Picture this

By The Chilli analysts

In the run up to Christmas, I accompanied a friend to a mobile phone shop. Whilst there, I availed myself to a demonstration of picture messaging. Two attempts to transmit a picture of my companion from one handset to another resulted in failure, owing to a busy network (according to the error message on the handset). However, a result of sorts was achieved when the handset successfully transmitted the picture back to itself [Editor's note to mobile phone shops: please improve your in-store demonstrations]. I left wondering whether or not picture messaging will be a great success. My answer is yes, if the following factors are taken care of - user behaviour, technology and pricing model.

The novelty effect

In normal human communication, people don't communicate by pictures alone. They talk to others and use body language. Showing a picture may start a conversation, resulting in a discussion that can be communicated more precisely and swiftly by voice or text. Looking at it this way, one can see a place for picture messaging, as the little brother to voice calls and text messaging. It is quite challenging to communicate by pictures alone, especially on an interactive basis, which is where text messaging and voice calls excel.

The chatterati, texterati and picturati

What kind of users will send picture messages frequently? Well, as the saying goes, a picture paints a thousand words. Holidaymakers can use picture messaging to send postcards, but we don't go on holiday everyday. Mobile workers, such as insurance investigators, could use picture messaging to communicate damage reports, were it not for the fact that a digital camera with a flash will produce consistently better results. Teenagers may send jokes, sports information, etc, as snapshots. This could form a new sub-segment, in the manner of ring tones. Imagine teens swapping fashion trends, pictures of pop or sports idols, potentially supplanting teen magazines and collector cards. Text messaging is great in that it is a non-intrusive way to communicate with someone, in contrast to voice calls. Picture messaging is intrusive, in that you have to hold the handset at the object you wish to immortalise in a picture - a little tricky for a teenager to do in a lecture theatre. The immediacy provided by taking a picture and transmitting it, is only of value if the receiving handset can display the picture, else the receiver must go to the mobile network operator's (MNO's) website to view the picture.

Vanity effect

The great thing about voice calls and text messaging is that you can project an idealised image of yourself, as nobody can see what you look like (e.g. bad hair, dark rings around your eyes, in your pyjamas, etc) or whom you're with. Many of us like to have our photographs taken only when we feel we look our best.

Interoperability

MNOs have limited their market size by a lack of interoperability, between handsets as well as operators. Mobile phone users are accustomed to sending text messages to users of different networks in different geographies. How many of us know what networks our friends' use? Should we care? Orange UK hopes to achieve full interconnect (handset and operator interoperability) by the end of Q1 2003. mmO2 has added interoperability agreements with Orange and T-Mobile in the UK. A spokesperson from Vodafone UK declined to provide any guidance on MMS interoperability in the UK. A spokesperson for mmO2 UK stated, "We expect to see full interconnect between all operators in the UK by mid-2003".

If you can't measure it, you can't bill it

Some MNOs launched their messaging service with a flat monthly rate, as their billing systems weren't designed for per event or per packet billing. Almost all of the operators have moved to simple, per event billing, but without stimulating demand there will not be enough revenue for the MNO to share with its software and content partners.

Courage of conviction

Following the heat they were getting on the issue of 3G licenses and likely returns, the MNOs panicked and rushed out picture messaging to show investors that they were focusing on delivery, rather than licenses, auctions and acquisitions. Most of the current messaging works on 2.5G networks, which can be deployed at less than a fraction of the investment required for a 3G network.

MMS-enabled handsets currently range from £130-250, with the cost of sending a picture message ranging from 21 to 40 pence. A wider range of suitable handsets in the £50 - 100 price bracket, encompassing likely picture messengers, is required to kick-start the market.

To provide the best possible start to messaging, MNOs should have provided the following from the launch date:

• Interoperability between different networks and handsets
• Per event pricing with volume discount
• Migration to pricing models based on quality of service, etc
• Large number of customers already equipped with suitable handsets (so people have someone to communicate pictures with)

Instead, launching early has made a mockery of it and provides further evidence that MNOs are still struggling to stimulate consumer demand and charge for it, whether its WAP, picture messaging, 3G or Wi-Fi. It would have been wise for the MNOs to position the period between official launch and full interconnect as a trial period, if only to set the correct level of expectation.

A lot of start-ups have bet on picture messaging [Editor's note: see The Chilli profile of Andrew Berend, ceo of Anthropics]. Unless the MNO can overcome these challenges, these start-ups could be at risk, and should consider other ways of feeding themselves until picture messaging has matured, sometime during the latter half of 2003.

Comments on this story? Send an email to Woz@theChilli.com

© Chilli Publishing Ltd 2003

17FEB2003