The Ovum View: Will Microsoft win the wireless email war?

There's a battle royal in the offing as all sorts of vendors enabling wireless email line up to offer their wares to mobile operators. The stakes are high, as software vendors are fighting to own not just email but the entire underlying wireless platform, says Ovum analyst, Jessica Figueras.

Wireless email has become the new catch-all application for operators who are beginning to offer broad portfolios of wireless email services for both consumer and corporate customers.

There are plenty of vendors willing to supply operators with the underlying wireless email software. But this market is still so immature, and its borders so fluid, that it looks more like an open-ended collection of tiny sub-markets. There are big differences in emphasis depending on what background these vendors come from. All have different business models and target different customers.

The main players are:

Lotus and Microsoft - enterprise messaging vendors that offer wireless extensions to their corporate customers via operators

Wireless email specialist RIM, which sells a package comprising its Blackberry device and enabling software to corporate and consumer customers via operators

Openwave and Comverse, which sell their wireless email software directly to operators, which use it to create mainly consumer-focused services

Specialist OEMs such as Mobeon, which licenses its wireless email platform to other operator-focused software vendors.

What distinguishes these players from each other is their customer focus - essentially, whether they sell their products to operators for hosting, or via operators. Today's hosted offerings tend to be aimed at consumers, while corporate customers are usually served via operators.

The vendors' backgrounds have a strong influence here, and some are having to move quickly to adapt their channel models to the new market. The most noticeable - if unsurprising - trend is the extent to which operators are becoming the focus of attention for all of the vendors.

Openwave, for example, has a historically strong position in fixed email for portal operators stemming from Software.com, but the Phone.com-Software.com merger that created Openwave provided an opportunity to target wireless operators with the same messaging platform. Openwave, like Comverse and Mobeon, has no relationship with the end users of its wireless email software. All three companies offer products that fit a pure one-to-many hosted solution model.

On the other hand, Lotus and Microsoft have always targeted enterprise customers directly or via their traditional resellers. But in order to ensure their customers have access to packaged - rather than DIY - wireless email services they have had to form partnerships with operators - virtually from scratch.

Both Lotus and Microsoft have started the process with Vodafone UK, which now offers a secure, managed wireless email service for customers using Lotus Notes and Microsoft Exchange. The infrastructure is semi-hosted, meaning equipment must be installed at both the customers' premises and the operators'.

With this arrangement, Vodafone and the two vendors share the job of marketing, selling, implementing and supporting the offering. Both vendors are now focusing on expanding their partnerships to operators in every region where they have customers - a major task indeed.

RIM's current model is similar to that of Lotus and Microsoft. It partners with wireless network and portal operators - Bell Mobility, Cingular, Motient and Rogers AT&T in North America, BT Cellnet, Telfort and TIM in Europe - that offer a semi-hosted, managed service to corporates, built around the RIM Blackberry device plus server software to wireless enable Microsoft Exchange-based email.

RIM does have some customer-facing operations but is moving towards a pure operator focus in order to increase scale and reduce costs. Its operator partners can provide the sales and marketing, customer services and geographic presence that RIM cannot afford.

So what do these differences of emphasis mean? One of the most interesting implications is the effect of convergence on market dynamics. And in the short term, these effects look unsettling from an operator's point of view.

One of the characteristics of a mature market is that it is relatively easy to see where one's interests lie. There is generally direct competition between players, and partners' business models tend to be complementary, which fosters stability.

In contrast, few of the players providing wireless e-mail software compete directly, and experimental business models mean that it is often difficult to work out who is partner, supplier or competitor to the operator.

The difference between Openwave and Microsoft is, perhaps, the most telling example of this. Openwave has always been a highly operator-friendly vendor, in that its product range is completely focused on helping operators to keep control of, and make money from, the wireless data traffic on their networks.

It prioritises features that are suited to a centralised, one-to-many model such as provisioning and billing. Even better, Openwave does not seem to have any ambitions to threaten operators' customer ownership. These are some of the reasons why Openwave has been so successful in targeting operators for business.

Microsoft, on the other hand, was born out of a philosophy that puts the user at the centre of everything, emphasising local control and functionality. It has been hugely successful in the free-for-all of the fixed internet world. This philosophy militates against that (??) of the wireless operators, which are happy to provide access to any service or content so long as the user pays them for it.

The conflict of interest this produces is illustrated by two deals that Microsoft has signed with wireless network 'hub' owners, MobileSys and MobileWay. These allow users of Microsoft's corporate wireless email solution to roam abroad, while bypassing operators' lucrative roaming charges. Great for users - but a problem for the operators.

Will Microsoft take it all? How will the smaller vendors survive? And what do the mobile operators make of it all? Click here to read the second half of this commentary: http://www.silicon.com/a51353

This research is taken from the HostedServices@Ovum Advisory Service.
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