It's all in your hand

By Maria Kowalewska

Thanks to the success of short message service (SMS), mobile messaging has long been implicated as the key application on the cellular market. The evolution of messaging technology now continues with the arrival of multimedia messaging service (MMS), already available worldwide. The new technology allows users not only to send and receive photographs, pictures, sound and text from their mobile phones, but also to receive them in their e-mail accounts.

As mobile providers recover from the failure of the overhyped wireless application protocol (WAP), experts believe operators have learned their lesson, and MMS services now stand a chance of becoming the new success story of the year, with the technology readily available.

Sales of handsets with cameras will increase worldwide but their application design, combined with how users perceive their value, will remain the greatest barriers to their growth, according to estimates by technology research and advisory firm Gartner. Other analysts agree and say that messaging is evolving toward a unified model in which clients select the best way to communicate at a given moment.

"With MMS, the key issue at present, and likely for the future, is the cost and availability of handsets," said Anna Bossong, a telecoms analyst at CA IB Securities in London. "The problem for most operators is that handsets are currently very expensive - around $800 if the purchase price is not subsidized by the operator, which limits the number of people who are able to afford them."

The success of MMS will largely depend on a critical mass of users with compatible handsets, coherent tariffs, the ability to send messages between users on different national networks as well as international roaming, which would require the data transmission capabilities of general packet radio service (GPRS), Gartner experts say.

"Newer, smaller and cheaper (handset) models expected four months ago have still not arrived, which has delayed the takeoff in growth in demand," Bossong said. "A longer-term issue is likely to be the cost of sending picture messages, although we expect these prices to come down as the take-up of the service increases. Also the question of boosting local content will have to be addressed, but the cellular companies are likely to rise to the challenge."

But MMS also has the advantage that users can send images to e-mail recipients and thus have a ready-made target audience, although the number of handsets has not yet reached critical mass. Users who perceive MMS as an easy-to-use messaging application already know how to use the three key technologies for sending MMS - GPRS, WAP and SMS. MMS also enables users to download ring tones, screen savers and "themes" for mobiles. Though little mentioned, Gartner analysts also believe this capability represents a significant revenue opportunity just as is now the case with similar SMS-related offers.

Robert Maciejko, managing director of the Boston Consulting Group in Warsaw, said that the market for additional MMS services, such as ring tones and wallpapers, will prove lucrative not only for mobile operators but also for private companies, particularly with younger MMS users. He also said it was unlikely that MMS would share WAP's fate.

"MMS is easier to use, and its interface resembles Internet applications to a larger extent," Maciejko said. "The most important thing for providers is to offer specific and well-aimed services."

In response to the growing trend, all three domestic mobile operators - Polska Telefonia Cyfrowa (Era GSM), Polkomtel and PTK Centertel - have already launched their MMS services, albeit somewhat later than other European wireless operators. While PTC and Polkomtel started offering commercial MMS last year, Centertel just started the service last month.

Bossong, however, does not believe that the start of the service in the country just last year compared with the earlier launch by other European mobile providers will hinder the technology's development here.

"Since at present it is handset cost which is delaying expansion of the service in the mass market, in practice it shouldn't affect the market too much one way or the other that the Polish operators launched later than elsewhere in the region," she said.

The three national operators have started to cater to their MMS clients by providing inexpensive handsets as well as discounts to encourage the use of MMS services. PTC, for instance, has also lowered its service costs to zł. 0.50 per MMS message for the company's estimated 1,000 clients who use the service.

Jacek Kalinowski, Centertel's spokesman, estimates that currently about 50,000 Idea network subscribers have MMS phones. He anticipates that the number will reach 250,000 by the end of the year.

Przemysław Stangierski, communications and media practice director at consultancy A.T. Kearney in Warsaw, said that the MMS market in the country is developing according to initial expectations.

"Although some believe that MMS services will develop faster than SMS, the MMS market will develop rapidly but not quite as quickly," he said. "MMS will definitely become popular in the same way SMS did five or six years ago."

Stangierski believes that the number of clients using the service will increase within the next two years as operators will likely continue to lower handset prices and provide some MMS-related services free of charge. Spending on MMS marketing campaigns is also likely to be higher than what the operators spent on advertising for SMS services a few years ago.

"The aim of MMS would be to compete with other communication applications, as it involves sending content that can also be purchased, just as with SMS," Stangierski said. "The technology is the same the world over, but it's what you do with it that can set you apart."

"The service will prove popular," Bossong of CA IB said. "But in terms of the number of messages, it is unlikely to overtake SMS, which is a very cost-effective form of communication, and therefore appeals very strongly to budget-conscious consumers and young people. The key thing will be that the operators should be prepared, when cheaper handsets become available, to market the product effectively and to offer local content and flexible features such as the ability to send MMS messages between operators."