Instant Messaging set to explode internationally
Vodacom and MTN (the two major cellular connectivity providers) don’t want to talk about IM. Despite repeated requests, they refuse to give comment on the issue.
If one examines the SMS figures they have, it’s not hard to see why they won’t talk.
MTN’s SMS figures from Christmas and New Year’s day show 120 million SMSes were sent over the two days, which would have made them around R78 million. If 120 million instant messages had been sent, MTN’s revenue from the most popular SMS days in the calendar would have been R1.2 million. Vodacom won’t even disclose their figures.
The reason for this is that IM uses GPRS (General packet radio service) and IM users only pay for the bytes sent and received. In South Africa, the average conversation on an IM client costs the user about two cents (less than one US$ cent) at the standard data rate of R2 per Megabyte (US$0.30) on older phones and a fraction of that on new phones. The South African cellular networks data bundles lower the cost further. This in comparison with SMS, which costs around 70 cents (US$0.11) per message.
These kinds of figures have to be a key motivator as to why the cellular networks won’t talk about it, let alone launch their own IM services.
Breaking the silence
If MTN and Vodacom aren’t talking now, they will be soon. And the thing that is going to make them talk is non-cellular IM clients like MSN and Yahoo moving onto mobile phones and diluting SMS revenue.
It has already started in South Africa. MXit ( http://www.mxit.co.za ), an IM client developed by a Stellenbosch company called Clockspeed ( http://www.clockspeed.co.za ), has managed to accumulate over 400 000 users since it launched in June 2005 and is seeing about 2500 downloads of their free IM client a day.
The cellular networks won’t be unhappy about that yet. MXit users log on a million times a day and send literally gigabytes of data a day.
But at the recent 3GSM conference in Barcelona, it became very clear that the international cellular networks are going to push into IM in the near future. The three reasons for this are: cost; the obvious functionality advantage IM has over SMS; and the noises being made by the likes of Microsoft.
Steve Ballmer, Miscrosft CEO, told 3GSM that Microsoft is a friend and not a foe to cellular networks internationally. However, the Microsoft Office Communicator, which uses VoIP on a mobile phone and is due to be released this year, is hardly a friend. Right behind the Office Communicator is Skype, Yahoo, Google etc. The networks will want none of it.
Added to this, Vodafone has taken £28 billion ($49 billion) write down of its assets, saying its German operations were over valued. Vodafone has also commented that, apart from acquisitions and disposals, mobile growth would be just five percent to six and a half percent in the year to April 2006.
This will see mobile operators looking to secure revenue streams for the future and IM is certainly the best place to look after MMS has failed in its bid to take over from SMS.
There are billions of IM messages sent every month around the world and the cellular operators don’t want anyone else getting their hands on their revenues.
As a result, 15 cellular operators including Vodafone, Orange, T-Mobile, China Mobile, O2, Telefonica and Turkcell (who have around 700 million users between them) have agreed in principle to use a the GSM Association standard for IM sometime after 2006.
Africa behind the rest
Africa will be behind the international trends because of the huge potential for growth on the continent. Outside South Africa, SMS has not yet exploded and GPRS coverage is minimal. However, inside South Africa with other IM clients launching this year and Clockspeed showing there is a need for it, MTN and Vodacom might change their tunes very soon.
This will be accentuated by the release of High Speed Downlink Packet Access (HSDPA) in the first quarter of 2006 by MTN and Vodacom. While HSDPA is certainly not needed for IM, it opens the door for IM and other IP based services. The greater awareness HSDPA will bring will help to open consumers’ eyes as to the possibilities of their cellphones.
African News Dimension
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