Mobile Instant Messaging

Overview

Mobile instant messaging is real-time messaging and chatting between two or more people which has extended its presence from the desktop to the mobile environment. The instant messaging client is either embedded on the handset, prior to shipping, or can be downloaded from the service provider’s website. The instant messaging server is installed at the operator end and serves to enable communication and interaction between different instant messaging and presence service domains.

Traditionally, mobile messaging has been defined by text messages which are transmitted over the voice channel itself. The evolution of 3G networks, with high bandwidth availability, is leading it towards rich media messaging where users have much more control over the means through which they can communicate with others.

According to a new study by Forrester Research it is anticipated that the world wide mobile instant messaging (MIM) market will grow from 9m subscribers in 2007 to 66m subscribers in 2011. The European market is expected to grow from 8 percent (26.7 million subscribers) in 2007 to 24 percent (80 million subscribers) by 2013. The report goes on to state that Mobile IM will displace 13 percent of SMS traffic by 2013.

Simultaneously, the study has also attempted to allay the fears of operators stating that text messaging will continue to grow regardless of the increasingly popularity of mobile IM, despite the fact that some traffic will have moved to IM.

Capgemini’s telecommunications, media and entertainment strategy lab predicts that mobile IM revenue is set to reach between €775 million ($1.05 billion) and €800 million ($1.09 billion) by 2012.

The increasing acceptance of mobile instant messaging is being driven by younger users who are familiar with the desktop based IM and want the same level of services even while on the move. This is supported by the availability of higher bandwidths on third generation mobile networks, which is reducing the latency of real time communication driving better performance. The service is further being supported by the increasing number of IM enabled handsets which are now available on the market providing greater freedom of choice.

However, some of the obstacles for mobile IM are the lack of whole-hearted support from mobile operators fearful of loosing out on their cash cow – SMS; multiple protocols used by major IM providers; and the high pricing of operator data plans. Currently there are two business models being evaluated by operators for IM – the first is charging for instant messages along the same lines as a text message; the second is charging for the communication as part of a data transfer plan. Operators are realising increased ARPUs from the higher data transfers associated with IM thus increasing their support for the service. Interoperability has also been a major issue because IM vendors have pushed proprietary protocols that lock users into their IM service rather than support open standards.

The high pricing of operator data plans can be subsidised by mobile advertising and content-in-client models. Given the breadth of the mobile advertising channel, there could be a mix of pricing strategies ranging from cost per thousand for screen based ads, cost per click where fulfillment is via the mobile and cost per action where the mobile channel is used as a response mechanism.

The mobile instant messaging space is increasingly being defined by new players such as third party application developers and ad-networks, which will serve to increase the richness of the user experience on the IM client. A recent partnership between Neustar and Mobinex, demonstrates on-device portal functionality with an IM application. It allows users to access data services such as ringtones, videos etc while in an IM conversation, thus improving the user experience, while allowing for higher revenue generating opportunities for operators. Similarly IM providers and ad networks can also provide personalised and contextual advertising within the IM client in a wide range of options such as banners, product placements or branded information services.

Fig 1: Mobile Instant Messaging Environment

Trends

While operators played an important role in launching IM, increasingly the IM providers are playing a more important role. The user need only log on to the mobile version of the IM service providers website, identify the handset and the operator and download the client to the handset. A stronger penetration by software vendors and IM providers into the space has been seen in the recent acquisition of Danger Inc by Microsoft. Similarly, Google’s acquisition of social networking service provider, Zingku and presence sharing and activity stream provider Jaiku While the operators stand to gain from the data transfer, there is a loss of branding opportunity. Therefore, there is an opportunity for operators to provision integrated messaging platforms with an increased value proposition. One of the means would be to aggregrate the various IM providers enabling a single contact list for the user.