Why is Newsgator Rockin?

NewsGator has been transitioning from a consumer RSS feed-reader company to an enterprise company over the past few years. And their strategy seems to be paying off since the company reported 300% annual revenue growth in 2007 and has taken a fifth round of funding to fuel their sales and marketing efforts.  So what's going on?

The company has client feed readers, enterprise server products and widget based syndication services. They've also got a nice add-on product for Microsoft SharePoint called Social Sites.  It will deliver some social functionality for Sharepoint users (more on this below). Therefore, they are playing in almost every portion of the RSS/ATOM feed market.  There's a successful seeding strategy at work...They recently announced it would make its feed readers, including FeedDemon and mobile, Mac and Outlook products, free, which plays well into their enterprise angle. Free readers seed the market for enterprise sales and helps the company capture usage data... and the more it has the more useful it can make the data for its clients.

But I gotta think it must be tough trying to drive three lines of business - consumer, enterprise and SaaS so an element of success is the increased emphasis on its enterprise business (including SaaS syndication). I also imagine that they are facing a lot of upfront customer education as to the value that Enterprise RSS can bring to the table. After all, only 40% of Enterprise Early Adopters of Social Media are planning online communities... Where is RSS in their online road-maps?  I do think that that since there is so much UGC out there and that RSS is THE GLUE for bringing it all together, Newsgator has a huge opportunity. 

What NewsGator is doing in the Enterprise space with SharePoint is contributing to their current success. Newsgator's Social Sites application extracts content from SharePoint as RSS feeds, whose content can then be delivered via those feeds any where. SharePoint Web Parts can deliver RSS-based content, but Newsgator really provides sophisticated value added services that you need to be effective in content syndication. For example, it has sophisticated abilities to slice and dice feeds by attributes. It also provides tagging and subscription capabilities which frankly, no enterprise solution can do without.  It also has a user profiling capability that goes beyond what SharePoint does. 

I haven't talked much about the portion of Newsgator  led by Jeff Nolan -- the Syndication business.

The SaaS syndication service syndicates content via widgets. The primary market for this service are media companies. The syndication services let media companies (or any content producer, so the market is actually much broader than just "big M" media) create, editorially control and syndicate content to other sites via these widgets. The widget service is hosted and managed by NewsGator, but content owners can manage what content is syndicated and track its usage.  Newsgator does face a decent amount of competition in this space though... Fox Interactive, ClearSpring and and Internal RSS Development to name three sources.

Newsgator may be concerned about Microsoft building these value added capabilities into SharePoint but from what I understand it will be a coupla years before a new version of SharePoint hits the market. And with all that's going on... maybe longer!

All in all, the company looks like it is in a strong position to grow into a great provider of Enterprise RSS solutions.