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Vodafone MMS deal up for grabs as Ericsson fumbles?

Single European deal may not be viable

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ComputerWire: IT Industry Intelligence

The world's largest mobile operator Vodafone Group Plc is being forced into a major reversal over the award of a key contract to supply software and systems for mobile multimedia messaging (MMS) to nine of its international subsidiaries. The deal was awarded to Swedish mobile equipment vendor LM Ericsson AB, and was valued at over $380 million.

Vodafone will now only confirm that some of the national operations may be considering bringing in other companies, to make sure that their MMS services are launched on time. This could be argued to be a failure of Vodafone's management style, in forcing a technology supplier on national operators in Germany, Greece, Ireland, Italy, the Netherlands, Portugal, Spain, Sweden and the UK, without properly consulting them first.

This suggests that Vodafone's global management did not sufficiently evaluate the technical issues inherent in its target of rolling out MMS technology across Europe from the middle of 2002. In fact a number of Vodafone's national operators may be forced to go back to their 2G messaging systems vendors, for systems integration work and possibly even software. This is the analysis suggested in a research note from investment bank ABN Amro. Particularly pressuring Vodafone central management, apparently, to make changes to the MMS strategy is German mobile operator Mannesmann, which is an existing second generation customer of messaging system specialist CMG Plc. ABN Amro suggests that CMG is likely to be the winner if many of these contracts come up for re-tender, but even CMG thinks that a formal re-tendering process is unlikely. Vodafone is unlikely to re-tender these contracts, primarily because of the loss of face which would be involved, but also because of the time delay. It may just quietly award the contracts to the second placed vendors from the original tender.

Newbury, UK-based Vodafone boldly announced that the company would be awarding the entire multi million dollar contract to supply mobile multimedia messaging services to its equipment supplier LM Ericsson Telefon AB, with some fanfare in late January 2002. Ericsson was awarded the contract mainly because it has preferred supplier status, and supplies the majority of Vodafone's mobile network hardware. At the time this seemed to herald the death knell for specialized developers and integrators of mobile messaging software such as CMG Plc, Logica Plc. The conclusion drawn was that the equipment suppliers, such as Ericsson, Motorola Inc, Nokia Corp, Siemens AG, and Nortel Networks Corp, would knock companies such as CMG, Logica, and Comverse Technology Inc.

This idea was swiftly knocked back in February 2002, when CMG announced that it had won a contract with 3G operator Hutchison to supply MMS systems to five territories, UK, Italy, Sweden, Australia and Hong Kong. At the time CMG spokesman, Peter Maathius, commented with reference to the Vodafone deals that: "Ericsson cannot even integrate Ericsson systems".

Logica, which is a partner of Ericsson in the 2G messaging world, but is bidding against it in every 3G contract, refuses to comment on whether the perceived gap in Ericsson's MMS technology strategy would give it the potential for a 3G MMS alliance between the two vendors. Logica has yet to name any of its formal MMS systems customers.

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