Friday, May 26, 2006

Telcos could lose out on mobile IM

ZDNet UK News writes that "instant messaging has a bright future on mobile phones, but handset vendors and existing IM giants have a big lead on the telcos. Analysts have warned that mobile operators may fail to capitalise on the full benefits of instant messaging (IM), which has the potential to overtake text messaging in popularity in the mobile space."

John Delaney at Ovum said, "The main replacement for SMS will be mobile IM." According to the article, Delaney cited a "faltering of growth" in the SMS market at the Global Messaging Congress in London, and that mobile IM "does it better, but if operators price it right it doesn’t do it any cheaper. IM will gradually take over from SMS in the next five years in Europe".

James Enck at Daiwa Securities believed "network operators could lose out in mobile IM because of their traditional approach to interoperability." He said, "If implemented in way that carriers typically do, which is to pretend that the rest of the world doesn’t exist, then it’ll be a big failure. Presence in IM is certainly very compelling to the end user but, if you think about the revenue model for cellular operators, a lot of their money is made from a lack of transparency."

Enck said, "SMS is the most profitable product in the history of telecoms" and pointed out that the main efforts towards interoperability were being made by "IM giants", and "independent players who have a solution on the software side."

The article cites recent "IM interoperability agreements between MSN and Yahoo (YHOO), and -- through Google’s (Goog) recent investment in AOL -- between Google Talk and AOL’s client." It aslo discusses efforts by handset manufacturers, such as Nokia (NOK), to work beyond the network operators.

Enck added, "It’s not just the major usual suspects [such as MSN], but community interests and social networks who’ve got a major lead on the carriers in this space."

Ovum's Delaney insisted that the success of mobile IM would require "the co-operation of the operators and [having] them involved in revenue participation," but would depend "on the operators deciding to embrace IM in a way that they haven't been thus far".