Version 0.1 /03 Oct. 2002

Table of contents

• 1. Introduction
  • 1.1 Market Forces
  • 1.2 Market Barriers
  • 1.3 Developer Impact
• 2. Calling All Developers
• 3. Recommendations for Developers
• 4. Conclusion
• 5. Definitions
• 6. Build Test Sell

Disclaimer:

The software or the copyrighted document is provided "as is", without warranties of any kind, and specifically excluding all implied warranties, for example of merchantability, fitness for purpose, title and non-infringement. In no event shall nokia be liable for any special, indirect or consequential damages, or any damages whatsoever resulting from loss of use, data or profits, arising out of or in connection with the use or performance of the software or the copyrighted document.

License:

You need a license from Nokia to use this document. The license terms will determine your rights and obligations. Without the prior written permission of Nokia, reproduction of the copyrighted document to any other server or location for further reproduction or redistribution is expressly prohibited.

1. INTRODUCTION

When color TV replaced black and white, households were suddenly transported into a bright, vibrant new world. Color TV elicited the emotional link between viewers and technology by bringing its win-dow to the world closer to reality.

The evolution of Short Messaging Service (SMS) to Multimedia Messaging Service (MMS) on mobile handsets will have a similar impact on how consumers communicate in the near future. What once was the realm of sending simple text messages from a monochrome mobile handset is evolving into a service that allows greater expression through multimedia voice, video, audio, and data delivered to MMS-enabled mobile phones. Unlike SMS, MMS provides an excellent platform for consumers, with a colorful, user-friendly application interface. It is no surprise, then, that the telecommunica-tions industry seeks to revolutionize messaging by enhancing its robustness and delivering on a prom-ise to bring the next generation of communications to mobile consumers.

Today, analysts estimate that more than 62 billion SMS messages will be sent worldwide on a month-ly basis in 2002. That translates into a little more than $5 billion (5.7 billion euros) in transaction rev-enue per month. For a developer, this means an opportunity to create compelling applications that not only build loyalty between consumer and network operator, but also make money for the devel-oper. Developers can share recurring revenue streams with network operators on transaction-based services or license their software to aggregators and system integrators.

We are well along the path from SMS to MMS, as indicated by the frenzy of activity ranging from network operators readying their infrastructure to support MMS services, to new product launches of MMS-enabled handsets. However, forces governing the transition are based not only on the technol-ogy but also on a variety of industry factors that need to be addressed before the full potential of MMS is realized. Major telecommunications players such as Nokia and its operator partners are com-mitted to ensuring that the migration of millions of SMS consumers to advanced messaging services happens smoothly. In fact, Nokia and other handset manufacturers are working closely together to promote interoperability standards that will enable various models of mobile phones to work together. Network operators are beginning to deploy and test MMS services in select markets, hoping to introduce new technology in a market that analyst firm Mobile Streams says could potentially be worth $20 billion per month worldwide by 2006.

In order to participate in the migration to MMS, developers need to understand the market drivers and challenges that will impact its success. A closer look at the market forces will arm developers with the educated knowledge they need to plan their business.

Back to top

Market Forces

• Increased usage of mobile handsets. Mobile handsets have grown beyond useful communication tools into fashion accessories for everyone from teenagers to adult business users. Market research firm International Data Corp. (IDC) recently projected that mobile handset wireless subscribers would number more than 1 billion worldwide by the end of 2003. Introduction
• SMS success. Some of the most avid SMS users today are teenagers and young professionals who wish to stay in constant contact with their friends and business partners. With the 62 billion SMS messages sent monthly, it is not a big stretch of the imagination to see how a more robust mes-saging service will expand that market further in the next few years. The rollout of 2.5G services by the end of 2002 will provide consumers with increased bandwidth and decreased latency, readying them for the transition to MMS.
• New MMS-enabled handsets. Leading handset manufacturers such as Nokia have pledged to launch MMS-enabled handsets beginning in 2002, and Nokia expects half of terminals shipped from Nokia at the end of 2002 to be MMS capable.
• New server deals. Companies like Nokia continue to execute strategies that ensure the success of MMS. Nokia has announced agreements with carriers such as Sonera, which will deploy Nokia's Artuse Multimedia Messaging Service Center (MMSC) , enabling Sonera to provide MMS services to its customers. Other equipment manufacturers are seizing the opportunity as well.
• MMS interoperability. Initiatives from leading telecommunications firms such as Nokia, CMG Wireless Data Solutions, Comverse, Ericsson, Logica, Motorola, Siemens, and Sony Ericsson have promised cooperation on MMS interoperability by supporting the standards defined and approved by the Third Generation Partnership Project (3GPP) and the WAP Forum.

Market Barriers

• 2.5G deployment. The transition to a high bandwidth infrastructure that will form the wireless transport backbone for MMS has taken longer than expected. Higher bandwidth is required to sup-port the ability to send and receive rich multimedia files to mobile handsets without a noticeable slowdown in service. MMS will be a leading traffic generator for the expanding GPRS networks, but the deployment and adoption of this 2.5G technology will occur at different rates throughout the world, which impacts when carriers can roll out MMS services to consumers.
• Lack of widespread roaming agreements. Roaming agreements among network operators have yet to be resolved for MMS. While such roaming agreements are not necessary for a user to receive MMS content services from their carrier, they are necessary if the market is to see the explosion in person-to-person messaging traffic experienced with SMS roaming agreements. Nokia has become a trendsetter and leader in ensuring that roaming agreements among carriers and other handset manufacturers are put into place, but more deals need to be established. Last year, Nokia and other handset manufacturers established Wireless Village, an initiative to ensure interoperability for different mobile instant messaging and presence services. In February 2002, the group announced Release 1.0 of the specification; however, it will take time for the specs to be incorporated into future products.
• MMS pricing. MMS transaction pricing has yet to be established. An MMS message will probably be slightly more costly during its initial rollout phase compared to an SMS message. Industry analysts predict an MMS message will cost 2.5 to 3 times that of an SMS message, thus ranging anywhere from $0.30 to $0.48/transaction (0.34 to 0.54 euros) for person-to-person multimedia messages. Early pricing example confirm these estimates, with D2 Vodafone (Germany) charging 0.39 euro ($0.38) per MMS message up to 30 KB in size; Sonera (Finland) charging 0.59 euro ($0.57) for messages up to 100 KB, and Telenor (Norway) charging 10 NOK (about $1.28) per person-to-person MMS message with no published limit on message size. Some value-added advanced messages, such as screensavers, are expected to cost as much as $2.00 (Mobile Streams, 2001). With the higher cost for MMS messaging, Nokia expects that initially this format will be paid for by businesses and high-end consumers who have the money to spend for MMS transactions. With the highly anticipated evolution towards MMS, there are a number of ways developers can positively impact the market and help drive the migration path.

Developer Impact

• Seize opportunities. Developers should seize opportunities now to create and market innovative applications and services to a growing number of consumer and enterprise messaging subscribers. On the consumer side, person-to-person messaging, entertainment, and content services are sure to play a major role in MMS, just as they do in SMS. It is only a matter of time before these serv-ices make the full transition to the MMS standard. Meanwhile, even enterprise users seek to make good use of MMS. In fact, some operators will develop MMS-enabled services for specific vertical applications. These applications may be tailored solutions for enterprise users such as a field engi-neer or salesperson. This trend will continue in parallel with consumer penetration.

Back to top

2. CALLING ALL DEVELOPERS

Why should you get involved with MMS? If you want to grow your business, MMS is the next stan-dard for mobile handset communications, and plans to enter this business begin now. Nokia can help you provide consumers more value for their money, while putting more revenue in your pocket.

There are already successful business models based on SMS experiences. Indeed, based on the esti-mated number of messages sent around the world today, the potential upside can become enormous with recurring revenue streams. One research organization, Mobile Streams, recently published fore-casts for the number of monthly messages and revenue for SMS and MMS.

MMS traffic is expected to exceed 10 billion messages per month sometime in 2005, and eclipse SMS traffic sometime in 2007.Note: Excludes Japan.
Source: Mobile Streams, 2001

The potential for the projected MMS market is sure to attract the most ambitious developers. The key is to find a sustainable business model. There are a number of ways to do this, including sharing transaction revenue with an operator. However, depending upon your size and business, this can become a risky proposition because of the wait to realize recurring revenue. However, the advantage is that operators will take more control of marketing and billing to subscribers. This can be a boon, especially if your company is small and lacks resources.

Because of higher per-message revenue, revenue from MMS will eclipse SMS two years before their traffic curves cross. Note: Excludes Japan.
Source: Mobile Streams, 2001

In Europe alone, the Yankee Group estimates that by 2006, MMS will be a $10 billion (11 billion euros) market, while the total messaging market will hit $44 billion (50 billion euros).
Source: The Yankee Group, 2002

You also can license software to content aggregators or system integrators. These channels can become a valuable resource by marketing and selling your applications and services as an overall solution to an operator. In this case, the aggregator or system integrator also takes care of the billing considerations. This model is especially appropriate in cases where operators seek to sell enterprise solutions for vertical applications.

You can work closely with Nokia's direct marketing channel to operators, called Tradepoint. This is an especially powerful tool for those who have not yet established relationships with operators or want to expand their distribution reach to other regions where they do not yet have established business relationships. By becoming a member of Tradepoint, you will have the opportunity to work directly with Nokia and informally with operators. More information about Nokia's Tradepoint program can be found at www.tradepoint.nokia.com.

Back to top

3. RECOMMENDATIONS FOR DEVELOPERS

Nokia offers several recommendations for getting developers ready for the onset of MMS.

Consider application design

• Determine how MMS applications will benefit users and provide them with a valuable user experience.
• Make the application simple and easy to use.
• Adhere to Nokia's design specifications for its four different user interfaces so that the application works well across a variety of Nokia mobile handsets.

Evaluate market presence

• Determine where you are most likely to gain market share. For example, is your market presence stronger in areas that are synonymous with MMS adoption such as Europe or Asia/Pacific?

Consider market forces

• Understand the market drivers, such as infrastructure deployment, roaming agreements, and new handset terminals supporting MMS. If you are educated about the market, there is a better chance of delivering a timely application for the market.

Determine your business model

• Establish a sustainable business model that is realistic in light of your application and the relationships you build with operators and Nokia. Remember that operators and service providers have different billing and customer systems, so it may be incumbent upon the developer to customize an application depending upon the operator or service provider. Some carriers will be willing to take on the billing issue themselves while others will not. All of this will factor into how you choose the right business model.
• In cases of revenue-sharing arrangements, remember to negotiate marketing commitments and a larger share for your business, especially if there is an operator exclusivity agreement. The success of your application will stem from how a consumer perceives the value of your service, and marketing plays a key role here.
• If a developer chooses to go through a third-party distribution channel, you must thoroughly understand the expectations of not only the distributor but also the carrier when you enter negotiations.

Establish key partnerships

• Work closely with innovative operators. In some cases this may call for first developing partnerships with second- and third-tier operators who may be more aggressive in deploying an MMS solution.

Back to top

4. CONCLUSION

With SMS evolving to MMS in the next several years, developers are well positioned to take advantage of the messaging revolution. Nokia's leadership in establishing MMS as an industry standard will ensure that developers receive the best support and tools for making this new service successful.

Back to top

5. DEFINITIONS

A variety of characteristics define the messaging services that will evolve into MMS.

SMS: Short Messaging Service enables mobile handset users to send simple text messages of up to 160 characters to another recipient. It is often referred to as person-to-person messaging. SMS has been in use since the 1990s, and is popular in Europe and the Asia/Pacific regions.

EMS: Enhanced Messaging Service takes SMS one step further. It enables the sending of combined text messages with other formats, such as simple sound, pictures, or animation. Although EMS is still considered person-to-person messaging, it adds more character and appeal to the messages by adding basic visual and audio capabilities. EMS emerged in 2001, but has yet to gain the popularity of SMS due to its later introduction.

MMS: Multimedia Messaging Service is perhaps the Holy Grail of messaging. It represents the highend phase of SMS evolution, enabling mobile consumers to send color multimedia data such as digital still images, video clips, audio, and animation, in addition to text messages. With its support for rich media formats, MMS visually appeals to consumers and plays on their emotions as messages become much more realistic. MMS will begin appearing in 2002. Several operators are already testing MMS solutions in select markets.

Back to top

		Go to Forum.Nokia.com Forum.Nokia.com provides the tools and resources you need for content and application development as well as the channels for sales to operators, enterprises and consumers. Forum.Nokia.com
		Subscribe to updates Stay abreast of news and developments through a subscription to our regional newsletters for Europe and Africa, the Americas and Asia. Subscribing is easy and your privacy is strictly protected. Forum.Nokia.com/newsletters
		Download tools and simulators Forum.Nokia.com/tools has links to tools from Nokia and other industry leaders including Adobe, AppForge, Borland, Macromedia, Metrowerks and Sun. Forum.Nokia.com/tools
		Get technical support The support area contains a library of white papers, sample code and FAQs arranged by technology. The Forum Nokia Discussion Boards enables you to ask questions of the global developer community. Forum.Nokia.com/support Discussion.Forum.Nokia.com
		Test your application The Nokia OK program provides the opportunity for your application to enjoy premium placement in Nokia's sales channels.
		Sell your application Global and regional channels get your application in front of operators and XSPs, enterprises and consumers. Go to Forum.Nokia.com/business to access all of the opportunities Nokia presents. Forum.Nokia.com/business

Back to top