Qualcomm and Teleepoch
Enter Into a 3G CDMA Subscriber Unit License Agreement, October
6, 2007
MTN chooses Cambridge Broadband
Networks for multi-service wireless network in Rwanda, October 6,
2007
Brazilian government to
publish 3G bidding rules soon, October 6, 2007
KTF 3G service suffers
from technical problems, October 6, 2007
Argentina’s Personal
lunches 3G service in Rosario, October 6, 2007
Russia has it's first 3G
network, October 6, 2007
AT&T could drop Alcatel-Lucent
as 3G mobile network supplier, October 6, 2007
Enea Extends License Agreement
with ZTE for 3G Handsets, October 2, 2007
LG to unveil premium handsets
in Brazil, October 2, 2007
KTF 3G subscribers doubled
in less than 3 months, October 2, 2007
3G policy in India will
be non-uniform, October 2, 2007
- previous news
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Moving from Text to Multimedia and Forecasting the P2P MMS Opportunity
October 3, 2003
Messaging Evolution/Market Overview In this research note, we update
our forecast of the SMS market published in March 2002. We also discuss
the U.S. market opportunity for person-to-person (P2P) multimedia messaging
services (MMS), which is the evolution of mobile messaging beyond text-based
services to a multimedia environment, where voice, text, images, and video
applications can be integrated and exchanged between mobile and fixed
terminals. For this forecast, MMS broadly refers to the services and applications,
and is not strictly limited to the GSM and CDMA standards defined by the
Third Generation Partnership Project (3GPP and 3GPP2, respectively) and
the WAP Forum.
MMS today is mainly still picture messaging, the “snap and send” of still
photos (largely from mobile phone to PC because of limited penetration
of cameraphones) and limited video capabilities. Most carriers provide
picture messaging via e-mail and select carriers via MMS standards. Although
the technical platform or bearer (e-mail, MMS) is irrelevant to the end
user, what is relevant is the experience, which should be ubiquitous,
allowing end users the ability to create, send, receive and post multimedia
messages, regardless of carrier or network. Unlike SMS, today’s MMS is
not interoperable and for the foreseeable future will not be.
Forecast Methodology
The forecast methodology can be broken down into three steps:
1. Identifying the addressable market: We identified the addressable
SMS and MMS markets using carrier and vendor inputs to estimate the current
percentage of wireless users who have two-way SMS-capable or integrated
camera/MMS-capable handsets. The addressable market over the forecast
period includes assumptions regarding handset shipments and replacement
rates.
2. Forecasting adoption and users: We estimated current and future growth
of active SMS and MMS users, which we define as users who initiate at
least one text or multimedia message per month, among total wireless data
users. This forecast does not include non-P2P SMS and MMS services, applications
and premium content (e.g., ring tones, graphics, alerts, e-greeting cards,
short-code applications). P2P messaging will generate the majority of
SMS and MMS revenues.Non-P2P applications represent strong growth opportunities
for the carriers and will be addressed in upcoming forecasts.
3. Estimating messaging revenues: We calculated revenues for SMS and
MMS using current pricing benchmarks (per message, message buckets, and
data connectivity) for picture and video messaging. We also assumed a
degree of price erosion over the forecast period, as well as changes in
the customer mix (pay-as-you-go versus bucket users).
In updating our forecast of the P2P SMS opportunity, the biggest adjustment
was to our revenue forecast, which takes into consideration more recent
price moves to spur adoption and the increasing commoditization of text
messaging (e.g., limited-time promotions appearing in spring 2003 offering
unlimited SMS for as low as $2.99 monthly). In forecasting P2P MMS, we
took into consideration adoption, use, and pricing (handsets and services)
trends in the U.S. and international markets, and expectations as to the
timing and impact of inter-carrier interoperability. With limited visibility
into pricing for more extensive video messaging capabilities, our MMS
forecast is based on pricing for picture and limited video messaging.
Based upon our annual Mobile User Survey, aggressive marketing campaigns
and the viral nature of SMS have boosted awareness and use. Although picture
messaging is in its early stages, it is generating strong interest from
all segments, particularly with young adults (18 to 24). See Exhibit 1.
Exhibit 1.
Picture messaging/MMS:
Generates Strong Interest Levels
Source: The Yankee Group’s 2003 Mobile User and Mobile User Young Adult
Surveys
Forecast Results and Conclusions
Yankee Group’s 2003 Mobile User Surveys show that SMS awareness levels,
adoption and use rose significantly from just a year ago. The Yankee Group
estimates that active SMS users have reached viral levels (~20 percent),
where carriers can start to realize the benefits of network effects.
Active SMS users will grow from fewer than 17 million users in 2002 to
nearly 70 million users in 2007 - a SMS penetration of 40 percent among
wireless users in 5 years (Exhibit 2).
Exhibit 2.
U.S. Opportunity
for P2P SMS and MMS
Source: The Yankee Group, 2003
P2P SMS revenues will grow more than 800 percent from under $300 million
in 2002 to $2.4 billion in 2007. SMS will continue to be a strong contributor
to overall wireless data growth: it will comprise nearly one-half of all
messaging revenues and nearly one-fourth of all data revenues in 2007.
Comparatively, MMS growth will continue to be boosted by wider availability
of affordable integrated camera phones and aggressive promotions (e.g.,
Verizon Wireless’ $4.99 for unlimited text and picture messaging).
Sprint PCS has been the particularly aggressive in enabling its base
and has seen seeing good initial traction: Vision customers uploaded 10.5
million pictures in the second quarter of 2003. However, in the short
term, MMS revenues will be limited by the lack of inter-carrier interoperability,
which we do not believe will be achieved until late 2004. Active MMS users
will grow from several hundred thousand in 2002 to over 31 million in
2007 (with 20 percent of all wireless users using MMS). P2P MMS revenues
will grow from just $8 million in 2002 to nearly $900 million in 2007.
Carrier Recommendations
Carriers should price based on value, not the lowest common denominator
of bit transport. If a single 160-character SMS message can attract a
10-cent price point and create a $20 billion worldwide market, then enhanced
person-to-person messages with pictures and video must be worth a premium
over SMS (with current premiums ranging from 300 to 500 percent in Europe
and the U.S.). The trend toward all-you-can-eat data at a small ARPU premium
prevents building a value-based revenue source that precludes investment
in service development. Pricing for MMS will evolve over time; however,
carriers should remain focused on the value-proposition.
Carriers need to continue to work with their vendors to address MMS interoperability
issues. If we look to Europe for cues, the inability of MMS systems to
interoperate among competing vendors’ systems and handsets has been a
major barrier to mass-market adoption. The fragmented technology market
in the United States will make it even more challenging. However, until
the interoperability problem is solved, consumers will be put off by the
technology’s limited usability.
Carriers should ensure that any multimedia device (Java, BREW, Pocket
PC, etc.) supports MMS and search for a common user experience. Carrier-to-carrier
uniformity will help develop new service markets and usage habits. On
PC desktops, most users work in similar ways with Windows, MS Office,
and Explorer. The same should be true for MMS. This should also extend
to support for legacy devices.
Carriers should develop a MMS strategy that will migrate legacy-messaging
services into a messaging ecosystem, which is an open, flexible messaging
environment. We are not just talking about picture messaging, but leveraging
MMS as a starting point for next-generation messaging services.
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3G Motorola A920
