picture messaging costs and market penetration

does anyone know the current market penetration of picture messaging mobile phones in the UK with or without cameras?

ie this includes 3g phones and 2G phones that have this facility?

in addition how much does it cost the supplier to send out a picture message to a picture phone and how much does it cost the user?

ie total margin

this excludes and cost for liscencing/intellectual property ie assume content is already procured.

Thanks ashley-very helpful.

could be useful in developing various pricing models!

alasdair

On 11:01:45 11 June 2003 Ashley wrote:
>Hi Alasdair
>
>Not sure about the market penetration figures but a few
>thoughts on pricing...
>
>[NB all operators are obliged by law to publish their
>pricing for users on their websites. So, for example, have
>a look at http://www.three.co.uk/threefiles/images/PriceGu-
>ide.pdf which gives 3's pricing details. 25p for picture
>messaging, 50p for video messages]
>
>As I understand the picture/video messaging pricing
>models, they are very similar to (premium) SMS - both in
>pricing and how the commercial deals are structured.
>
>This means that though it is clear what the user pays, it
>very much depends on the deal that is done in terms of
>what the operator and content provider get. The operators
>will typically charge a 'carriage charge' for actually
>delivering the message across their network. Then there
>will be a revenue share on what is left once VAT has been
>paid e.g.
>
>- User charged 25p for picture message
>- Operator takes 10p for carriage charge
>- 4p taken off for VAT
>- Remaining 11p split 50/50 between operator and content
>partner
>
>What the content provider gets depends entirely on their
>commercial bargaining power.
>
>The amount that the user is charged can vary greatly. The
>above prices are what a user would be charged, say, to
>take a picture with their phone and sent it via 3.
>However, if it is a premium service (e.g. pictures of
>goals scored) then the content provider could decide to
>charge 50p, £1, whatever they think they can get away
>with.
>
>The operators are allowed to advise on such premium
>pricing (they potentially stand to benefit or lose out on
>the resulting revenue share) but they cannot dictate
>prices as this would be anti-competitive.
>
>Within the above structure there are all sorts of other
>possible combinations too - volume based (as opposed to
>per-message) models, reverse-billed options (like with
>SMS)...
>
>Guess we need some case studies for deals different
>content providers have done with the different operators
>to give guide likely margin information?

Thank you very helpful indeed.

alasdair

On 11:18:21 12 June 2003 Alex wrote:
>Alasdair
>
>There's a great report by Deutsche Bank called 'The silent
>revolution: thick client, thin bandwidth' which covers a
>lot of the MMS predictions and revenue in depth. Quoting a
>quick figure from this report (and hoping they don't sue
>me), MMS phones are predicted to make up 27% of the phones
>shipped this year which makes their % market value at
>around 40% on a positive predicition.
>
>[Deutsche describe 'Feature Phones' as being those 2G and
>3G networked phones that have colour and MMS enabled.]
>
>|in addition how much does it cost the supplier to send
>out a picture message to a picture phone and how much does
>it cost the user?
>
>Now here's an interesting area. At present the carriers
>are yet to price-up 3rd party application to MMS delivery
>and make it commercially available like SMS connectivity
>is today. The reason is from speaking with a number of the
>UK carriers is that at the moment they are focusing on the
>stability of their own MMS capabilities and the
>inter-connectivity between other UK carriers rather than
>monetising their connections to other businesses. 3rd
>party connectivity should happen in Autumn/Winter this
>year.
>
>To deliver MMS today, companies like ourselves are using
>our own 'off-net' MMS servers which use on-network binary
>SMS to tell the phone they have a new MMS waiting and then
>embed our server address into this message for users'
>phone to automatically go and retrieve their MMS content.
>This obviously has a higher cost for the supplier as you
>need to have your own MMSC enable equipment to deliver
>messages (or a partner that provides it).
>
>The future plans are for the carriers (O2, Orange, TMob,
>Voda) MMSCs to provide 3rd party connectivity through one
>of the standardised MMSC protocols (MM7 is the prefered
>choice) which will mean at this point message content is
>just submitted to the carriers and they provide the
>technology and servers to deliver the message to the
>users. A much easier service in the long run.
>
>Costing today for MMS delivery is based on the outbound
>SMS (3.5p cost of delivery through UK carriers) + WAP
>serving costs + hardware to deliver.
>
>Costing to the user is (for off-net content) normally
>defined by the price point of the premium SMS that is used
>to send to the user. Therefore most services I've seen
>today use 25p or 50p Mobile Terminated premium rate SMS to
>initiate the MMS download, and then provide the WAP
>bandwidth for free.
>
>|ie total margin
>
>Total margin works out to be the 25p you charge the user
>(on top of their standard SMS rate)
>- VAT = 20p
>- Carrier cut for premium text = 13p
>- Technology fees = about 8p
>
>Obviously these are rough numbers I use here when we are
>pricing up deals, however they should give you the insight
>into what costs are involved and how they are broken down.
>
>As always, feel free to contact me directly if I can help
>in more ways with your project!
>
>Alex Judd
>CTO
>Skywire

Talking to one of the operators I found out the following which may be of help (operator name withheld for fairly obvious commercial reasons):

- How exactly to construct the commercial arrangement with third-party content suppliers is an aspect which all the operators are still grappling with at the moment.

- Currently in the UK about 10% of the pay-monthly mobile user base have MMS handsets (i.e. capable of picture messaging)

- Of these only about a third use the MMS capability with any regularity so the operators are keen to educate users about what they can do (e.g. Vodafone's bill-inserts encouraging customers to visit the shops and find out more about whet their phone can do, Orange's current 'learn' advertising campaign)

- Those who do use the service send and download a lot more pictures/photos than the operators thought they would, which is obviously very positive. O2, Orange and T-M probably have the same splits with Vodafone perhaps a bit better due to Live!

My contact also added the following:

"Getting the MMS (and higher levels of functionality) capable handsets into the user base is a key question here. While the % of MMS capable handsets sold of total sales is quite high (and obviously increasing in coming years), the actual numbers are small compared to the base so even the analysts acknowledge that it's going to take a few years to build up the numbers."