Mobile monitoring signals Keynote revival

Keynote Systems likes a good website disaster story.

Last month, for example, it sent out a media alert highlighting how the Sainsbury’s online shopping homepage had gone blank on 4 July over the critical period of Friday lunchtime, from 12.45pm to 2.10pm. The outage followed another crash just a few weeks earlier when an unusable log-in page meant Sainsbury’s was unable to access online delivery orders placed by more than 20,000 customers. That forced the company to cancel all home deliveries for two days at a cost to the company of nearly £1.5 million in lost sales.

Sainsbury’s is not alone in having its Internet mishaps highlighted. A few Fridays earlier, Keynote exposed the fact that the homepage had experienced an availability and performance issue that ran from 10:16am to 12:58pm. During that event, many online shoppers visiting the homepage were greeted with a cryptic “Http/1.1 Service Unavailable” message on a completely white screen.

Keynote likes to use this level of embarrassing detail to highlight just how well it can track web performance – not as seen from within the customer’s systems but from representative locations on the Internet.

For the past decade, it has provided a technology set and related services to businesses keen to see how their ecommerce services are holding up –
and how they can be optimised so that embarrassing and costly outages can
be avoided.

This Internet test and measurement (ITM) business is enabled by over 2,400 measurement computers (effectively simulated users) installed at major Internet backbones in more than 240 locations around the world – all feeding performance data back to the company’s operational centre in Silicon Valley for analysis, and so to the customers. That is no mean feat, says CEO Umang Gupta: “It is like trying to measure the temperature of the Earth.”

Keynote is now on its second generation of ITM services. These address much more than homepage performance: the aim is to measure the entire health of ecommerce transactions, says Gupta. Indeed, the company’s original single-page, single-device monitoring service is now deemed as legacy, with annual revenues having sunk from around $40 million to $4 million, he adds.

And Keynote has had to replace that. “Instead of just wanting to measure the homepage performance, customers now want to know how long it takes to buy a book or do a grocery shop or do an online trade,” says Gupta.

Today, Keynote monitors 13,900 Internet pages for approximately 2,800 customers. And while Keynote’s business has been steady (it was stuck at around $40 million in revenues for several years), it has not caught fire – until now.

Even as it shifts the customer base to the more sophisticated ITM services for web – VoIP and streaming performance measurement – the company finds itself with an even hotter revenue stream. Following its astute 2006 acquisition of Germany’s SIGOS, it is capitalising on demand for mobile device test and measurement (MTM), servicing demand from telecoms companies, which need to know the quality levels of the services being delivered to their roaming customers.

“The top 100 mobile telecos of the world are using Keynote to do text and measurement for their networks – Vodafone, T-Mobile, Cingular, SFR…,” says Gupta. That is now about a half of our business. “Such companies have passive networking tools to monitor the health of their voice networks, but a new industry has grown up to monitor the health of their data network, and SIGOS was a pioneer in this space.”

After years of flat growth, Keynote is now reporting revenues rising at 18%, with the mobile business the driving force. Its latest figures show quarterly revenues at a record $20.5 million high, with mobile revenues surging 81% to $8.3 million.

That does not mean to say that the traditional ITM business is itself static.

In the company’s latest (third) quarter, revenues in that segment fell 5% to $10.3 million. However, because that business is subscriptions based, Keynote has a full “tank of gas” of $24.2 million in deferred revenue. Gupta claims Keynote holds a third of the $150 million niche market for Internet monitoring services.

Analysts are now predicting $75 million in annual revenues for fiscal 2008, and for the company to be “nicely profitable”, according to Gupta. About 40% of that will be mobile – and that $27 million in estimated revenues will give the company about 40% market share in a sector that will only become more important as mobile phones become Internet phones. “Keynote spent many years being ‘solid but boring’,” says Gupta. He’s not yawning now.

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David Cliff

David Cliff is managing director of Houghton le Spring-based Gedanken, a company specialising in coaching-based support and personal development. Cliff is an experienced trainer, manager and therapist,...

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