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Mobile operators relying on multimedia messaging (MMS) for substantial income are in for a disappointment, as it will not deliver the revenues expected.

Many operators are aiming to garner 20 percent to 25 percent of their revenues from mobile data, and in particular from MMS, by 2005, but they are likely to fail, Datamonitors

According to the research firm, SMS revenues in Europe will peak in 2003 and fall year-on-year as price competition increases and new technologies emerge and cannibalise that particular revenue stream. MMS will plug this gap for a few years, said Datamonitor, but will not be able to match the revenue-generating success of SMS in the longer-term.

Datamonitor forecasts the MMS market will grow at a four-year compound annual growth rate (CAGR) of 388 per cent due to operator push and viral use, but in Europe it will still only be worth $4.9 billion by the end of 2006.

"SMS has proven to be a cash cow for operators in Europe," said Datamonitor mobility analyst, Richard Clifford. "As well as seeing phenomenal usage, margins crucially stand at over 95 percent on the service. This is not the case with MMS however, and while the fall in SMS revenue will be more than evened out by the increase in MMS revenue over the next couple of years, operators' profitability will be hit as the margins are considerably lower."

However, Datamonitor does hold out some hope for debt-ridden operators. So long as they don't rely on MMS for substantial revenues streams and look to other forms of mobile messaging, they might survive.

Clifford advised that operators deliver e-mail and/or instant messaging services as these will prove more popular and contribute more revenues than other forms of mobile data like location-based services and mobile gaming as such services have yet to take-off outside of Asia. "It is likely that consumers using e-mail and/or instant messaging will be higher value users," Clifford said.

"Ensuring substantial revenue streams from mobile data, other than MMS, over the next three years is crucial to the success of mobile operators," he added. "While the reduction in messaging revenues will come as a blow, all is not lost for the beleaguered operators."

© ENN

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