One Part Logic, One Part CMG

When two of Europe's largest IT services companies merged and set their sights on the North American messaging market, it seemed natural they set up shop in Texas, where living large is part of its character. And it probably wasn't a bad idea to put an actual Texan in command of leading the charge up the gut of the New World either, especially a Texan as well rounded as industry veteran DeWayne Nelon.

Not that it will be easy for Nelon — president of LogicaCMG Wireless Networks in North America — and company to claim leadership in the long-awaited 3G messaging and multimedia infrastructure market in North America, but like Texas, the market is wide open. And if the once bitter rivals can make their same-sector marriage last, it just might help multimedia messaging gain wider acceptance more quickly.

Logica, the U.K.'s largest computer services group, merged with London- and Amsterdam-based CMG in December 2002. At the time, CMG's Wireless Data Solutions group had its messaging, mobile Internet, and customer care and billing solutions deployed with 100 operators worldwide. Combined, they offer a broad set of consulting services, system integration, outsourcing and software solutions, including its Multimedia Messaging Service Center (MMSC), its uOne IP-based voice mail and unified messaging solution and its prepaid short message service (including a pre-delivery service agent) as well as rating and billing solutions.

“At the highest level, we were two competitors going at it pretty hard,” Nelon said. “Eventually we took a step back and saw how well we complemented each other.”

Since the merger, LogicaCMG has won contracts for messaging and payment solutions with Saudi Telecom, MTC Vodafone in Bahrain, TA Orange in Thailand, Optus Mobile in Australia, Telkomsel in Indonesia and with enterprises such as the Central Bank of Sri Lanka. In the U.S., the company recently won a bid from Dobson Communications to provide a prepaid short message service solution.

Nelon joined CMG in the summer of 2002, six months before it became part of Logica. He brings with him an MBA from the University of Texas and a telecom history that began with him writing software at Nortel Networks for its DMS switch product line and working in field operations. He later held technical and non-technical positions with XO Communications where he served as president and general manager.

Nelon's mission, now that he chose to accept it, is to make the win at Dobson just the beginning in the U.S. market. “It's fair to say that neither Logica nor CMG had penetrated the North American market,” he said. “I think that had more to do with market conditions than their core products.”

The messaging market continues to evolve from its “instant messaging” roots through its “short message” explosion. Now, the market conditions, technology and outlook for multimedia messaging appear to be coalescing into real opportunity. Research firm Ovum predicted the global multimedia messaging market would reach $70 billion over the next four year. And the ARC Group says that more than 240 million MMS-capable phones will be sold worldwide this year. Nelon says he's very bullish about the increase in activity carrying over into 2004.

Nelon, who has been in the telecom business for longer than he cares to admit (so Wireless Review will admit it for him: about 23 years), says that just because MMS is new and IP-based doesn't mean the infrastructure (the MMSC) doesn't have to be carrier-grade. And his company plans to win business by providing the scale and dependability operators have come to expect.

Kshitij Moghe, program leader for the mobile communications group at Frost & Sullivan said getting into the MMSC business is not that difficult.

“All you need is a server and a client and the software to run on it. The MMSC business is pretty commoditized because anyone can provide a MMSC,” he said.

The MMSC is LogicaCMG's flagship product in the U.S., and Nelon scoffs at the idea that the MMSC is commoditized. “I have heard that story before about different components, but if you have a revenue stream that is important to you and a service offering that is important to you, you're not going to go down to the electronics store and cobble together [an MMSC],” Nelon said. “It doesn't work that way.”

He added that scalability and reliability were absolutely the company's claim to fame. “Competitors may be able to handle 20 messages per second on their MMSC, but to go to 40, they would have to double, and in some cases triple, the amount of hardware required to do that. We can handle thousands of messages within the same footprint.”

Moghe did say that the integration of the different components that comprise the MMSC is where companies such as LogicaCMG, Nokia and others can make a difference. The integration arm from Logica has helped make the difference so far.

According to Nelon, there is currently a three-way race for the lead in the messaging infrastructure market, with LogicaCMG and Nokia holding 23% and Ericsson 26%. “And we are making significant progress, which will shift those numbers in the next 60 days,” Nelon said.

That progress includes a dozen previously unannounced contracts, including sales by channel partner Nortel Networks.

As important as the integration of a vendor's components is to differentiating its solution, LogicaCMG strongly emphasizes its transcoding and rating capabilities.

Transcoding is the tailoring of multimedia images and messages to fit the myriad of devices and network elements used in delivering MMS. Through the use of algorithms, transcoding tries to make images, audio and text best fit the display one is using to access them, whether the manipulation is one of display size, picture format (GIF vs. JPG) or video format.

“This is the thing that most affects the user's experience positively or negatively,” Nelon said. “The underlying technology is complex, but we have to take that complexity and extract it from the user so they don't have to be burdened with it.”

Some vendors, such as LightSurf, which helped Sprint launch its photo- and video-mail service offerings, have developed their own transcoding algorithms. LogicaCMG turned to Phillips. “We decided to outsource that part of the solution because that's what Phillips focuses on 100% of the time. They have a whole division that makes sure devices work with our platform,” Nelon said. The company also does business with media processing company Mobixell.

With complexity removed from using their new devices, discriminating consumers will soon notice the limits on whom they can directly communicate with. They will be looking for interoperability.

Nelon chuckles when talking about the operators' collective will to interoperate. “If they could, operators would like to keep MMS in-house as a brand differentiator, but realistically they know they can't,” he said. “Most of us don't even know who our friends' or colleagues' carriers are.”

Removing the need to know someone else's carrier by permitting the passage of messages between operators is part of removing the complexity Nelon talked about. Analysts point to the history of short message service as an example.

“Carriers kind of got burned with what happened with SMS by sticking to their business plan and not opening up,” Moghe said. “I think they realize now the value of interoperability. In Europe, most revenue comes from inter-carrier messaging, not intra-carrier.”

On the other hand, said Andrew Seybold, founder of research firm Outlook 4 Mobility, the common platforms and formats required for interoperability could lead to a loss of differentiation. He stressed the importance of having a network infrastructure that enables value-added services such as storage, retrieval and the manipulation of files and images by end users in order to maintain differentiation.

That is where LogicaCMG's rating and billing capabilities come in. “As carriers roll out new services, the issue is to rate and bill them in a timely fashion,” Nelon said. “Our system helps operators do that quickly so they can capture the premium value of the content they deliver.”

It will be up to Nelon and gang to capture the opportunity before them as the United States and the rest of North America join the global multimedia community.