Despite security concerns and interoperability issues, mobile IM is gearing up to be cellular's next big thing
Although it has gained popularity on the computer desktop largely as a free software application, instant messaging (IM) is increasingly being viewed by many wireless operators and service providers around the world as the next developing opportunity in the telecom space.
The race to capitalize on the growing demand for wireless IM services is occurring on both the enterprise and consumer sides of the business. In the US, for example, Verizon Business (formerly MCI) in April launched its own Hosted Secure Instant Messaging Service, which aims to protect business users from numerous Internet threats and promises compatibility with popular IM providers. (Verizon hopes to roll the service out worldwide by next year.) In Europe and Asia, the GSM Association and 15 mobile operators announced plans for IM interoperability, which could well spur increased consumer use.
Analysts see growing worldwide demand for mobile IM through the end of the decade as consumers extend their desktop and notebook experiences to the wireless world and businesses become more confident in the security and management aspects of IM. But current adoption is being hindered by a lack of interoperability and standards, as well as security concerns. And there is uncertainty about which business models will dominate in different markets.
Despite these handicaps, use of wireless IM is on the rise worldwide. In December, Gartner estimated that the enterprise IM market will grow at a compound annual rate of 20% through 2009. By 2010, Gartner forecasts that 90% of users with business email accounts will have IT-controlled IM accounts.
In a more recent report released in April, In-Stat noted that competing standards and platforms likely will delay the growth of wireless IM worldwide until 2008, when technology barriers should be reduced. The research firm estimates that there are currently slightly more than 2.5 million wireless IM users worldwide, about 0.6% of the 400 million Internet IM user base. It pegged wireless IM worldwide revenue at $54.9 million in 2005 and predicts this will grow to $265.2 million this year, $580.9 million next year and more than $3.6 billion by 2009.
'Carriers are increasingly trying to bring the power of the online world to the handset,' explains David Chamberlain, principal analyst wireless for In-Stat. But this transition is being muddled by uncertainty about standards, security and carrier strategies, he notes.
'Because IT managers have concerns about standardization, interoperability, spam, phishing scams and other security risks, enterprises will be slow to adopt wireless IM,' he states in a report. 'Consumers will present a better market in the near-term, but again the key dynamic is the interoperability of systems.'
Chamberlain warns that carriers need to be wary of wireless IM's ability to contribute to overall revenue until these various uncertainties are resolved. He says carriers should look for opportunities to promote the technology as a service that connects groups and communities of interest. In some cases, they may end up partnering with vendors and IM providers for increased profitability.
One example is Montreal-based Oz, which provides server, gateway and client products to carriers that can mobilize portals from AOL, MSN, Yahoo and others.