Pacific Epoch recently spoke with PepTalk CEO Mu Rong about the company's service and competition in the industry.

Pacific Epoch: When was PepTalk established?

Mu Rong: PepTalk Technologies used to be Suzhou Guangda Technologies' mobile instant messaging division and was spun off in July 2005 after receiving a first round of venture capital investment.

Before being spun off from Guangda Technologies, PepTalk had provided wireless communication services for industry clients, mainly police departments, since 2003. Dopod's first smart phone wireless application for enterprises was developed by PepTalk. In the second half of 2005, PepTalk customized its mobile communication solutions into a mobile IM tool for individual and launched the beta version in early 2006.

PE: Who were the investors in PepTalk's first round?

Mu: PepTalk Technologies received its first round of funding from a US-based venture capital firm and a Suzhou government-run venture capital fund in 2005. We started raising a second round of between US$3 million and US$5 million in October, 2006 and plan to close the round in the beginning of 2007 [PepTalk would not confirm with Pacific Epoch in late February whether the second round had been completed, .ed]. PepTalk's founding team will retain a controlling stake in the company.

PE: What kind of service does PepTalk's wireless IM tool offer?

Mu: PepTalk Technologies' mobile IM tool, also called PepTalk, has features including PoC (Push-to-talk over Cellular), mobile voice over IP (VoIP), bundling with QQ/MSN Messenger/Yahoo Messenger accounts, group text messaging, offline message receiving, chat rooms, photo sending, send/receive attachments and mobile blogs. Users can send pictures or files from PC to handset or from handset to handset and one user can send a picture or file to multiple recipients at the same time. PepTalk has direct cooperation with companies including Tencent, MSN China and Yahoo.

PE: Does PepTalk charge individual users for the service?

Mu: PepTalk's mobile IM service is free. PepTalk will not charge for basic functions but is developing some paid value-added services. The new services will be entertainment-focused or business-focused, depending on the target users. Mobile advertising is another planned revenue source.

PE: How many individual users does PepTalk have?

Mu: Since the beginning of 2006, PepTalk has a user base of over 1.5 million individual users, of which nearly 20 percent log-on to PepTalk at least three times a month. The number of average concurrent users is about 15,000, while peak concurrent users has hit 22,000.

PE: Can you give us a profile of a typical PepTalk user and their user habits?

Mu: Most of PepTalk's users are between 18 and 30 years-old and they are logged into PepTalk for about 2.5 hours a day. Some overseas Chinese and Chinese citizens studying or working overseas use PepTalk's Push-to-talk function to communicate with friends and family in China.

PE: How many handset models does PepTalk support?

Mu: PepTalk currently supports over 300 handset models - almost all the popular Java-enabled handsets. To develop PepTalk for a new handset model takes from several days to two months, depending on what operating system the handset model uses.

PE: Do you think China Mobile and China Unicom's own mobile IM tool will affect PepTalk and other existing mobile IM service providers' business?

Mu: I think the IM services from mobile operators will take some of our users; however, the market is still very underdeveloped, so there is enough room for all companies. China Mobile and China Unicom will help to develop the market, which will benefit existing companies.

PE: Who are PepTalk's competitors?

Mu: Actually, PepTalk only has one direct competitor: MMIM Technologies Ltd.'s PICA service. The other mobile IM tools have some differences from PepTalk. Mobile IM tools such as Shanghai's Me-you and Bang.cn's BBT lag behind PepTalk in terms of technology.

PE: I saw on your website that PepTalk has a partnership with Suzhou Mobile. What kind of partnership is it?

Mu: The cooperation started in January 2006. The partnership includes Suzhou Mobile helping promote PepTalk and exempting some PepTalk users' GPRS traffic fee.

PE: How many employees does PepTalk have?

Mu: We have 36 employees total and 21 of them are R&D staffs.

PE: What do you think are the problems facing the development of China's mobile IM industry at present?

Mu: I think there are two major problems: One is the network quality is still not good enough in some areas; the other is that the penetration of smart handsets is still too low in China. Some of PepTalk's multimedia applications can only run on certain handsets.