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Instant SMS: Messaging Just Got Personal Bringing SMS To The Next Phase
Bringing SMS To The Next Phase This presentation aims to share our analysis of recent developments for Mobile Instant Messaging services and the opportunities for both Instant SMS and Mobile Portal IM service for operators in Latin America. Our analysis is based on our experience in other regions as well as observations on market trends and technology.
What is Enhanced Messaging? Enhanced Messaging: the  evolution   of today’s messaging services towards the next generation communication experience  (the converged communications experience) Revolution by Evolution : phased approach towards the fully implemented converged messaging solution Key Factors : Services are simplified and matched with the best of the internet experience Inherent Fixed-Mobile Convergence Migration from Signaling (SS7) to IP based communication
What is Instant SMS? Instant SMS is today’s  initial   service   implementation of tomorrow’s Enhanced Messaging providing a new messaging experience Instant SMS is a service that can be implemented now! Why start with Instant SMS?  To fill the gap between user’s mobile and  internet communication patterns
Service Background: Instant Messaging According to the Radicati Group over 900 million registered instant messaging accounts of which according to IDC 300 million are active users. IM has become popular due to its  conversational based messaging rhythm  and the introduction of the  Presence  concept to the world. It is one of the most popular applications on the Internet.
Service Background: Text Messaging SMS is undisputedly the king of data. However, operators are facing the beginning of a  saturated market  indicated by  flattening of SMS growth and revenue .  SMS is an ‘old’ technology  that has not been upgraded since its introduction. Operators should be attentive to the issue of relying on a large piece of their revenue pie from outdated technology. Finally,  today's user experience does not satisfy the demands of the user  who is exposed to a much richer and broader messaging experience on the internet.
Market Trends
Market Trends Introduction of smart handsets suitable for mass market IP enabled  Fixed-Mobile Convergence is happening Business:  Telcos merge Mobile and Fixed assets Applications: VM2MMS, Instant SMS, Email2MMS. Improved Handset Capabilities Cost reduction initiatives (SS7 to IP) Shared back end components improving network efficiency Growing Demand for Convergence IP Penetration Matching demand for internet communication alternatives Responding to the existing void for impulsive communications Internet Threat
SMS Business Overview SMS mass market success: ~100% penetration agnostic to device, technology, location and operator Worldwide 90% of all non-voice revenue comes from SMS SMS revenues will continue to grow Global SMS volumes are expected to continue rising with almost 2.38 Trillion messages in 2010 Operators enjoy 90-95% profit margin on SMS
SMS Trends “ SMS is likely to remain the dominant messaging application for a long time – well beyond 2010” Portio Research 2007 “ SMS is set to enjoy revenue of $67 billion by 2012” Portio Research 2007 Graphs: Ovum, 2006 & Strategy Analytics, 2007 SMS is here  to stay High Volume Growth (Millions) SMS Revenue Growing, Yet Slower
Latin America Mobile Demand Source: LATIN AMERICA MOBILE DEMAND - June 2006, Pyramid Research
Mobile Messaging Revenues in LA 2000-2009 Mobile Messaging Trends in Latin America, Pyramid Research 2005
SMS Usage in LA 2002-2011 Source: LATIN AMERICA MOBILE DEMAND - June 2006, Pyramid Research
Probability of Users Adopting IM Data ARPU, Mobile Penetration & SMS Usage Source: LATIN AMERICA MOBILE DEMAND - June 2006, Pyramid Research
The  Internet   Shapes our Users Lifestyle Users are spending hours a day connected to the internet The Internet and it’s services also penetrated to the business environment (email…) Person-to-Person communication is affected Immediacy/Interaction level  Language abbreviations Personalization Self Expression “ Less talking = more writing” Emoticons Books: TTYL – Talk to you later – Internet girls New Impulsive Communication Culture at&t commerical
Major Trends US carriers as opposed to their European counterparts have embraced strong internet brands like AOL, MSN and Yahoo. EU carriers, on the other hand, have focused on trying to launch their own operator branded mobile IM services which in some instances failed due to the absence of a strong and established community to empower the service Partial list
Examining the End-User’s Communication Values Richness Interaction Level How engaging is the channel? How does it answer an  immediate communication  method? What is the user experience?  How rich is the  communication channel?
  The  Internet  Communication Services  Richness Interaction Level Talk (VoIP/Video) Chat Instant Messaging Send a Message Email
  The  Mobile  Communication Services MMS Interaction Level Richness Talk Voice/Video Portal IM SMS Mobile  Email
  The  Mobile  Communication Services MMS Interaction Level Richness Talk Voice/Video Portal IM Mobile  Email SMS Send a Message Chat Users expect to find the PC/Internet experiences on their mobile But only one Service for impulsive conversations (ISP based) Various services for sending a  message
The Converged Communication World …more than just a unified bill Single  Address Book  across all  terminals Seamless  handover  between  terminals Simplified  and improved  messaging  experience Optimal  network  with flexible  service  pricing Communication Service  Provider
Worldwide Market Activities Regional activity: North America-  emerging market, high traction for Enhanced Messaging EMEA-  first launches (TMO, Telefonica. TMN), slower rollout than expected APAC-  India, Malaysia, Singapore have committed to launch throughout 2007/8 Standard Bodies’ activities: CTIA  is pushing the service forward with T1’s,  defining interconnectivity and service framework GSMA  is leading the activity and defining the service framework OMA-  CPM group is defining the service functionality of enhanced messaging Market is happening and moving forward
Major Market Dynamics: Mobile Interoperability 15 of the world’s leading mobile Operators announced to rollout instant messaging services that will work across networks  Provide a new messaging experience to be ubiquitous among mobile users  Create a critical mass of users from day one by opening networks Enable connectivity to Portals GSM Announcement- Feb 06
Challenges
Challenges in the Messaging Landscape Reduce OPEX to increase service margins Maintaining the existing SMS service value Preserve brand equity and customer loyalty Improve  User Experience Increase ARPU to compensate for flattening SMS revenue Respond to internet messaging threat Operator’s  Challenges
The Solution = Instant SMS Evolutionizing the existing SMS service with the richness and real-time user experience of Instant Messaging SMS + Instant Messaging = Instant SMS
SMS + Instant Messaging = Instant SMS Mass market service Wide inter-carrier interoperability All revenues directed to operator Core messaging service No registration process Perceived as reliable Focused on the mobile community Real-time communication Supports text and multi-media IP based service Conversational-base interface Multi party conversations Presence enhanced service Instant SMS combines the best of both worlds
Service Description
User Experience Comparison Emoticons Multiparty Conversation Conversation Message Type Address  Book SMS way Instant SMS way Did you see the game last night? I am late. Will be there in a few min Sorry, will stop by at 5pm Hi Wassup? Gr8 ! and U :)  ;-)  :-(  )-x A B D C Hi Of course Sure
Presence Enhanced Address Book Native Address Book Instant SMS Contact List Initial Contact List Status All contacts are “SMS” users Adding Presence information Presence Information is added for other contacts when available Presence
Instant SMS Chat Experience Selecting an “IM” contact Spontaneously adding  a multimedia object Chatting with  IM contact Instant SMS user Instant SMS user
Instant SMS to Legacy SMS  SMS user Instant SMS user SMS user composes message SMS user replies to a message Message is received and displayed in the relevant conversation thread Composing and sending a message Message is received as SMS by the other party Selecting an “SMS” contact
Presence Options Availability Status can be set  manually or by the network Basic status set to keep simplicity Offline status does not affect messaging delivery Personalization The user can set his own profile Display Picture, Personal Message, Display name Immediately shared with contacts Rich self expression options
Bubble Up the Online Friends Bubbling the online contacts to the top of the list Visual alerts for notifying a new online contact Spontaneously triggers communication
Presence goes Beyond Messaging …but needs to start there “ Presence and Availability is the New Age Dial Tone” Ed Fish, AOL  SVP and GM of Desktop Messaging Notifications Profile Device  Capabilities Social  Networking Applications
Rich Conversation Experience Typing  Indication See when the other party is writing a message One of the most popular features in internet IM Keeps the other side engaged  Multiparty Conversation Message conferencing capabilities Message is sent to all participants Invite others to join, be invited See who else is in the conversation
PC Client PC Client Allows messaging from the PC Seamless conversation transfer Address book is replicated Can also include Voice Call capabilities
Target Segments (1) Combination of work and fun Productivity benefit Early adopters of technology Immediacy and efficiency New trendy IM “addicts” – heavy daily users Peer pressure Communication with close groups  of friends Know friends availability New, trendy, fun, and colorful Affordable price Teens 12-19 Young professional 25-35 White collar  Single No children
Target Segments (2) Communication for coordination Immediacy  Affordable price Basic Messaging as priority for effective communication Influenced by kid’s usage  pattern Families > 35 Contacts work & family Party animals 20-30 Working class Single / no children Work to party at weekends
Why Instant SMS? User Experience FMC IP Various solutions exists for each domain, but only Instant SMS answers the needs of all domains
Beyond Instant SMS User Experience FMC IP Multi party conversation Typing indication Presence (mood, status text, gaming) Notifications Multi identity Multi terminals Network Address Book Seamless handover Improved network efficiency resulting in reduced OPEX Flexible service pricing options  Various solutions exists for each domain, but only Instant SMS answers the needs of all domains When all domains are fully addressed  Converged Messaging  becomes a reality
Operator Benefits
Operator Benefits Increase ARPU Providing an enhanced user experience resulting in additional  messaging traffic Open service environment Through messaging continuity and backward compatibility to legacy messaging services Fix Mobile Convergence Meets requirements for fix and mobile environments Improve ROI for network capital investments   Reduce OPEX Cost reduction from migration to IP Shared back end network components
Operator Benefits Extract additional value from existing services via Instant SMS   Marks the first step towards a fully Enhanced Messaging offering Future proof solution through IP compatibility (IMS ready) Supports messaging continuity (IP and legacy) Response to internet threat Filling the messaging void :   Meeting the user’s need for an impulsive, real-time  communication experience Matching the Portals service offering to block them from further penetration into the mobile domain Content delivery tool Enables users to easily access/ be exposed to a broad range of  content services
Operator’s Business Potential Improve overall messaging traffic due to enhanced messaging experience  (avg. SMS user/mo ~ 56 vs. avg. IM user/mo ~170) Reduce OPEX by migrating message traffic from SS7 to IP based barriers Improved ROI on existing network capital investments  (SMS, MMS, Fixed assets, etc.) One solution answering the needs of triple/quad players
Summary
Summary Enhancing the text messaging service with the superior internet instant messaging user experience will generate significant increase in traffic nation-wide Instant SMS with SMS continuity ensures mass-market adoption from day one Instant SMS meets the demand for engaged conversational based messaging currently being offered via the IM portals only Operators gains full control over service revenues and roadmap Instant SMS paves the way towards Converged Messaging
Thank you Raúl Castañón Martínez PSE – Latin America [email_address] www.comverse.com

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Instant SMS: Bringing SMS to the next phase and increasing service revenues

  • 1. Instant SMS: Messaging Just Got Personal Bringing SMS To The Next Phase
  • 2. Bringing SMS To The Next Phase This presentation aims to share our analysis of recent developments for Mobile Instant Messaging services and the opportunities for both Instant SMS and Mobile Portal IM service for operators in Latin America. Our analysis is based on our experience in other regions as well as observations on market trends and technology.
  • 3. What is Enhanced Messaging? Enhanced Messaging: the evolution of today’s messaging services towards the next generation communication experience (the converged communications experience) Revolution by Evolution : phased approach towards the fully implemented converged messaging solution Key Factors : Services are simplified and matched with the best of the internet experience Inherent Fixed-Mobile Convergence Migration from Signaling (SS7) to IP based communication
  • 4. What is Instant SMS? Instant SMS is today’s initial service implementation of tomorrow’s Enhanced Messaging providing a new messaging experience Instant SMS is a service that can be implemented now! Why start with Instant SMS? To fill the gap between user’s mobile and internet communication patterns
  • 5. Service Background: Instant Messaging According to the Radicati Group over 900 million registered instant messaging accounts of which according to IDC 300 million are active users. IM has become popular due to its conversational based messaging rhythm and the introduction of the Presence concept to the world. It is one of the most popular applications on the Internet.
  • 6. Service Background: Text Messaging SMS is undisputedly the king of data. However, operators are facing the beginning of a saturated market indicated by flattening of SMS growth and revenue . SMS is an ‘old’ technology that has not been upgraded since its introduction. Operators should be attentive to the issue of relying on a large piece of their revenue pie from outdated technology. Finally, today's user experience does not satisfy the demands of the user who is exposed to a much richer and broader messaging experience on the internet.
  • 8. Market Trends Introduction of smart handsets suitable for mass market IP enabled Fixed-Mobile Convergence is happening Business: Telcos merge Mobile and Fixed assets Applications: VM2MMS, Instant SMS, Email2MMS. Improved Handset Capabilities Cost reduction initiatives (SS7 to IP) Shared back end components improving network efficiency Growing Demand for Convergence IP Penetration Matching demand for internet communication alternatives Responding to the existing void for impulsive communications Internet Threat
  • 9. SMS Business Overview SMS mass market success: ~100% penetration agnostic to device, technology, location and operator Worldwide 90% of all non-voice revenue comes from SMS SMS revenues will continue to grow Global SMS volumes are expected to continue rising with almost 2.38 Trillion messages in 2010 Operators enjoy 90-95% profit margin on SMS
  • 10. SMS Trends “ SMS is likely to remain the dominant messaging application for a long time – well beyond 2010” Portio Research 2007 “ SMS is set to enjoy revenue of $67 billion by 2012” Portio Research 2007 Graphs: Ovum, 2006 & Strategy Analytics, 2007 SMS is here to stay High Volume Growth (Millions) SMS Revenue Growing, Yet Slower
  • 11. Latin America Mobile Demand Source: LATIN AMERICA MOBILE DEMAND - June 2006, Pyramid Research
  • 12. Mobile Messaging Revenues in LA 2000-2009 Mobile Messaging Trends in Latin America, Pyramid Research 2005
  • 13. SMS Usage in LA 2002-2011 Source: LATIN AMERICA MOBILE DEMAND - June 2006, Pyramid Research
  • 14. Probability of Users Adopting IM Data ARPU, Mobile Penetration & SMS Usage Source: LATIN AMERICA MOBILE DEMAND - June 2006, Pyramid Research
  • 15. The Internet Shapes our Users Lifestyle Users are spending hours a day connected to the internet The Internet and it’s services also penetrated to the business environment (email…) Person-to-Person communication is affected Immediacy/Interaction level Language abbreviations Personalization Self Expression “ Less talking = more writing” Emoticons Books: TTYL – Talk to you later – Internet girls New Impulsive Communication Culture at&t commerical
  • 16. Major Trends US carriers as opposed to their European counterparts have embraced strong internet brands like AOL, MSN and Yahoo. EU carriers, on the other hand, have focused on trying to launch their own operator branded mobile IM services which in some instances failed due to the absence of a strong and established community to empower the service Partial list
  • 17. Examining the End-User’s Communication Values Richness Interaction Level How engaging is the channel? How does it answer an immediate communication method? What is the user experience? How rich is the communication channel?
  • 18. The Internet Communication Services Richness Interaction Level Talk (VoIP/Video) Chat Instant Messaging Send a Message Email
  • 19. The Mobile Communication Services MMS Interaction Level Richness Talk Voice/Video Portal IM SMS Mobile Email
  • 20. The Mobile Communication Services MMS Interaction Level Richness Talk Voice/Video Portal IM Mobile Email SMS Send a Message Chat Users expect to find the PC/Internet experiences on their mobile But only one Service for impulsive conversations (ISP based) Various services for sending a message
  • 21. The Converged Communication World …more than just a unified bill Single Address Book across all terminals Seamless handover between terminals Simplified and improved messaging experience Optimal network with flexible service pricing Communication Service Provider
  • 22. Worldwide Market Activities Regional activity: North America- emerging market, high traction for Enhanced Messaging EMEA- first launches (TMO, Telefonica. TMN), slower rollout than expected APAC- India, Malaysia, Singapore have committed to launch throughout 2007/8 Standard Bodies’ activities: CTIA is pushing the service forward with T1’s, defining interconnectivity and service framework GSMA is leading the activity and defining the service framework OMA- CPM group is defining the service functionality of enhanced messaging Market is happening and moving forward
  • 23. Major Market Dynamics: Mobile Interoperability 15 of the world’s leading mobile Operators announced to rollout instant messaging services that will work across networks Provide a new messaging experience to be ubiquitous among mobile users Create a critical mass of users from day one by opening networks Enable connectivity to Portals GSM Announcement- Feb 06
  • 25. Challenges in the Messaging Landscape Reduce OPEX to increase service margins Maintaining the existing SMS service value Preserve brand equity and customer loyalty Improve User Experience Increase ARPU to compensate for flattening SMS revenue Respond to internet messaging threat Operator’s Challenges
  • 26. The Solution = Instant SMS Evolutionizing the existing SMS service with the richness and real-time user experience of Instant Messaging SMS + Instant Messaging = Instant SMS
  • 27. SMS + Instant Messaging = Instant SMS Mass market service Wide inter-carrier interoperability All revenues directed to operator Core messaging service No registration process Perceived as reliable Focused on the mobile community Real-time communication Supports text and multi-media IP based service Conversational-base interface Multi party conversations Presence enhanced service Instant SMS combines the best of both worlds
  • 29. User Experience Comparison Emoticons Multiparty Conversation Conversation Message Type Address Book SMS way Instant SMS way Did you see the game last night? I am late. Will be there in a few min Sorry, will stop by at 5pm Hi Wassup? Gr8 ! and U :) ;-) :-( )-x A B D C Hi Of course Sure
  • 30. Presence Enhanced Address Book Native Address Book Instant SMS Contact List Initial Contact List Status All contacts are “SMS” users Adding Presence information Presence Information is added for other contacts when available Presence
  • 31. Instant SMS Chat Experience Selecting an “IM” contact Spontaneously adding a multimedia object Chatting with IM contact Instant SMS user Instant SMS user
  • 32. Instant SMS to Legacy SMS SMS user Instant SMS user SMS user composes message SMS user replies to a message Message is received and displayed in the relevant conversation thread Composing and sending a message Message is received as SMS by the other party Selecting an “SMS” contact
  • 33. Presence Options Availability Status can be set manually or by the network Basic status set to keep simplicity Offline status does not affect messaging delivery Personalization The user can set his own profile Display Picture, Personal Message, Display name Immediately shared with contacts Rich self expression options
  • 34. Bubble Up the Online Friends Bubbling the online contacts to the top of the list Visual alerts for notifying a new online contact Spontaneously triggers communication
  • 35. Presence goes Beyond Messaging …but needs to start there “ Presence and Availability is the New Age Dial Tone” Ed Fish, AOL SVP and GM of Desktop Messaging Notifications Profile Device Capabilities Social Networking Applications
  • 36. Rich Conversation Experience Typing Indication See when the other party is writing a message One of the most popular features in internet IM Keeps the other side engaged Multiparty Conversation Message conferencing capabilities Message is sent to all participants Invite others to join, be invited See who else is in the conversation
  • 37. PC Client PC Client Allows messaging from the PC Seamless conversation transfer Address book is replicated Can also include Voice Call capabilities
  • 38. Target Segments (1) Combination of work and fun Productivity benefit Early adopters of technology Immediacy and efficiency New trendy IM “addicts” – heavy daily users Peer pressure Communication with close groups of friends Know friends availability New, trendy, fun, and colorful Affordable price Teens 12-19 Young professional 25-35 White collar Single No children
  • 39. Target Segments (2) Communication for coordination Immediacy Affordable price Basic Messaging as priority for effective communication Influenced by kid’s usage pattern Families > 35 Contacts work & family Party animals 20-30 Working class Single / no children Work to party at weekends
  • 40. Why Instant SMS? User Experience FMC IP Various solutions exists for each domain, but only Instant SMS answers the needs of all domains
  • 41. Beyond Instant SMS User Experience FMC IP Multi party conversation Typing indication Presence (mood, status text, gaming) Notifications Multi identity Multi terminals Network Address Book Seamless handover Improved network efficiency resulting in reduced OPEX Flexible service pricing options Various solutions exists for each domain, but only Instant SMS answers the needs of all domains When all domains are fully addressed Converged Messaging becomes a reality
  • 43. Operator Benefits Increase ARPU Providing an enhanced user experience resulting in additional messaging traffic Open service environment Through messaging continuity and backward compatibility to legacy messaging services Fix Mobile Convergence Meets requirements for fix and mobile environments Improve ROI for network capital investments Reduce OPEX Cost reduction from migration to IP Shared back end network components
  • 44. Operator Benefits Extract additional value from existing services via Instant SMS Marks the first step towards a fully Enhanced Messaging offering Future proof solution through IP compatibility (IMS ready) Supports messaging continuity (IP and legacy) Response to internet threat Filling the messaging void : Meeting the user’s need for an impulsive, real-time communication experience Matching the Portals service offering to block them from further penetration into the mobile domain Content delivery tool Enables users to easily access/ be exposed to a broad range of content services
  • 45. Operator’s Business Potential Improve overall messaging traffic due to enhanced messaging experience (avg. SMS user/mo ~ 56 vs. avg. IM user/mo ~170) Reduce OPEX by migrating message traffic from SS7 to IP based barriers Improved ROI on existing network capital investments (SMS, MMS, Fixed assets, etc.) One solution answering the needs of triple/quad players
  • 47. Summary Enhancing the text messaging service with the superior internet instant messaging user experience will generate significant increase in traffic nation-wide Instant SMS with SMS continuity ensures mass-market adoption from day one Instant SMS meets the demand for engaged conversational based messaging currently being offered via the IM portals only Operators gains full control over service revenues and roadmap Instant SMS paves the way towards Converged Messaging
  • 48. Thank you Raúl Castañón Martínez PSE – Latin America [email_address] www.comverse.com