Research Notes

Distribution of MMS enabled mobile phones

obstacles in connection with MMS still present a threat strong enough to create a new “WAPergate”
While the mobile operators are crossing their fingers and hoping MMS will be an ever bigger success than SMS has turned out to be – thereby ensuring the success and growth of non-voice mobile traffic – there are major obstacles that still need addressing, before MMS can really take off. At the same time, the MMS marketing guns are already being put in place and being tested.

Before any MMS services are available in any quantity in Europe, the marketing of MMS has already started – primarily by the terminal manufactures, eager to start selling 2.5G mobile phones, thereby getting a head start to the competition.

But there are so many obstacles still not addressed or solved, that marketing MMS right now does seem somewhat premature – especially with the lessons learned from the launch of WAP. Three main obstacles that desperately still need to be both addressed and solved, before MMS really can take off are:

·MMSC has not yet been implemented with all mobile operators
·Mobile operators have yet to present MMS revenue sharing models
·P2P MMS messages will not take off properly before mass penetration of MMS mobile phones is a reality

Lets have a closer look at these three issues.

The MMSC (MultiMedia Messaging Services Centre) is the back-end system that every operator must have to handle MMS messages. The MMSC works out whether the MMS being sent, is being sent to a mobile user with the same operator – or with another mobile operator. If the mobile user is with another operator the MMSC sends the MMS message to the correct operators MMSC. The MMSC also determines, whether the user the MMS is being sent to, actually has a MMS enabled mobile phone. If they do – no problems – the MMS is sent to their phone. However, if they do not have an MMS enabled phone, the MMSC saves the MMS on the mobile operators website and sends an ordinary SMS to the user, saying in effect “Hey, someone sent you a MMS message – go to this Internet address to see it”

So if all the mobile operators do not have their MMSC up and running, mobile users who have been enticed by the advertisements for MMS and MMS enabled phones will find themselves sending MMS’s – at a somewhat greater cost than SMS’s – that just do not get through to the person intended, if that persons mobile operator has not got their MMSC tested and working! How about that to dampen the excitement about a new mobile phone you just invested in?

So, if sending MMS’s to your friends gets a bit boring after a while, because they may or may not get through, depending on which mobile operator your friends have – and honestly, do you have any idea which mobile operators your friends are using? – maybe it will be more fun looking at some of the great services and content available to you – now that you have invested in a MMS phone..

Basically, there are just about zero services and content available for MMS in Europe today, aside from a few scattered tests here and there. Why? Because most mobile operators have still not announced what kinds of revenue sharing models they are thinking of offering to the content- and service providers who would like to migrate or enter the MMS market.

For the content providers, just making MMS services that they would have to finance and market themselves and not being offered a share of the revenue that their content will generate, does not really make any business sense. Even less, when you remember that many content providers spent a good deal of money on a WAP portal, in expectation that great numbers of mobile users would be using WAP. There were no revenue sharing models for WAP – the mobile operators didn’t think it would be necessary for WAP to become a hit! Today there are few – if any – operators offering revenue sharing models for MMS, not really the best signal to send to the already hard tried content owners.

So what are the operators hoping for with MMS? Certainly that P2P MMS will explode in a manner similar to what they have experienced with SMS – generating easy revenue with little investments involved once the basic MMS platform is running.

Here the operators are hoping that the early adopters of MMS will enjoy sending MMS’s to people who still do not have an MMS mobile phone. To see the MMS, the receiving party will have to find an Internet terminal and log on to the address they received by SMS. Then – and only then – they can view the MMS. Our feeling is that after someone has spent the time logging on to see some MMS’s that were not really relevant and actually maybe sent the day before, but the receiving party wasn’t actually close to a PC at that time, the fun of reading old MMS’s on a PC might wear off. In fact, the whole point of “Instant Messaging” looses its meaning, if you cannot receive and read the message straight away!

The mobile operators are of course hoping that the mobile users will want to get a MMS phone themselves, instead of having to find a PC every time they receive notification that someone sent them an MMS – but bearing in mind the other issues mentioned above, the word could spread faster than you can say “WAPergate” that MMS is a dead duck, setting back the mass penetration of MMS enabled terminals by a good deal.

These challenges – and many others – together with revenue and ARPU figures for both voice and non-voice traffic from today and through to 2005 are explained in detail in Strand Consults new report “How to make money on mobile services” a picture of the current & future Market for Mobile Services in Europe and as the report points out, there is little room for mistakes like the disastrous launch of WAP in the late 90’s, as many mobile operators simply do not have enough financial reserves today to survive many more setbacks – or the postponement of new non-voice revenue from 2.5G and 3G mobile services and P2P messages.
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