The struggle for market leadership and revenues in mobile instant messaging has lead operators down different paths, finds Tony Dennis
Many operators are looking at mobile instant messaging (MIM) as a key service for driving revenues. They also see MIM as a way to build mobile communities and user-generated content services. While some European operators have launched their own IM services, they've never proved very popular with subscribers who prefer to use an already-established brand. Currently there is a struggle going on between these existing, ISP-based IM services and the 'own-branded' IM offerings from network operators. Market watcher, Analysys believes the Mobile IM market will be worth an impressive € 26 billion by 2010, but by contrast, rival firm, VisionGain, is more conservative and is predicting that it will only be worth around € 10.89 billion by 2011.
So, exactly what Mobile IM services are up and running with mobile operators? Steven van Zanen, head of messaging with Acision, defines two key IM services which he calls community IM and operator-owned IM. Guy Reiffer, product marketing director with Colibria, makes a similar distinction. "Currently there are two options available for mobile operators, Mobilised Internet IM Gateway services and operator ‘own brand' MIM services," he argues. "With Mobilised Internet IM Gateway services, operators are able to provide subscribers with complete access to an existing Internet IM service, such as Windows Live Messenger, Google Talk or ICQ. This option enables the operator to leverage the brand awareness of a chosen Internet IM brand. However, it does mean that the operator is potentially restricted by certain business models and branding factors."
According to Scott Stonham, vp for product marketing with IM specialist, Miyowa, the prominent ISP-based IM service appears to vary markedly depending upon geography. Microsoft – with its variations of Windows Live Messenger – appears to dominate in Western Europe, whereas in Eastern Europe ICQ is most prominent. Yahoo! holds market leadership position in Asia, whereas in Western Europe it is running a close second. Stonham puts these differences down to which brand has achieved the best 'mind share' amongst the existing fixed line community of IM users.
There's one obvious solution to this dilemma. At OZ Communications, Michel Besner, a senior vp of marketing points out that, "OZ has successfully deployed Windows Live, Yahoo Messenger, AIM and ICQ services, all of which can be accessed and used simultaneously from inside a single client application." By contrast, Miyowa's Stonham revealed significant part of the specification process which occurs when mobile operators come to his company for IM client software. He maintains that the majority of operators start off by asking for one client which can handle all of the major IM services. "After time – for a variety of political commercial and technical reasons – this requirement usually dwindles down to a request for just one IM service to be covered – on a toe in the water basis," Stonham explained, "Even though for Miyowa it is perfectly possible to have a single piece of software that provides access to multiple IM services." This capability Stonham describes as a 'multi-headed' application.
There's one major exception to these two categories which isn't an own branded solution nor an ISP originated solution. That joker in the pack is the IM aggregator which creates its own presence and doesn't rely either on an ISP or on a mobile operator to gain a foothold. A good example here, Stonham says, is Ebuddy. Another odd man out is Skype which – besides being a hugely successful VoIP service -also offers a top class IM system. The big difference is that while the likes of Windows Messenger and Yahoo have been optimised for the mobile environment, Skype has come very late to the mobile market. The major exception here is Hutchison 3 which offers Skype chat via its dedicated Skypephones.
'Own brand' IM
Asked how successful 'own brand' IM communities have been, Scott Stonham replied, "The harsh truth is that none of the major mobile network operators appears to have enjoyed much success with its 'own branded' flavour of IM." It still seems to be early days for the mobile operators even though a big noise was made about mobile IM at the 3GSM conference back in 2006 with the GSMA's Personal IM initiative. "There are some technical reasons for this as well," Stonham continued. "If, for example, the operator goes for a client which isn't pre-installed but user-downloadable then there can be a problem with users actually finding the app in the first place. Typically they might have to move through three to five menus just to open the application. The incentive to do so is poor unless the subscriber is actually rewarded with some tangible benefit. If the result is that the mobile handset can 'see' all of their existing IM buddies, this is sufficient incentive. And it probably explains why own branded services – which are starting from scratch – fare so badly."
OZ's Michel Besner basically concurs with this view. "Some operators – especially in Europe – have tried to launch their own operator-branded services based on the IMPS standard," Besner explained. "These services have not been known to be successful. Lately, we are seeing many major European operators shifting to deploying portal-branded mobile IM services." Acision's Steven van Zanen, added, "In general, it appears community IM has become more successful than own brand IM. However, market penetration of IM services overall has been low and there are approximately only 30-40 own-brand deployments worldwide." There are some exceptions – but not in Europe, it seems. One such example comes from South Africa, where MTN has introduced its own brand MIM service called ‘noknok'. Using a Colibria supplied system, noknok subscribers can receive messages as either an SMS or an MMS – as advocated by the GSMA's Personal IM Initiative. MTN's success clearly proves that own branded IM is working but only in an environment where ISP-based IM has little or no foothold.
Exact figures for IM usage are difficult to come by. Myiowa's Stonham wouldn't reveal exactly which European customer was in question but said that operator had found that its own branded IM was being used by as few as 0.5 per cent of its subscriber base (one in 200). This compared to a client app that offered access to Windows Live Messenger where usage rose to a more impressive 10 per cent – or one in ten subscribers.
Comscore M:metrics which monitors the behaviour of its European mobile phone user sample group has found that IM usage is very low. Only 1.6 per cent of the sample employs a handset to check IM messages daily and only 5.1 per cent actually check for IM messages in a month. Significantly the majority of these mobile IM users access the service via the handset's built-in browser compared to a tiny minority – 0.9 per cent – who use a built-in IM client. Stonham argues that the operator's best tactic is to get customers used to the concept that they genuinely can get access to IM from their mobile handsets and then "migrate the perceived value" over to their own brand of IM.
Gateways to ISP services
For IM to be successful, operators need to install their own gateways to ISP-based IM services, Scott Stonham firmly believes. "Crucially, for mobile network operators the most successful IM offerings are when the subscriber has to go through the operator's own gateway to reach the desired IM service rather than going direct. The reason for this is that mobile connections are notoriously fickle. Hence, if the mobile subscriber is connecting directly, the fixed line 'buddy' might see their friend go offline and come back online repeatedly during a single session. By contrast, a good mobile IM gateway can iron out all of these failings and make the IM connexion appear much more resilient." Acision's, Steven van Zanen, points out that, "Already, IM to SMS connectivity is generating additional revenues rather than cannibalising the latter and once interoperability becomes reality it will create additional up- and cross-sell opportunities for all sorts of services."
Inter-operator interconnect
There's a strong feeling that inter-operator interconnects for mobile IM are just a paper proposition rather than a reality. Colibria's Guy Reiffer disagrees, "It's very much a reality, with interconnects available to subscribers in contrasting markets across the globe." However, he points to markets outside Europe such as South Africa and Malaysia. "The importance of interconnect cannot be overlooked as it brings disparate communities together to form one large community," Reiffer commented. Again it seems to be a question of geography. "In Europe, IM uptake varies from country to country. Some have a very low penetration while others, such as Spain, have a much more advanced IM market," Acision's Steven van Zanen claimed. At CCSinsight, senior analyst, Paulo Pescatore, observed, "In France all the major operators have got together to make their own branded IM services interoperable. While this should be applauded, sadly France has so far proved to be the exception to the rule. The bottom line is that mobile IM has so far been very slow and unsuccessful. There just hasn't been mass market adoption of mobile IM."
"The reality is that operator interconnect – between the IM services offered by different mobile operators – is not a major issue because it is almost unneeded," Scott Stonham believes. "The interconnections between the rival IM communities happen at ISP level so the mobile operator is completely cut out of the loop. For example, why would the UK's Vodafone need to connect directly to France's Bouygues, when their respective customers are both using Microsoft Messenger? The IM service is performing the interconnect so a dedicated IM agreement between the two operators becomes redundant." Paulo Pescatore added, "The fact that it still impossible for some-one on Yahoo! mail to swap an IM message with another user of Windows Live Messenger shows that, while such offerings might be advanced Web 2.0 services, they're still proprietary and enclosed. That's why mobile operators have sought alliances with one of the leading players."
Originally, it was thought that IM would eventually replace SMS. However, IM is now largely viewed as a complementary service to SMS. "The real driver for IM may well be mobile social networking and the key to its adoption will be tightly integrated presence," Pescatore suggested. "That will mean when subscribers look at their handset's address book they will be able to decide whether to communicate by voice, text or – thanks to presence- via IM. That's the vision is just that the industry hasn't got there yet."