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Ericsson wins MMS infrastructure battle in Europe: U.S. market still up for grabs

As the battle for the multimedia messaging service (MMS) market in Europe begins to heat up among the region’s wireless carriers, the fight for the MMS infrastructure market has largely drawn to a close-and the undisputed winner is Ericsson.

“The leader in the MMSC (multimedia messaging service center) industry is Ericsson by a considerable distance,” said Simon Buckingham, chief executive officer of U.K.-based Mobile Streams, a research and analyst firm that tracks the worldwide wireless messaging industry.

The equipment maker has scored major contracts with some of Europe’s largest carriers, including T-Mobile and Vodafone Group. The company was also one of the first to introduce an MMS-capable phone, a move that may have helped it gain attention and traction in the infrastructure market.

Nokia and CMG Wireless Data Solutions came in behind Ericsson, signing deals with most of the rest of Europe’s carriers, although it is unclear which company is making the most money in the field because financial and contractual details remain secret.

However, what is not secret is which companies have come up short in the market for MMS infrastructure. Logica and Comverse-both major players in the market for short message service (SMS) technology-each have only a few MMS infrastructure contracts in Europe. Indeed, both companies have announced job cuts in their messaging divisions-Logica in May and Comverse just last week.

Kobi Alexander, chairman and chief executive officer (CEO) of Comverse, cited the slowdown in global telecommunications capital spending as the reason behind the company’s cutbacks and said there are still “no clear indications of stability or improvement.” Comverse plans to cut about 21 percent of its work force, or 1,200 positions.

The reason Logica and Comverse have come up short in MMS is the same reason Nokia and Ericsson are on top, industry watchers agree.

“It’s carriers in a tight economy looking for a one-stop shop,” Mobile Streams’ Buckingham said. “The carriers are looking for convenience, and they’re looking for cost effectiveness.”

Ericsson and Nokia-which both sell MMS phones and centers, as well as other network infrastructure products-can offer packaged deals that include all the elements of a multimedia messaging service. Logica and Comverse, as well as CMG, can only offer the MMS center. And because MMS services are based on a Third Generation Partnership Project (3GPP) standard, there is not much room to differentiate products through technology.

“It’s convenience more than anything,” Buckingham said. “It’s not a technology issue.”

Because none of the financial details for MMS infrastructure deals have been released, those in the industry are left to speculate about the particulars. Some have ventured to guess that Ericsson and Nokia discounted their MMS center products to sell additional infrastructure equipment and phones. Others think the two companies could have simply written off the entire cost of the MMS center as a means to sell more phones. John Delaney, senior analyst at research and analyst firm Ovum, pointed out that Nokia and Ericsson’s MMS center sales are closely tied to the introductions of their MMS-capable phones.

“The main advantage is that they can offer very competitive prices for the MMSC,” he said.

U.S. market still open

However, although Ericsson may have largely won the battle for Europe, the war is not over, Buckingham cautioned.

Logica, the worldwide leader in SMS infrastructure sales, recently moved its focus for the MMS market into North and South America. Indeed, the head of the company’s MMS efforts, Patrick Lopez, recently relocated to the United States.

“I wanted to focus specifically in North America,” said Lopez, Logica’s MMS program director. “There’s a lot of potential in North America.”

Lopez said Logica has a better chance to make inroads in the North and South American markets because multimedia-capable phones are no longer a scarce resource. In Europe, carriers were so intent on being the first to market for MMS that they launched MMS centers before all the technology’s specifications were finalized. However, most agree interoperability won’t be too much of a problem in Europe because the core set of technical specifications for MMS services were standardized early on.

“Now we’re getting into a phase where more handsets are available,” Lopez said, adding that Logica expects some carriers in North and South America to launch MMS services as early as the end of this year.

Buckingham said Logica may have a better shot at markets outside Europe because the company has stronger relationships with U.S. and Latin American carriers. Further, Ovum’s Delaney added operators might be worried about locking themselves into a relationship with a single infrastructure vendor, thus prompting them to team with independents like Logica, Comverse and others.

However, as more carriers turn on MMS offerings, those in the industry agree the value of infrastructure contracts will diminish and will be replaced by sales of MMS-capable content and services.

“All of the value of the MMSC is in content and applications,” Buckingham said. GW

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