Worldwide Messaging Applications Forecast and Analysis, 2003-2007

Learn from the lessons illuminated by the rapid adoption and maturation of SMS in Europe and benefit from the fact that SMS's shortcomings (no ability to carry presence information, complicated billing, etc.) will create a strong demand for "leading-edge" nonvoice applications (instant messaging, etc.) that in turn drive the adoption of other nonvoice wireless services (wireless Internet, etc.), particularly in the consumer market.

IDC had anticipated 2002 messaging application market revenue would grow by more than 20% from its 2001 high water mark of $1.14 billion. But in late spring 2003, as vendors completed their reporting for fiscal 2002, it became clear that for several reasons - carriers' sluggish spending on messaging applications and services-creation platforms and a slower-than-anticipated transition from new spending on ICE applications to lower-cost standalone email applications, among others - messaging market revenue had remained essentially flat in 2002.

Factors contributing to the market performance include:

Vendors (chiefly Openwave, but also Comverse and Sun) saw a dramatic pullback in the spending by carriers and very large service providers for unified messaging, standalone email, MMS, and services-creation platforms; in many cases, seat capacity was purchased, but was not sold to end users, and plans for upgrades (from voicemail to unified messaging, for example) did not occur.

Enterprise instant messaging activity, buoyed by the late-2002 announcements of business products by potential market champions AOL, Yahoo!, and Microsoft, produced great interest (but very little revenue) as early alliances and sales were delayed until spring 2003.