Cellcos prepare for IM onslaught
Shut out portals to whip up ARPU
Steve Ballmer told the audience of 3GSM recently that Microsoft should be considered a friend, not a foe, of the global mobile operator community.
"We come as friends. We see opportunity to change the world together in a positive way." One positive way was something else he demonstrated at the show, the use of VoIP over Microsoft Office Communicator, due to be released this year on a mobile phone.
No mobile audience can consider a company a friend if it threatens multiple future revenue streams, and in another part of the 3GSM audience, 15 of the leading non-US cellular carriers were plotting to launch their own statement on standardised interoperable instant messengers, a move that is meant to slam the mobile door in the face of not just Microsoft, but also AOL, Yahoo, Google and, of course, Skype, the carriers’ current "bête noire".
Investment analysts globally shuddered at the prospect of VoIP getting some kind of free ride over mobile services, and nodded sagely as the 15 leading mobile operators responded by promising IM interoperability and fast.
Almost as if to remind everyone of the danger, Hutchinson Whampoa’s 3 mobile carrier announced that it was now supporting Skype on a mobile, and finally the panic was almost perfect.
Now, two weeks later Vodafone, added to the angst surrounding mobile operators by taking a £28bn ($49bn) write down of assets, mostly associated with its German operations, which it said were over valued. Vodafone also said that excluding acquisitions and disposals mobile growth would be just 5 per cent to 6.5 per cent in the year to 31 March 2007, a dramatic drop on previous forecasts. Vodafone shares dropped about 6.5 per cent on the day, and have fallen a total of 12.5 per cent since we last issued a Faultline Fifty analysis (see separate story and spreadsheet) a month ago, to a three year low.
While this Vodafone hiccup doesn’t relate to IM in any direct way, Vodafone, as the global leader in mobile, sets the tone for the entire industry, and right now must feel it needs friends like Microsoft about as much as it needs a hole in its balance sheet. It will take the view that it has to secure any and all revenues on its network that are going, for itself, and not share them with any newcomer from the software or internet world. It needs growth revenues urgently, and IM is potentially the most promising place to look. There are billions of IM messages placed each month with the AOL network alone, carrying around 800m IM messages each day and that success is set to shift onto mobile.
Today there are estimated to be only 12m IM mobile customers in the world, but this number is expected to double every year for at least the next four years.
Microsoft’s Telco team has just recorded a win with Beijing Mobile, part of the China Mobile group, where the Microsoft Live Communications Server is supporting an IM client written by China Mobile.
The sign ups in a market not known for high SMS usage, are happening at the rate of 10,000 per day and have reached multiple millions of customers. It is this kind of growth that all of the 15 declaring cellcos, China Mobile among them, are chasing.
These include Vodafone, Orange, T-Mobile, China Mobile, O2, Telefonica and Turkcell and others, between them covering 700m mobile phone users, which have agreed in principle to use a the GSM Association standard for IM, compatible across all networks, from some point later in 2006.
Vodafone and Orange also said that they want to be the first to get interoperability working, while Orange plans to offer a common IM service between Orange and Wanadoo broadband customers.
The most important discernible difference between SMS and IM messaging is the fact that it is real time and that other underlying data delivery services can be launched on the back of an IM server.
3G networks are more than capable of handling real time data services now with increased total bandwidth and lower latency and this move will mean that development of interfaces which arrange messages into separate conversational threads rather than in strict order of arrival. And IM traffic can be opened up to groups, and is not just about conversations between two individuals.
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