MMS revenues will disappoint

Jim just sent me a link to where this report was just released saying that MMS won't be the cash-cow that Telecoms are hoping it'll be:

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.

That's still a lot of money involved in MMS, but basically the Telecoms are fooling themselves if they think we're going to pay 10 or 20 times as much as an SMS message for stupid freaking messages with clip art or fuzzy-fotos.

Here's what I'm paying right now to use my mobile phone. I use a pre-pay phone, which costs a little more, but is flexible and keeps me aware at all times how much I'm spending. I like that. So here's how the charges for my phone break down:

First, let's talk about simple phone calls. In order to make a phone call, I need to "charge up" my phone with money. So I go to the local ATM, type in my phone number, and pop let's say 50 Euros into the phone. Now when I want to make calls, the charge comes out of that 50 Euroes. When I run out of money, I can't make any more calls, but can still receive calls for free. The price of the call depends on where you are calling and what time of day and to which network, but it's usually around 20 Euro cents a minute.

Secondly let's talk about SMS. I can send a simple text message to just about anywhere in the world and it costs 3 Euro cents. The text can only be 160 characters long, but that's more than enough for most things you want to send. Americans don't really understand text messages right now, but they will some day. I'm not going to explain it here, but just point out that in December alone something like 30 Billion text messages were sent in Europe.

Now let's talk about GPRS. My phone automatically can use GPRS, which is just a data connection and has nothing to do with voice that I can tell. If I don't sign up to a plan, then I have to pay some HUGE rate per kilobyte that works out to about 5 Euros per megabyte transfered, but if I do choose a plan, then I pay less. I bought a 20 meg plan for $30. There's a great thread at All About Symbian comparing GPRS costs around the world and this, believe it or not, is pretty good. Now I can use up to 20 megs of bandwidth this month and not have to pay any more money. At the end of the month, I have to pay $30 again.

Finally, let's talk about MMS. You can only use MMS if you have a GPRS phone because MMS requires higher bandwidth and is really just WAP wrapped up in a push-like framework. My provider - Telefonica Movistar - has a deal where if you buy the plan like I did, you only have to pay 25 Euro cents per MMS message, but if not, you have to pay 75 Euro cents. Look at those prices again. SEVENTY FIVE CENTS!

These guys are insane.

Think about that for a second. I'm already paying for the data connection, yet in order to use MMS I need to pay 25 cents a message extra. WHY? Why in the world would anyone pay this amount. Now, the MMS message could by HUGE, right? It could have tons of pictures and a soundtrack and god knows what else. So maybe this is a savings if you look at it from a kilobyte level, but the fact is it's probably not. It probably would cost less if you were charged by the kilobyte to download the data rather than by the message. Especially if you already have a data plan like mine. So basically, MMS is just a charge-per-use application - an internet based service that the telecoms have wrapped up and are trying to push on non-technical users. It's an smartphone stupidity-tax.

But the thing is, it isn't going to be long before there's ways around this! First, I don't need to use the gateways that my telecom is providing for MMS. There's already a service at which will allow MMS messages for free - but is advertising supported. I may sign up just to get cool MMS advertising to see what a good MMS message looks like, because I haven't seen one yet.

But even thinking beyond MMS, I've already got several different ways to send and recieve messages on my phone. I've got an Instant Messaging client, a web browser that I can use to post to my blog, and the integrated Email client already. I can send you a photo in an email and send you an SMS message that tells you to check your email and it'll cost me only 3 Euro cents. This is basically what MMS is doing already, but in a packaged way. So there's no reason, in my mind, that MMS will succeed because unlike SMS, it's not a messaging monopoly.

Gotta go to lunch.... more on this thought in a bit.


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