Penny Wise...

...and not Pound foolish either. Whichever way the markets may be moving, investors want real-time information. Banking on this basic need, real-time stock market data provider AlphaTrade has chalked out an ambitious growth strategy in a highly competitive industry of financial data analysis. Penny Perfect, the company's CEO, speaks to ANJU GOVIL and explains why she's sure about her price-based strategy will work.

Retail investors who could not afford the prohibitively expensive, yet valuable real-time financial information and analysis tools have a ray of hope. AlphaTrade, provider of high-performance stock market data for investors, day traders, professionals and other interested financial parties, is now making its services available in the local market at affordable prices for investors with small investment budgets.

The company sends personalised 'Level 2' trading information like market movers and real-time quotes unavailable on free Web portals like Yahoo! Finance. Its main product line includes E-Gate - a real-time stock market quote system; Jupiter, a wireless stock market quote service, and E-Trax, which includes modules that are fully customisable and can be integrated into a client's website.

AlphaTrade is trying to make its mark in an industry that has far been dominated by big names such as Bloomberg and Reuters. And its strategy is simple: While others offer a similar service for prices ranging between $2,000 and $6,000 per month (cheaper deals are possible, but conditional upon signing a long-term agreement), AlphaTrade is offering the same at a fraction of that price. "Our prices at $17 per month compare to a couple of Starbucks coffees a month"

An added selling point is its multilingual capabilities and a low lag time on transmitting real-time information to wireless devices that ensures a ready audience in non-English speaking emerging markets. The choice of the Middle East as the third destination after North America and London is based upon many factors suiting the business model of AlphaTrade. Firstly, the company's strategy is to focus on the retail consumers, which constitute the fastest growing markets in its home base. In North America, retail investors seeking online financial tools are growing at about 20 per cent a month with AlphaTrade adding 1,000 subscribers a month. The institutional market, on the other hand, is shrinking as brokerage houses are merging in the face of volatile financial markets over the last five years. "People are leaving the industry and companies are finding it so much more difficult to make money," maintains Perfect.

Secondly, the existing subscriber base of the company reflected that the Middle East is not well represented. Identifying absence of a low-cost alternative as the main reason for this in an underserved market made the Middle East an attractive target for AlphaTrade to expand its geographical reach. Like North America, this region is also characterised by a stable and aware investment community. Fast growing China and the Pacific Rim are the other regions the company is targeting.

Set up in 1999, AlphaTrade released its first commercial product in 2002 with the aim of making financial information easy to use and analyse. Calling it a simple industry, the CEO argues that you don't need any sophisticated manuals to become an expert. "As long as you know how to operate a mouse, you are already an expert in using our tools," she says.

Managing risks in the fast evolving world of information processing, AlphaTrade late last year opened another revenue stream from its advertising business. Offering clients spots on the company's homepage as it opens on its customer's work stations already accounts for 25 per cent of the company's revenue. The 20 to 60-year-old male that defines the company's target segment is so popular with its advertising clients that revenue from this activity is expected to eclipse product revenue by the end of this year. At $20,000 per subscriber, per month, for a sponsored screen, the price differential is also in favour of this division.

Although most of its products are based on customer feedback, the company has launched a free online information exchange for investors to educate people on how to invest and later migrate them to the company's real-time service. Customised for different regions, the service allows investors to compare new, emerging markets with more matured markets and realise, in some cases, that they have overbought. "People who already know what to do are an easy sell. But it is people whose investment activity is limited to buying a house who need support and education," says Perfect.

The company is now looking at adding depth to its own services by bringing new ways of analysing information that its competitors haven't thought of. "Essentially, allowing people to interpret information on their own criterion," hints Perfect. Total revenue for the first quarter of 2006 were $958,875 compared to $651,636 in the first quarter of 2005, an increase of 47.1 per cent.

Most of these ambitious projections are based on the premise that this is an industry with little risk of stagnation - at least for now. As fresh investors seek the basic level of information, the larger and matured clients, looking for more detailed information, move to the second level of information. "The recent scandals have led to more people taking the decisions in their own hands rather than relying on a third person," says Perfect.