recognize that channel partners lead them to their real customers. Partner relationship management (PRM) solutions have been somewhat lacking in the past, offering little value beyond the purely administrative.

InfoNow is going beyond the tactical and taking channel relationship management into the business strategy arena. Stressing the end customer as a focus for manufacturers and partners to come together, the iChannel suite of services offers a new way for companies to improve revenue and partner relationships that go beyond the traditional lead generation, partner profile information, and marketing materials management of PRM systems.

InfoNow: Channel Solutions for Competitive Advantage - Link expired -- AberdeenGroup

Provide End Customer Satisfaction

Unlike other channel management solutions, iChannel was designed with the needs of end customers as the focal point — not the suppliers' or partners' requirements. The iChannel suite provides solutions that serve the complete spectrum of end customers' buying needs. For example, it includes locator and self-service capabilities to give customers increased buying options and guide them to the products and services and the nearest reseller location to meet their needs.

From InfoNow's December 2000 10-K (Link expired)

A Cutter Consortium survey conducted in the first quarter of 2000 indicates that 70% of companies did not have sufficient software developers capable of developing the complex systems that form the foundations of eCommerce. The increasing complexity of these strategies and the rapid pace of technological change are driving many companies to outsource the development of their eBusiness initiatives. Time-to-market is also a key factor, as companies race to gain competitive advantage via eBusiness. Licensed or outsourced products can be implemented in as little as two to four weeks, while it may take as long as 24 months to develop similar products from the ground up.

Financial Analysis

Not only is their customer list growing, their revenues per customer is also growing, a very good sign. Revenues for the last two quarters have grown by over 100% y/y and their gross margin is expanding reaching 61.3% for the third quarter of 2001.

Quarter Revenue Growth %
Gross Profit Gross
Margin %
Profit or Loss
Margin %
Profit or Loss
Margin %
3/31/00 1,805   756 41.9 -803 N/A -1933 N/A
6/30/00 1,626   598 36.8 -1802 N/A -1682 N/A
9/30/00 1,799   551 30.6 -1623 N/A -1525 N/A
12/31/00 1,998   636 31.8 -1700 N/A -1635 N/A
3/31/01 2,487 37.8 952 38.3 -1515 N/A -1483 N/A
6/30/01 3,466 113.2 1,920 55.4 -644 N/A -631 N/A
9/30/01 3,951 119.6 2,423 61.3 46 1.2 50 1.3

From InfoNow's 3rd quarter press release: - Link expired


In the third quarter, the company enhanced or expanded the breadth of services it provides to existing customers, such as ABN/AMRO, Apple Computers, Ariens/DMI, Avaya, Bank of America, The Hartford, Hewlett-Packard, Maytag, Miller Electric, Visa, and Wachovia, to name a few. As a result of these and other customer projects (including the ongoing impact of the $10 million contract announced in the second quarter), InfoNow grew its average trailing-twelve-month revenue per customer 27 percent sequentially, to $213,000 at the end of the third quarter 2001 from $168,000 at the end of the second quarter. This growth represents a 63 percent increase compared to the same period a year ago.

Maytag Extends Relationship with InfoNow (Yahoo - Document Has Expired)

Maytag has been working with InfoNow for three years using the company's opportunity referral system that handles a wide range of customer requests through the Internet and IVR from one central database. Maytag's "Where to Buy" system powered by InfoNow, which processes tens of thousands of customer referrals every month, is easily integrated with existing enterprise systems supporting multiple brands, including the delivery of Maytag dealer location information via XML. Currently, the locator technology directs customers to Maytag and Jenn-Air dealers in the United States and Canada, with customers receiving Maytag information in French Canadian or English for various areas within Canada.

InfoNow will announce earnings for 2001 on February 19 and that's just 2 weeks away.

Disclosure, I like the company so much I bought some shares.

Thanks go to Ryan Ciliento, a.k.a. cocteau, for bringing this interesting company to my attention!

"Demand creates queues. Supply gets rid of them."

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Last updated June 22, 2003