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SMSC

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Competitive overview

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DRAFT 8
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21st Feb 03
Suzi Byer

2003 by LogicaCMG All rights reserved. This document may not be copied in whole or in part without the prior written consent of
CMG Wireless Data Solutions. The information in this document is subject to change without notice and should not be construed as a
commitment by LogicaCMG. LogicaCMG assumes no responsibility for any errors that may appear in this document. The software
described in this document is furnished under license and may be used or copied only in accordance with the terms of such license.
Products mentioned in this document are identified by the trademarks or service marks of their respective companies or organisations.

SMSC - Competitive overview

Table of Contents

Competitor Groups...............................................................................................3
1.1

Prime Competitors................................................................................................................ 3

1.2

Key Market Players............................................................................................................... 3

1.3

Alternative competitors......................................................................................................... 4

Key Competitors...................................................................................................5
2.1

LogicaCMG (looking in first).................................................................................................5


2.1.1
SWOT.................................................................................................................... 5

2.2

SchlumbergerSema.............................................................................................................. 7
2.2.1
Company Overview............................................................................................... 7
2.2.2
Products................................................................................................................ 7
2.2.3
Services................................................................................................................. 8
2.2.4
Partnerships.......................................................................................................... 8
2.2.5
Customers............................................................................................................. 8
2.2.6
SWOT.................................................................................................................... 9
2.2.6.1
Strengths........................................................................................... 9
2.2.6.2
Weaknesses....................................................................................10
2.2.6.3
Opportunities...................................................................................10
2.2.6.4
Threats............................................................................................. 11
2.2.7
Analysis............................................................................................................... 11
2.2.7.1
How to Attack Sema.........................................................................11
2.2.7.2
How Sema will Attack Us.................................................................12

2.3

Huawei Technologies.......................................................................................................... 12
2.3.1
Company Overview............................................................................................. 12
2.3.2
Products.............................................................................................................. 13
2.3.3
Services............................................................................................................... 13
2.3.4
Partnerships........................................................................................................ 13
2.3.5
Customers........................................................................................................... 13
2.3.6
SWOT.................................................................................................................. 14
2.3.7
Elaborate on SWOT, provide more details...........................................................14
2.3.7.1
How LogicaCMG can attack Huawei...............................................15
2.3.7.2
How Huawei can attack us..............................................................15
2.3.8
Analysis............................................................................................................... 16

2.4

Nokia.................................................................................................................................. 16
2.4.1
Company Overview............................................................................................. 16
2.4.2
Products.............................................................................................................. 16
2.4.3
Services............................................................................................................... 17

2003 LogicaCMG Table of Contents

iii

SMSC - Competitive overview

2.4.4
Partnerships........................................................................................................ 17
2.4.5
Customers........................................................................................................... 17
Some of Nokias SMSC customers include:........................................................................17
2.4.6
SWOT.................................................................................................................. 18
2.4.6.1
Strengths.........................................................................................18
2.4.6.2
Weaknesses....................................................................................19
2.4.6.3
Opportunities...................................................................................20
2.4.6.4
Threats............................................................................................20
2.4.7
Analysis............................................................................................................... 21
2.4.7.1
How to Attack Nokia........................................................................21
2.4.7.2
How Nokia will Attack Us.................................................................22

2.5

Comverse........................................................................................................................... 22
2.5.1
Company Overview............................................................................................. 22
2.5.2
Products.............................................................................................................. 23
2.5.3
Services............................................................................................................... 23
2.5.4
Partnerships........................................................................................................ 23
2.5.5
Customers........................................................................................................... 23
2.5.6
SWOT.................................................................................................................. 24
2.5.6.1
Strengths.........................................................................................25
2.5.6.2
Weaknesses....................................................................................25
2.5.6.3
Opportunities...................................................................................26
2.5.6.4
Threats............................................................................................26
2.5.7
Analysis............................................................................................................... 27
2.5.7.1
How to attack Comverse.................................................................27
2.5.7.2
How Comverse will Attack LogicaCMG...........................................27

2.6

Telsis................................................................................................................................... 28
2.6.1
Company Overview............................................................................................. 28
2.6.2
Products.............................................................................................................. 28
2.6.3
Services............................................................................................................... 28
2.6.4
Customers........................................................................................................... 28
2.6.5
Partnerships........................................................................................................ 28
2.6.6
SWOT.................................................................................................................. 29
2.6.7
Analysis............................................................................................................... 29

Overall conclusions............................................................................................31

2003 LogicaCMG Table of Contents

iv

Competitor Groups

1.1 Prime Competitors


The traditional SMSC market saw a select few competitors compete for messaging
business. Up until about 2000 the messaging war took place between CMG and Logica with
Sema and Comverse playing less of a key role. CMG sold high performance and stability
while Logica sold its SMSC on the premise of a cheaper price with more features (but
without the elements CMG could offer customers). Most smaller and medium sized
operators opted for the cheaper price alternative. CMGs solution was more appealing to the
larger operators with fast growing messaging businesses as 1) they could afford it and 2) it
offered them the stability for peak volumes and increased interactivity and 3) the increase in
SMS traffic meant quick payback periods and faster return on investment. CMG also
focussed in the EMEA region whereas Logica built a particularly strong foothold in Asia and
the Americas. Japanese business for Logica has helped to fund other business around the
globe and essentially acted as the companys cash cow.
Comverse made inroads through its voicemail installed-base and as the first killer app for
SMS was voicemail notifications, Comverse started on a good thing. Comverses SMSC
was also a cheaper priced version used for low traffic environments. Sema focussed on
high-performance business as did CMG and they managed to secure the largest telecoms
group in the world - Vodafone and hence also has a strong foothold in the global
marketplace.

1.2 Key Market Players


When the focus started to shift to MMS, the bigger groups like Nokia and Ericsson started to
really make their move in the messaging market. To streamline and centralise network
operations, operators have started to opt for a one-vendor policy. In some cases this means
that everything from the BSC to the network, to the SMSC or MMSC is one brand. In the
case of wireless data solutions, global network agreements with operators (and their
affiliates) can result in huge opportunities for LogicaCMG. But it can also mean the opposite
for LogicaCMG if the agreement is awarded to an end-to-end solution supplier. Nokia has
been said to throw in a messaging centre along with the handsets, making decisions for
operators easier (or harder?) to adopt a single vendor policy. At the end of the day it is all
about building market share and penetrating the market. Free handsets (or the withholding
of handsets) added to the equation make it simpler for operators to build up their market
share. But with new handset players entering the market, Ericsson and Nokia have less
bargaining power than they used to.
Then there was the silent (but deadly?) move from Chinese players Huawei and ZTE who
actually have a stronger position in the market than we first imagined. There has been a
perception that the products from Chinese suppliers are cheaper and therefore inferior than
their European (or global) counterparts. But their increasing presence in regions far outside
their own territory, particularly in boom markets is a serious threat and proves that in fact
their offer is an extremely competitive one. China, being the largest mobile market in the
world, boasts two local players who in fact have very healthy prospects, not only in their own
marketplace but globally as well.

1.3 Alternative competitors


These days the tables have turned. SMSCs have essentially become commodity items, and
as the main market for CMG in the past, matures (not to mention the over capacity installed
in the market) the focus is all about being able to decrease Capex and Opex. The total
messaging solution and the service network concept were borne out by this very fact. Crossselling or being able to link in the features and benefits from other products (e.g. MAR, PSA,
Business Tools, FSG and OMG) in LogicaCMGs messaging solution allows LogicaCMG to
position itself as a player for the future. It is no longer about just delivering the best SMSC.
Trends in the global marketplace have also seen new players enter the messaging arena,
strategically equipped with a weapon that could seriously impact LogicaCMGs existing and
future messaging business.
The likes of Telsis, Empower Interactive, Telesoft and mBalance offer extremely pricecompetitive solutions to the traditional SMSC. Although were actually comparing apples
with oranges competitive positioning of these products against SMSCs leaves the operator
thinking that theyd be foolish not to consider/trial whats on offer. With an extremely low
footprint, in terms of size of solution and cost, it is very likely well see a huge increase in the
use of these types of systems in global networks.
The following section looks at each competitor in detail, whether they are a prime
competitor, a market player or whether they provide an alternative to what LogicaCMG
offers, and pose a serious concern to LogicaCMGs messaging market share.

2003 LogicaCMG Key Competitors

Key Competitors

2.1 LogicaCMG (looking in first)


This chapter will start by looking at our own companys position in the market. We will
address LogicaCMGs key Strengths, Weaknesses, Opportunities and Threats. The SWOTs
take into account LogicaCMGs next-generation messaging offering (5.0 or Picasso), as well
as the classic SMSC (4.6 or Telepath). What will follow then is a look at LogicaCMGs
competitors, providing details about each company including an overview of its products and
services, and a SWOT analysis. It was decided to list all competitors as they each play their
own (but differing) role in the future of messaging.
2.1.1

SWOT
Table 1:
Table 1: LogicaCMGs SMSC SWOT

Strengths

Weaknesses

Strong messaging reputation with large


SMSC installed base

Huge company which can lead to slow


reaction times/R&D effort

Unlimited performance and throughput

Perception of inflexible pricing model

Largest independent SMS vendor

Few strategic channel partnerships

Solutions provider/partner

Systems Integration expertise

Official joint proposition still to be


determined

Aggressive/extensive sales force

Open interfaces, opens the opportunity


for competitor products to get foot in

Extensive connectivity on one SMSC:


CDMA/GSM/TDMA even in MNP
environment

Open VMS is some cases is considered


a weakness by the market

Strong SMS interconnect features


(SMPP and SS7) on one platform

Rollout turn-key delivery operational


within one week

Supports all global standards

2003 LogicaCMG Key Competitors

LogicaCMG SMSC SWOT cont

Threats

Opportunities

Premium Messaging Market

Managed Services

Emerging markets

Fits into solution strategy: easy


integration/cross-selling of solution
elements such as MMSC, Q&RP, etc.

Coexistence / replacement (competitive


knockout) opportunities: Installed
hardware (both LogicaCMG and nonLogicaCMG) can be integrated into new
solution

Limited solution for content provider


access

In some cases the solution is still too


expensive, particularly when compared to
inexpensive routing solutions.

Cant compete with small, nimble, flexible


companies therefore limited tailoring can
be offered.

Communication to market/existing clients,


i.e. avoid new RFQs in customer base

Opex pressure

Dedicated throughput for peak traffic


scenarios e.g. for SMS voting

Additional competition of IP experts such


as Nokia

Performance upgrades

Increase of margin through lower


hardware prices.

Companies with local development,


support and sales e.g. Huawei

Smaller alternative SMS router products


now on the market

Higher margins on new business

Easier entrance due to competitive


pricing

Interconnect (multi-technologies)

Cost reduction/rationalisation

Performance upgrades without downtime

Greenfield operators

MVNOs

IP or ATM connectivity

Strengths
-

We are Messaging! Solid real-world messaging reputation for high performance, reliability and
availability, with strong references.

47% market share in terms of customers

60% market share in terms of subscribers

8/10 largest operators in terms of the highest data ARPU use a LogicaCMG SMSC

The new N+1 scalability concept means that performance and throughput is unlimited.
Particularly suitable for voting and high-peak traffic scenarios.

By using open standards and by not being terminal-dependent, LogicaCMGs combined offering
means we can cater for all needs and requirements.
2003 LogicaCMG Key Competitors

We dont just deliver an SMSC, we deliver the expertise and other associated products to ensure
our customers get maximum value out of their messaging businesses.

By centralising LDAP provisioning, SS7 access, SNMP management etc; by utilising the N+1
scalability concept, online upgrades, and through rationalisation of existing H/W, LogicaCMGs
offer becomes extremely cost competitive!

[More detail on individual strengths, weaknesses etc. will be added as appropriate]

2.2 SchlumbergerSema
2.2.1

Company Overview
Schlumberger is a global technology services company with corporate offices in New York,
Paris and The Hague. With more than 80,000 employees, in 100 countries, the company
consists of two businesses:

Oilfield Services, with turnover of $8bn and 50,000 employees, focuses on oil and
gas explorations, production services, information technology and network solutions.

SchlumbergerSema - formed in April 2001, when Schlumberger acquired Sema plc,


and combined it with part of its former SIM cards and Test & Transaction business,
has 30,000 people and turnover of $4bn. It provides capabilities delivering consulting,
systems integration, managed services and products serving the telecommunications,
energy and utilities, finance, transport, and public sector markets.

The Telecommunication business unit consists of the followings:

4,500 telecom employees in around the world

Reinvestment of 10 per cent of revenues in research and development

350 customers worldwide

Products and services are tailored to customer needs

20 years in telecommunications

2.2.2

They claim to have one of the world's largest installed bases of business support
systems including more than 65 million post-paid subscribers, and lead the world in
prepaid services with 85 operators and 60 million prepaid subscribers.
Semas global market share in SMSC installations is 7.13% (35 installations)

Products
-

Messaging solutions supporting 2G, 2.5G and 3G

Business support including customer care and billing, prepaid platforms, interconnect
services, mediation, provisioning, and network management

SIM and USIM smart cards

Handset and network applications

2003 LogicaCMG Key Competitors

Gateways for mobile commerce, electronic payment, WAP, messaging and roaming

SchlumbergerSema solutions support GSM, TDMA, CDMA, GPRS and UMTS standards
and cover a broad range of services including:
Short Message Service, Messaging Gateways, Multi-Media Messaging
Location Based Services, Unified Communications, Mobile Instant Messaging
Mobile E-mail Solutions Over-The-Air Activation USSD Equipment Identity
Enhanced Calling

2.2.3

Services
Sema has 30 years' experience in systems integration. It also provides consulting and
managed services and business process outsourcing for numerous industries.

2.2.4

Partnerships
Sema partners with numerous industry players such as: Cap Gemini Ernst & Young, Oracle,
Siebel, Nortel, Cisco, Siemens, Sonus Networks, Sun, EDS, Ericsson, Mirapoint, Alcatel,
AOL, Bea Broadvision, Nextel, Compaq, People Soft etc. It also says that it partners with:
Verizon, Vodafone, T Mobil, France Telecom, TIM, and Telefnica.

2.2.5

Customers
Sema claims to have 60 SMSC customers. 35 are known to LogicaCMG. They say they
support 15 per cent of all SMS users worldwide (as of December 2000). Some key
customers are found below.
EMEA
- Vodafone UK

Americas
- Verizon, USA

Asia Pacific
- SmarTone, Hong Kong

O2 Ireland

Bell Mobility, Canada

Vodafone, Australia

Bouygues, France

Telus Mobility, Canada

GMCC, China

Blu, Italy

Lusacell, Mexico

Radio Mobile, Czech


Republic

Cingular, USA

TPS Cellular, Argentina

PTC, Poland

Panafon, Greece

Vimplecom, Russia

Vodacom, South Africa

Eircell, Ireland

2003 LogicaCMG Key Competitors

10

2.2.6

SWOT
Table 2:
Table 2: Sema SMSC SWOT

Strengths

Weaknesses

Reliable, fully redundant, scalability and


high-performance system

IPR shared with Vodafone who gets 45%


of all software license fees with special
arrangement with Vodafone UK.

Global Tier 1 installed base

Experienced specialists, fast response


times, also in Emergency situations

Tailored solutions and Strong


SI/consultancy

New Unix-based SMSC launched

Heavily dependent on Vodafones jurisdiction

Low credibility due to the fact that messaging


is not core business

Lack of vision, roadmap, strategy, support etc;


No key differentiator for 3G

Ineffective messaging partnerships

Relatively poor quality despite high price tag

Threats

Opportunities

Leverage position within the Vodafone


Group especially within China Mobile

Use expertise and customer base to


become a 3G messaging leader

Attack former Logica customer base.


Increase North American market share,
whilst competitors focus on Europe

Develop special purpose applications in


strategic spaces

New Unix SMSC may not prove itself

Other messaging vendors could occupy


Semas space in the Vodafone group:
LogicaCMG in Europe and LogicaCMG and
Comverse in North America

Rumour about divesting mobile arm -> No


more product business

Nokia and Ericsson for 3G

2.2.6.1 Strengths
- Reliable, fully redundant, scalability and high-performance system
Semas original SMSC is designed on Open VMS. Therefore they were able to develop a
reliable system with high performance.
-

IPR shared with Vodafone who gets 45% of all software licence fees with special arrangement
with Vodafone UK.
As Vodafone has part ownership of the Sema SMSC IPR, they build up a solid position
within the Vodafone group.

Global Tier 1 installed base

2003 LogicaCMG Key Competitors

11

Sema has installations on most Vodafone Tier 1 subsidiaries such as Vodafone UK and
Verizon.
-

Experienced specialists, fast response times, also in Emergency situations


Sema has experienced staff. They react quickly and resolve customer queries fast. They
have defended the threat of replacement by ensuring fast responses to customer issues and
offering special financial bundles to key customers.

Tailored solutions and Strong SI/consultancy


Sema is known for providing tailor-made solutions. LogicaCMGs installation at Bouygues
learned that a number of additional developments are required to match all the features
Sema is offering to Bouygues. In addition, Sema is managing the SMSC infrastructure at
Bouygues with a revenue share based on SMS traffic receiving 1p for every SMS.

New Unix-based SMSC launched


Sema invested to develop an Unix SMSC next to their Open VMS offering.

2.2.6.2 Weaknesses
- Heavily dependent on Vodafones jurisdiction
Semas main references are in the Vodafone group. They have not yet experienced any
replacements in this. Outside the Vodafone group they have: Maxis, Malaysia (former
Logica SMSC) and partly at Bouygues (former CMG SMSC).
-

Low credibility due to the fact that messaging is not core business
As messaging is not the core business, this department had to deal with a number of cost
cutting exercises. This resulted in delayed product development and lack of resources. Also
the response times to customer queries increased.

No vision, roadmap, strategy, support etc; No key differentiator for 3G


Sema has no clear vision on the future for messaging. The vision and positioning they have
is broadly copied from LogicaCMG.

Ineffective messaging partnerships

Relatively poor quality despite high price tag


The Sema SMSC has a reasonable performance, but it is not the best in the marketplace.
However their pricing is high.

2.2.6.3 Opportunities
- Leverage position within the Vodafone Group especially within China Mobile
The Vodafone group has a minority share in China Mobile. Vodafone can use this influence
to push Sema in China Mobile.
-

Use expertise and customer base to become a 3G messaging leader


Sema is technically a strong company. They can use this expertise to become a 3G leader.
They have an MMSC and a Unified Communications platform. Although Sema has a late
start in these markets, their SMSC customer base (specifically the Vodafone group) gives
them cross-selling opportunities for this.

Attack former Logica customer base. Increase North American market share whilst competitors
focus on Europe
Sema has already a solid market share in North America and with that a strong reference in
this part of the world. With their Unix SMSC they can attack the former Logica customer
base.
2003 LogicaCMG Key Competitors

12

Develop special purpose applications in strategic spaces


As Sema delivers tailor-made solutions, they can reasonably quickly develop specific
applications for operators in regions Sema finds strategically interesting, such as the US.

2.2.6.4 Threats
- New Unix SMSC may not prove itself
The new Unix system has not yet proven itself. Most Unix SMSCs do not have a track
record for performance and reliability. In a developed market with pressure on Capex and
Opex, operators are reluctant to choose unproven solutions.
-

Other messaging vendors could occupy Semas space in the Vodafone group: LogicaCMG in
Europe and LogicaCMG and Comverse in North America
As other vendors such as LogicaCMG are further ahead with messaging compared to
Sema, the Vodafone group may consider replacing Sema SMSC. Logica CMG has
reference sites within the Vodafone group such as D2-Vodafone, Telecel and Vodafone
Ireland. These subsidiaries are out performers in the SMS market. Comverse has a strong
Voicemail installed base. Comverse can cross-sell SMSCs e.g. in their North America
Voicemail customer base.

Rumour about divesting mobile arm -> No more product business


The rumour spreads that Sema is no longer investigating in their mobile branch. As this is
just a rumour it nevertheless makes operators reluctant to buy a system that is end of life.
This therefore hurts the business. However, note that Sema is still selling SMSCs. Telstra
Australia in January 2003 decided to upgrade their messaging infrastructure using the Sema
SMSC.

Nokia and Ericsson for 3G


Because of the rapid uptake of MMSC market share for Nokia and Ericsson and to a lesser
extent LogicaCMG, this risks Sema playing a part in next-generation messaging and 3G.

2.2.7

Analysis
This section presents the conclusions of comparing Semas and LogicaCMGs SWOTs. The
outcome provides the direction for the SMSC Competitive Management document, and the
SMSC attack plan for Sema. The conclusions of this analysis are presented in two
subsections:
1. How LogicaCMG can most effectively attack Sema. The conclusions in this section have
been reached by matching LogicaCMGs strengths with Semas threats, and
LogicaCMGs opportunities with Semas weaknesses; and identifying where Sema is
most vulnerable.
2. How Sema is most likely to attack LogicaCMG. This section is the result of the inverse
exercise: matching Semas strengths with LogicaCMGs threats, and Semas
opportunities with LogicaCMGs weaknesses.

2.2.7.1

How to Attack Sema


1. In a competitive confrontation with Sema, the following points most effectively position
LogicaCMG:

LogicaCMG is the market leader in messaging. For us, it is part of the core business.
Therefore, LogicaCMG has a better understanding of the messaging market and
operator needs in this field compared to Sema.
2003 LogicaCMG Key Competitors

13

Whilst Sema is reducing its investments in messaging, LogicaCMG has kept its
development expenditure at the same level in real terms. This means that LogicaCMG
is able to further develop and tailor the SMSC to new market requirements.

Make optimal use of the rumour, that Sema divesting its messaging, billing and cards
product business. Although this is a rumour and should be treated with caution, the
organisation was recently changed to make each product independent.

The Unix SMSC is not a proven solution

Semas messaging vision is a LogicaCMG copy.

2. In the Sema SMSC installed base, opportunities can arise in 2003 for replacement and
deliveries as second vendor. The most likely areas where the Sema customer is
dissatisfied with the Sema SMSC and LogicaCMG has a better offering are:

2.2.7.2

3G

Throughput

Quality of Service

High Opex

How Sema will Attack Us


1. In 2003, Sema can attack LogicaCMG mainly at the former Logica installed base using
the Unix SMSC:

The Unix SMSC is a nice to have in the US

They claim to have better SI skills than LogicaCMG

2. In a competitive confrontation with LogicaCMG, Sema will use the following points to
position themselves against LogicaCMG:

Tailor made solutions fit exactly with customer needs.

Strong reference in the Vodafone group, which is the largest group

2.3 Huawei Technologies


2.3.1

Company Overview
Huawei Technologies was established in 1988. It is a private high-tech enterprise fully
owned by its employees.
A total staff of over 19,000:

45% R&D = 9000 people; Research Centres in Silicon Valley, Dallas, Stockholm,
Moscow and Bangalore

35% Marketing, Sales & Customer support = 6650 people; 40 branch offices and
customer support worldwide

10% Production = 1900 people

10% Administration = 1900 people

Huaweis global market share in SMSC installations is 7.13%. As their entire


customer base is in Asia Pacific ex. Japan, Huaweis market share in this region is
18% (or 36 installations).
2003 LogicaCMG Key Competitors

14


2.3.2

2001 revenues of $3,1 billion

Products
Huawei specialises in research and development, production and marketing of
communications equipment, providing customised network solutions for telecom carriers in
fixed, mobile and data communications and optical networks. Ranging from switching,
intelligent networks, support networks, GSM, GPRS, W-CDMA, CDMA 1x, ATM to other key
telecom technology fields. Most importantly, Huawei's products are based on independently
designed ASIC chips which allows Huawei to provide solutions from start to finish, from chip
to network.
Huawei (together with ZTE and most other Chinese telco vendors) has never spent money
on inventions or long-term R & D. Instead, it is copying the concepts and ideas from the real
market leaders, then within an extremely short period, creating the product and starting to
sell even before the product is ready. Their huge engineer base is mainly used for this
purpose. Furthermore, the goal for their business is purely for market share, not for profit.

2.3.3

Services
Services can be tailored to customer needs.

2.3.4

2.3.5

Partnerships

Huawei Technologies says that it is willing to establish OEM and distribution


partnerships with all leading global and regional telecommunications equipment
providers in Europe and North America.

Huawei linked an optical networking contract with PfalzKom of Ludwigshafen, a


German telecoms operator, via Vierling Electronics GmbH Co. KG, of Ebermannstadt,
Germany

Apella, Huawei's systems integrator partner in the U.K. and Ireland

Joint lab with Microsoft

Joint lab with NEC

Customers
Huaweis SMSC customer base is mainly within China Mobile and China Unicom. The only
SMSC outside China is Cashin in Cambodia. For their networks and IN systems Huawei has
many customers in the Asia Pacific region, Russia, Latin America and Africa.

2003 LogicaCMG Key Competitors

15

2.3.6

SWOT
Table 3:
Table 3: Huawei SMSC SWOT

Strengths

Weaknesses

Strong government support in China

Limited international presence

Strong growth; 2001 revenues up 25%

Limited international experience

Huge and flexible workforce (9000 in R&D)

Messaging not core business

Top two core network vendor in China

Strong SMSC presence in China and Asia

Majority Chinese specifications therefore


lacks universal specs/requirements

Strong sales arguments through diverse


portfolio and bundled deals

Messaging Products not fit for high


performance

Aggressive sales and marketing

Quick and dirty product development

SI partnerships/capabilities

IPR and patent issues with Cisco

Threats

Opportunities

Influence telecom legislation in China

Expansion to emerging markets e.g.


Russia, India, Africa, Latin America, China

Will lose SMSC market share unless they


prove high-performance capabilities

Higher development costs for specs /


requirements outside of China

Eastern perception of cheap but lower


quality

Potential language barriers for


international business

WTO entry may lead to less government


support

Expand portfolio to switches and routers

Cross-sell in core network installed base

Greenfields operators

Re-branding local products

Channel Partners

Replacements

2.3.7

Elaborate on SWOT, provide more details


S
W
O
T
See MMSC Competitive info

2003 LogicaCMG Key Competitors

16

2.3.7.1

How LogicaCMG can attack Huawei


Use some of the generic arguments (see MMSC Competitive Overview, page 16-17) such
as:

LogicaCMG is independent of core network, handsets etc

LogicaCMG has strong capabilities in the area of billing and CRM

LogicaCMG has global SI capabilities across numerous industries

LogicaCMG is committed and focussed on messaging

8 out of 10 Top mobile operators use LogicaCMG Messaging gear

Where should we attack Huawei and where should we pre-empt them attacking us?
The obvious country to attack them is China: China Mobile, China Unicom and China
Telecom. Considerations: local partner / JV and more local feed on the ground essential.
Likely partners: Siemens, Nortel, Motorola and Alcatel. Dedicated messaging products for
Chinese market: (D-)SMSC, SMS TV, MMSC, Service Enablers and Service Network. Local
Research centre for TD-SCMDA . Are the margins in China attractive enough? QoS will
become important in China; even today China Mobile and China Unicom are complaining
that revenue from content providers will drop when person-to-person SMS increases. CDMA
1xRTT at China Unicom is a specific opportunity; we know Huawei has developed a CMDA
SMSC & MMSC but has so far not sold this to China Unicom.
In emerging countries like (part of) APAC region, Latin America, Africa and Russia
LogicaCMG has to pre-empt very aggressive gateway sales efforts by Huawei and counter
these by putting much more emphasis on SMS TV, MMSC, Total Messaging Solution,
Service Enablers and the whole Service Network concept.

2.3.7.2

How Huawei can attack us


In China Huawei is playing a home game, and will continue to strengthen its relationship
with China Mobile and China Unicom. It will sell SMSC and MMSC on the back of core
network deals or will offer bundled end-to-end solution (core network, services, service
gateways and handsets (partnerships with Chinese handset vendors, NEC and Panasonic).
Outside China Huawei will try play a similar and aggressive game: it will try to get into all our
accounts in the APAC region, Africa, Latin America and Russia. Note that Huaweis senior
management has set export growth targets at 80 to 100% for 2003 and 2004.
In a confrontation Huawei will use the following against LogicaCMG:
At product level: too expensive, not flexible, no localised products for specific regions, often
no local support at Tier 2/3.
(note that Huawei is present in more countries than LogicaCMG is!)
At company level: LogicaCMG will divest Wireless Networks division just like they did with
Aldiscon. Outside Western Europe LogicaCMG cannot leverage its other core competency
which is SI. And LogicaCMG has no strong partnerships to complement its offering.
Specifically for China: LogicaCMG is a foreign company; has not really invested in China
(See Chinese government policy of Invest and Get Business), has no local R&D centre,
has only 30 people, vs. Huaweis 18000. LogicaCMG has no track record in CDMA and no
CDMA 1xRTT or TD-SCDMA knowledge. LogicaCMG has no dedicated product for the
Chinese customers.

2003 LogicaCMG Key Competitors

17

2.3.8

Analysis
Huawei is known to be working on a LogicaCMG replacement strategy for our SMSC,
MMSC and CBS products. The stereotypical perceptions of European and other countries,
concerning doubts around intellectual property integrity and poor quality products from
China, are still potential obstacles, if only on a perception level. The biggest challenge is to
get the West to appreciate that (the Chinese) have their own capabilities, said James Ennis,
managing director of Apella, Huawei's systems integrator partner in the U.K. and Ireland.
They're not copyists. All of this stuff is really their own intellectual property. [Source:
Chinese vendors Huawei and ZTE seek European lab approval, Comms Week International,
12.11.01]

2.4 Nokia
2.4.1

Company Overview
Market leader in mobile phones and number two in network infrastructure and global
customer base. Nokia Networks is a front runner in providing mobile, broadband and IP
networks and related services. They develop mobile data applications and solutions for
operator and Internet service providers, aiming at leadership in IP mobility core, radio and
broadband access for network providers and operators.

Nokia has 18 production facilities in 10 countries around the world

R&D spend 3 bn

Research and development in 15 countries. 18,600 people employees in the area of


R&D making up 35% of its workforce

Sales to over 130 countries

Employs around 54,000 people

Nokia global market share in SMSC installations is 9.37% (46 installations).

Most recently, Nokia moved its Service Platforms including the messaging products such as
SMSC, MMSC into the mobile phone division. This will provide unique synergies and shows
the strategic importance associated to service platforms given its leadership in the mobile
phones.
2.4.2

Products
Nokias Messaging and Presence suite is made up of:
-

Nokia Messaging Gateway

Nokia MMS Solution (which includes WAP


Gateway, MMSC, MM store, Profiling Centre
etc)

Nokia Presence Server

Nokia SMS Centre

Nokia USSD Centre

Nokia Download Centre

2003 LogicaCMG Key Competitors

18

2.4.3

Services
Nokia is said to provide services to help operators make the most of their network
investment. This covers the entire process of planning, building and operating a network,
maintaining and optimising network performance, training operator staff and integrating
solutions that enable new mobile services.
Nokia's services for operators comprise a global partner network and Nokia Online Services,
which provides round-the-clock support via the Internet.

2.4.4

Partnerships
Nokia divides its partnerships into the following categories:

2.4.5

Games: Enlightenment, Sega

Entertainment: Akumiitti, Aspiro, WES, ConVISUAL, Yomi Vision, Disney

Integration: Cap Gemini Ernst & Young, IBM, Accenture

Mobile Commerce: Earthport

Location services: Arcus, Genimap Oy, Hotel.guide.com, SandStone, Sonera Info

Corporate applications: Cidercone Wireless, Smartner Info Systems.

Customers
Some of Nokias SMSC customers include:
EMEA
- Omnitel, Italy
-

Connect Austria

Americas
- Neuvatel, Bolivia

Airtel, India

Pannon, Hungary

Birla AT&T, India

Radiolinja, Estonia

Netcom, Norway

Ben, Netherlands

China Mobile (Hainan,


Jilin, Shanxi, Yunnan,
Bejing, Ningxia, Fujian),
China

Polkomtel, Poland

Time Wireless, Malaysia

Cosmote, Greece

Orange, Denmark

Telia, Finland

Ittissalat Al-Maghrib,
Morroco

Digicel, Venzuela

Asia Pacific
- Smart, Philippines

2003 LogicaCMG Key Competitors

19

2.4.6

SWOT
Table 4:
Table 4: Nokia SMSC SWOT

Strengths

Weaknesses

Large workforce in Nokia Networks (19,000)

Expects continued decline in profits

End-to-end solution

Poor SMSC product quality

Strong global presence

Lack of Messaging Focus and track record

Strong end-user and service centric vision

SMSCs based on HP Unix platform.

Overly dominant player, at times abusive of


position (EMS, Club Nokia)

Now part of mobile phones

Handset position obstacle in IOP

Not a dominant SMSC market share

Do not fully understand support systems and


processes such as billing, provisioning etc.

No CDMA or proven IP solution

Threats

Opportunities

Establish wireless messaging track record

Leverage strong position in APAC

Leverage MMSC for cross-selling SMSC


and routing products. Target former Logica
customers due to product rationalisation
within LogicaCMG

Success of Nokias key customers

Financially strong to buy market share

Losing out in CDMA markets as they only


have a GSM solution

Replacement of Nokia SMSC

Market share in handsets reduced due to


Asian players

Slow growth in 3G market

2.4.6.1 Strengths
- Large workforce in Nokia Networks (19,000)
Nokia Networks has a significant workforce, which has made it possible to implement their
MMS vision in their MMSC. The cost cuttings in Nokia have been less drastic than in
Ericsson.
-

End-to-end solution, bundled deals


Like Ericsson, Nokia offers an end-to-end SMSC including their MMS solution, the Nokia
WAP Gateway and handsets, vendor financing and third-party content and applications
(acquired through the Forum Nokia programme).
Nokia have a very aggressive approach in buying SMSC market share through crosssubsidising SMSC business from their handset business and by creating dependencies
between their SMSC business and their handset and network businesses. For example,
2003 LogicaCMG Key Competitors

20

Nokia Smart messaging, which is similar to EMS, only works properly on a Nokia handset.
To date Nokia handsets do not support EMS.
-

Strong global presence


Another strength that Nokia share with Ericsson is their global presence; they have sales
offices in +/-50 countries and R&D in +/- 15 countries. For SMS, Nokia has Tier 1 presence
in China, Philippines and EMEA.

Strong end user and service-centric vision


Nokia have a strong end user and service-centric vision, which they apply very well to both
SMS and MMS; Nokia understands and communicates the essence of SMS: end user
experience, e.g. easy chat menus on their handsets.
This is strengthened by moving the service platform into the mobile phone division to exploit
their leadership position in the devices market and can offer unique synergies.

2.4.6.2 Weaknesses
- Expects continued decline in profits
Although Nokia is still profitable (unlike Ericsson), they expect their profit to continue to
decline (-2% for 2001; -5% for 2002) at Nokia Networks.
One of the weapons that Nokia use to fight their MMSC battles is vendor financing. Nokia
will have less room for providing financing to their customers, as their Capex will decline
with an expected 50%.
-

Poor SMSC Product Quality


The availability, scalability and performance of the Nokia SMSC, which is built on the ancient
Artuse platform, is poor. The functionality of the Nokia SMSC is not fit for high performance.
They need 22 SMSCs to handle the traffic at SMART Philippines.

Lack of core Messaging Focus and track record


Nokia plays in the broad field of wireless communication, and they have been successful in
voice. But they do not have the expertise and understanding of what makes a successful
wireless messaging or mobile internet solution. Because SMSC is not a significant source of
direct revenue for Nokia, they are not committed to it and it will be one of the first areas for
any additional cost cuttings.
The issuing of many Service Network tenders by operators indicates the need for
application, network and handset-independent service IT environments. This requires
specialisation and separation from infrastructure. Dont let the plumber do your electricity.
Operator such as E-plus have already stated that they do not allow handset and
infrastructure vendors like Nokia into their Service Network environment.

Overly dominant player, at times abusive of position (EMS, Club Nokia).


Bundled handset-infrastructure deals have won Nokia a significant MMSC market share.
Sometimes Nokia have practically blackmailed operators by refusing significant handset
deliveries unless a Nokia MMSC was installed. There is a trend that operators are turning
against Nokia out of frustration over this unfair approach.
Also in other fields, operators are starting to feel that Nokia is a supplier who is telling them
in which direction to go, rather than do what their customers ask. One such example has
been the lack of EMS support in Nokia handsets, which has killed this standardised service.
Several operators see Club Nokia as direct competition to their own wireless portals.

Handset position obstacle in IOP


2003 LogicaCMG Key Competitors

21

The other handset vendors are reluctant to give openness to Nokia in interoperability testing
with Nokias MMSC, since they know Nokia is their competitor in handsets and will use any
intelligence it gets on their handsets MMS capabilities.
-

Not a dominant SMSC market share


SMSC is not a core business for Nokia, although they identified SMSC an important source
of income. Therefore the Nokia SMSC is not very much pushed into the market. Nokia has
around 9% market share.

Do not fully understand support systems and processes such as billing, provisioning etc.
Nokia has not focused on what an SMSC means from a business point of view. Issues on
how to help the operator with billing and provisioning are generally not addressed.

No CDMA or proven IP solution


Nokia does not have a CDMA solution. They claimed to have an IP SMSC. With that, they
tried end 2001 and early 2002 to sell an IP system to Globe Telecom in the Philippines. This
was in fact a proprietary Nokia Solution and not an open standards IP solution.

2.4.6.3 Opportunities
- Establish wireless messaging track record
With its traditional visibility and brand recognition in the handset market, and a high market
share in MMSCs, Nokia finds itself in an excellent position to earn/build its reputation in the
wireless messaging area.
-

Leverage strong position in APAC


Nokia heavily targets the Asian/APAC market, especially China. These markets show the
strongest growth in the SMS market.

Leverage MMSC for cross-selling SMSC and routing products. Target former Logica customers
due to product rationalisation within LogicaCMG
Nokias strong installed base for MMSC can potentially be used for cross-selling for SMSC.
For LogicaCMG there is a threat in the Tier 1 former Logica customer base in EMEA.
Operators such as O2 UK and Ireland and Orange UK have all purchased a Nokia MMSC.

Success of Nokias key customers


Nokia has a number of very visible MMSC customers (MMO, Orange). If these customers
are successful in their MMS business, Nokias track record in wireless data is established.

Financially strong to buy market share


Nokia has a strong cash position. Therefore, they can buy market share.

2.4.6.4 Threats
- Losing out in CDMA markets as they only have a GSM solution
Nokia has no SMSC installed base on a CDMA network. With interoperability issues being
addressed, CDMA is a growth market for SMS. By not having a CDMA solution, Nokia
cannot grow in this area.
-

Replacement of Nokia SMSC


Nokia does not have a solid track record in high-performance markets. In SMS growth
markets they risk losing market share e.g. to LogicaCMG.

Market share in handsets reduce due to Asian players

2003 LogicaCMG Key Competitors

22

GPRS and 3G are about colour and high quality audio. The Japan-oriented handset
manufacturers started on the learning curve of producing colour screens, polyphonic audio,
integrated cameras and picture and movie playback in early 2000. Nokia is at least a year
behind that and could be hurt if these Asian players enter the GSM/GPRS domain.
3G infrastructure market grows slower than expected

The profit decline in Nokia Networks will steepen if the market for 3G networks does not
take off soon and the operators that have been financed by Nokia are not starting to make
payments.
Importance of Networks (3G Infrastructure/Messaging) will compel the Nokia group to
continue sustaining and investment activities for 3G networks, even when revenues are
below expectations. This could lead to cost reductions in terms of lay-offs and further
reduction of effective SMSC and MMSC expertise. Nokia Networks contributed to 28% of
Groups total revenue.
2.4.7

Analysis
This section presents the conclusions comparing Nokias and LogicaCMGs SWOTs. The
outcome provides the direction for the SMSC Competitive Management document, and the
SMSC attack plans for Nokia. The conclusions of this analysis are presented in two
subsections:
1. How LogicaCMG can most effectively attack Nokia. The conclusions in this section have
been reached by matching LogicaCMGs strengths with Nokias threats, and
LogicaCMGs opportunities with Nokias weaknesses; and identifying where Nokia is
most vulnerable.
2. How Nokia is most likely to attack LogicaCMG. This section is the result of the inverse
exercise: matching Nokias strengths with LogicaCMGs threats, and Nokias
opportunities with LogicaCMGs weaknesses.

2.4.7.1

How to Attack Nokia


1. In a competitive confrontation with Nokia, the following points most effectively position
LogicaCMG:

LogicaCMG is independent from wireless handsets (and networks) and focuses on


interoperability; operators are frustrated with the way Nokia has forced them to buy
proprietary Nokia SMSC and now also MMSC. They are afraid Nokia will introduce
proprietary functionality between their systems and handsets, like they have pushed
Smart Messaging as a proprietary alternative to EMS.

LogicaCMG is committed to and focusing on our core business: wireless


messaging; Nokia does not have a track record in wireless messaging, will not make
a special effort to preserve it if cost cuttings are needed.

2 out of the top 3 operators in terms of wireless data revenues use LogicaCMG for
wireless messaging1, 8 out of the top 10 use the LogicaCMG SMSC2; LogicaCMG
does not just claim a large customer base but also enables success for our customers
in wireless data; Ericsson has a track record in voice, not in wireless data.

The worldwide top 3 operators in wireless data revenues as a percentage of total wireless revenues are SMART of the
Philippines (39%), Globe of the Philippines (33%) and Telenor of Norway (20%). Smart uses Nokias SMSC and MMSC,
Globe and Telenor use LogicaCMGs SMSC and MMSC.
2
The worldwide top 10 operators in wireless data revenues as a percentage of total wireless revenues are SMART
(Philippines), Globe (Philippines), Telenor (Norway), NTT DoCoMo(Japan), J-Phone (Japan), Telefnica Mviles (Spain),
Vodafone (Germany), O2 (UK), Wind (Italy) and Orange *UK). Of these 10, SMART has a Nokia SMSC, NTT DoCoMo has
an in-house developed SMSC, the other 8 use LogicaCMG.
1

2003 LogicaCMG Key Competitors

23

LogicaCMG has strong capabilities in the area of Billing and Customer Care; B&CC
is not in the core expertise of Nokia.

LogicaCMG has strong Systems Integration and IT capabilities; this is expertise


that Nokia does not have.

2. In the Nokia SMSC installed base, opportunities can arise in 2003 for replacement and
deliveries as second vendor. The most likely areas where the Nokia customer is
dissatisfied with the Nokia SMSC and LogicaCMG has a better offering are:

2.4.7.2

VAS support and management functionality

Throughput

Quality of Service

High Opex

How Nokia will Attack Us


1. In 2003, Nokia can attack LogicaCMG mainly at the former Logica installed base, since
LogicaCMG as this customer base can following SMSC open cross-selling opportunities
for MMSC:

Bundle SMSC with MMSC with handsets, network, applications, discount the SMSC

Offer financing

2. In a competitive confrontation with LogicaCMG, Nokia will use the following points to
position themselves against LogicaCMG:

Nokia is the leader in MMS and has the highest market share in wireless handsets
and MMS client software and is therefore best prepared to work as a messaging
business partner; LogicaCMG has no position in handsets.

Nokia offers a complete, end-to-end solution for SMS and MMS, has everything that
is required in-house or available through Forum Nokia; LogicaCMG is not able to
offer end-to end SMS.

The long term viability of LogicaCMG is questionable; it is a small company in a


difficult market; this is to compromise LogicaCMG as a reliable partner.

The commitment of LogicaCMG to maintain the Wireless Networks business and


keep investing is questionable; Logica split off and sold a lot of the Aldiscon business
after they acquired it and they want to do the same with CMG WDS; this is to
compromise LogicaCMG as a reliable partner.

2.5 Comverse
2.5.1

Company Overview
Israeli and American based Comverse is a provider of software and systems enabling
network-based multimedia enhanced communications services. These services include
enhanced services systems and software, which enable the provision of revenue-generating
value-added services including call answering with one-touch call return, short messaging
services, IP-based unified messaging (voice, fax, and email in a single mailbox), 2.5G/3G
multimedia messaging (MMS), wireless instant messaging, wireless data and Internet-based
services, voice-controlled dialling, messaging and browsing, prepaid wireless services, and
additional personal communication services.

4000 employees in 100 countries


2003 LogicaCMG Key Competitors

24

Today, it is said that almost one out of every two mobile subscribers enjoys the
personalised communications experience of Comverse Solutions.

Scalability, redundancy, and reliability are said to be the cornerstones of Comverse's


solutions, along with open standards.

2.5.2

400 (fixed and mobile) customers worldwide

Global market share in SMSC installations is 8.35% (or 41 installations)

Products
Messaging Solutions

Personal Communication

ISMSC

iTVGate

SMS Interconnection Gateways

VoiSMS

MMSC

Voicemail (VMS)

UC/UM

VoiCD

Voice solutions:Mobile conferencing


Voice activated dialling
Voice portal

Prepaid solution

Mobile Entertainment

2.5.3

Mobile Game Services

Mobile Portal

Open.SMS

Services
Their Medalist Market Success Program is said to be the industry's most comprehensive
marketing consultation and support programme, designed to help customers position and
merchandise their services.

2.5.4

Partnerships
The Comverse Spark Alliance Program promotes cooperation in the development,
marketing and delivery of value-added, best-of-breed multimodal solutions. Comverse forms
alliances with with infrastructure vendors, system integrators, technology vendors,
application developers, and content providers. They say this enables them to rapidly
integrate new technologies and capabilities into existing and new revenue-generating
solutions.
Partners include Siemens, Ericsson, Nortel, Qualcomm, Texas Instruments, BitFlash,
Feather Mobile Systems, Vitaminic Signs, MAXware, WES, Sonus Networks, Sylantro,
Onset, InfoSpace among others.

2.5.5

Customers
Comverse has more than 400 wireless and wireline telecommunications network operators
in more than 100 countries. A selection can be found below.
2003 LogicaCMG Key Competitors

25

Americas
- Sprint PCS, USA
-

2.5.6

EMEA
- T-Mobile Austria

BellSouth affiliates,
Brazil & Peru

Telecom Personal,
Argentina

Telefnica, Chile

Infonet, Venezuela

Airtel Vodafone, Spain

Comviq, Sweden

Cesky Mobil

Ukraine Mobile
Communication

Asia Pacific
- PT Excelcomindo
Pratama, Indonesia
-

Taiwan Cellular, Taiwan

China Mobile
(Guangdong, Sichuan,
Heilongjiang, Hubei,
Beijing), China

China Unicom (Beijing


CDMA, Shanghai GSM)

SWOT
Table 5:
Table 5: Comverse SMSC SWOT

Strengths

Weaknesses

Aggressive Sales and Marketing

Strong global voicemail installed base (330


Customers)

SMSC not suitable for high traffic


environments

Requires DB maintenance during low traffic


hours

Seen as a voicemail vendor

Experienced many replacements in 2002


(China, Israel)

Weak position in other messaging markets


such as MMS and WAP

Going through continuous reorganisations

Over-reliant on VMS revenues (> 70%)

Complex overall architecture

Has both fixed and mobile customers

Strong financial position

Strong Partnerships

Global presence (39 Countries)

Tailor-made solutions

2003 LogicaCMG Key Competitors

26

Comverse SMSC SWOT cont

Threats

Opportunities

Strong foothold in fixed market and hence


large number of SMS over fixed
opportunities to push UC.

New bids in LogicaCMG upgrades


customers

Value-added services platform

Cross-selling opportunities

Key accounts choose a better profiled


messaging vendor

Merging of messaging and voice

Ongoing VMS market saturation

SMS uptake in under-developed regions

2.5.6.1 Strengths
- Aggressive Sales and Marketing
Comverse is buying market share. Analysing their pricing for Bayantel in the Philippines in
2000, they are more expensive compared to LogicaCMG. However, Comverses strategy is
never to the battle on pricing.
-

Strong global voicemail installed base (330 Customers)


Voicemail accounts for approximately 70% of Comverses revenue.

Has both fixed and mobile customers


Comverse has contacts, through its voicemail installed base, with both fixed and mobile
operators:

Strong financial position


Net cash position in Q2 2002 of $1.3 billion.

Strong Partnerships
Comverse has strategic partnerships with: Ericsson, Nortel, Qualcomm, Siemens and Texas
Instruments. Next to these they have partnerships with application providers (7), content
providers (19), technology providers (19) and infrastructure vendors (5).

Global presence (39 countries)


Comverse has offices in 39 countries worldwide. In the US Comverse is present in 9 states.

2.5.6.2 Weaknesses
- SMSC not suitable for high traffic environments
Comverse claims that they can handle 3000 SMS/sec on a single point code. To date
LogicaCMG is not aware of a reference sustaining this claim.
-

Requires database maintenance during low traffic hours

Seen as a voicemail vendor


Comverse made its claim to fame mainly in the voicemail arena. As they are a major player
in the voice mail / messaging market, they claim to understand the text market as well.
2003 LogicaCMG Key Competitors

27

Experienced many replacements in 2002 (China, Israel)


Comverse had a significant number of SMSCs within China Mobile. Most have been taken
over by Huawei. To date Comverse has 7 references in China.

Weak position in other messaging markets such as MMS and WAP


Comverse has 3% market share in the WAP gateway market and 2% in the MMS market.

Going through continuous reorganisations


Comverse has undergone continuous reorganisation. The most severe was the
announcement to lay off 1200 people of a total of 5700 in July 2002. In December 2001
Comverse had already reduced its workforce by 900 people. Currently the total Comverse
staff is 3500.
-

Over-reliant on VMS revenues (> 70%)

Complex overall architecture

Comverse has an all-in-one platform, including e-mail, web server and applications. The
market usually requires these services to be on separate platforms, as when the system is
down it means all services are down.
2.5.6.3 Opportunities
- Strong foothold in fixed market and hence large number of SMS over fixed opportunities
Their existing contacts with fixed operators can enable an easy road in for their fixed SMS
solution and push forward UC.
-

New bids in LogicaCMG upgrades customers


The merger of Logica and CMG gave them almost 50% of the SMSC installations. However,
product realisation means that about half of LogicaCMG customer base will need a new
SMSC, when upgrades are needed. This can potentially open ways for Comverse to be part
in new bids for those customers.

Value-added services platform


As Comverse has its own value-added service platform, they can directly offer services with
their SMSC.

Cross-selling opportunities
Their voicemail installed base can potentially be used for cross-selling.

2.5.6.4 Threats
- Key accounts choose a better profiled messaging vendor
By the creation of LogicaCMG, Comverse risks the possibility that its key SMSC accounts
choose this global messaging vendor.
-

Merging of messaging and voice


As data and voice are merging, data vendors will include a voice solution as well (e.g. textto-speech for fixed-line SMS). Comverse will get new competitors in their key market.
Ongoing VMS market saturation.

SMS uptake in under-developed regions


Comverses SMSC is customer base is mostly in regions where SMS is not yet developed
such as North and Latin America, China and the Ukraine. They do not have Tier 1 customers

2003 LogicaCMG Key Competitors

28

in Western Europe. As they do not yet have a good track record in developed SMS regions,
they risk replacements in under-developed regions when SMS takes off.
-

Ongoing VMS Saturation


Operators will replace their existing TDM voicemail systems to new UM/IP based platforms.

2.5.7

Analysis
This section presents the conclusions of comparing Comverses and LogicaCMGs SWOTs.
The outcome provides the direction for the SMSC Competitive Management document, and
the SMSC attack plans for Comverse. The conclusions of this analysis are presented in two
subsections:
1. How LogicaCMG can most effectively attack Comverse. The conclusions in this section
have been reached by matching LogicaCMGs strengths with Comverses threats, and
LogicaCMGs opportunities with Comverses weaknesses; and identifying where
Comverse is most vulnerable.
2. How Comverse is most likely to be attacking LogicaCMG. This section is the result of the
inverse exercise: matching Comverses strengths with LogicaCMGs threats, and
Comverses opportunities with LogicaCMGs weaknesses.

2.5.7.1

How to attack Comverse


1. A competitive confrontation with Comverse, the following points most effectively position
LogicaCMG:

References: LogicaCMG is the main SMSC messaging vendor with a market share
of 47% in installations and 58% in subscribers. These include 8 out of the top 10
largest customers worldwide.

Quality of Service (QoS): the LogicaCMG SMSC has a high performance, is highly
scalable and fully redundant.

Market expertise: LogicaCMG can work with the operator as a business partner as it
has a solid understanding of the messaging market, a broad product portfolio and
system integration capabilities.

2. In the Comverse SMSC installed base, opportunities may arise in 2003 for replacement
and deliveries as a replacement or second vendor. The most likely areas where the
Comverse customer is dissatisfied with the Comverse SMSC and LogicaCMG has a
better offering are:

2.5.7.2

High cost of ownership

QoS issues

Weak SMS business

How Comverse will Attack LogicaCMG


1. In 2003, Comverse will continue to use the following tactics against LogicaCMG:

Competitive pricing

One step ahead: Use fixed operator contacts for wireline SMS

Partnerships for SI and services

2. In a competitive confrontation with LogicaCMG, Comverse will use the following points to
position themselves against LogicaCMG:
2003 LogicaCMG Key Competitors

29

Position their expertise in voicemail as expertise for messaging

2.6 Telsis
2.6.1

Company Overview
Telsis was founded in 1987 and has a staff of 250 people worldwide. The Telsis group
includes a research, development and production facility at its headquarters in Fareham,
England and local sales and support organisations in Germany, France, Spain, Italy, the
Netherlands, Singapore, Australia and North America. They offer a range of programmable
platforms and their goal is to enable operators to quickly develop and implement advanced
network services for competitive advantage.
Interesting to note Telsis has an German language option on their website.

2.6.2

Products
Telsis provides a range of value-added service platforms enabling fixed and mobile telecoms
operators to develop and implement advanced services faster and more efficiently within
any mobile, PSTN or IN configuration. Their portfolio includes:

Interactive voice response systems

Programmable switches

IN platforms

Intelligent SMS routing

The company's main product line is the Ocean range of programmable platforms
which comprises three key elements a family of Ocean fastSSPs (Service
Switching Points), the Ocean fastIP (Intelligent Peripheral) and the Ocean fastSCP
(Service Control Point) together with a powerful visual service creation
environment and management system, the Ocean fastSCE. In addition, the Ocean
fastTC (Transaction Converter) connects the telephony and data worlds of SS7 and
TCP/IP.
Ocean elements can be deployed either stand-alone or in any combination within
both fixed and mobile networks.
2.6.3

Services
Telsis provides basic and advanced training sessions in the UK for the management and
maintenance of its Ocean range of products, Service Creation for fastSSP/fastSCP/fastIP.
Customised training may also be considered.

2.6.4

Customers
Vodafone UK, Jersey Telecom, BT, Deutsche Telekom, KPN Telecom, One 2 One,
Singapore Telecom, Telefnica, Powertel (Australia) and Telia.

2.6.5

Partnerships

2003 LogicaCMG Key Competitors

30

2.6.6

SWOT
Table 7:
Table 7: Telsis Router SWOT

Strengths

Weaknesses

Solid reputation at Telco companies


o

Founded in 1988

250 staff

Knowledge in ICT,
infrastructure and network
technology

Expertise in voice & data

Good marketing/positioning of products &


solutions

Lacking (clear) strategy

Only support SMS (+ IVR) ?! (what


about MMS, WAP, WEB)

Limited geographical presence

No major partnerships

Less than 4 messaging-related


partnerships

Technology focus/driven

Lack of contacts & reputation in the


media industry

Do not offer hosting/managed services

Financial situation (needs to be


verified)

Installed based in Western Europe

Threats

Opportunities
-

Partner with other players in the value


chain

Other players come with end-to-end


solution earlier

Moving towards end-to-end solution

No country-/region-wide offering

2.6.7

SMS voting (Mass Messaging


Event --> product/solution?)

IVR

Call centre

Can gain significant market share


o

Rationalisation issues (reduce


Capex/Opex)

Sexy solution

Analysis
Telsis = operator-centric <--> LogicaCMG = service network-centric

2003 LogicaCMG Key Competitors

31

LogicaCMG itself (i.e. mindset, culture, slow response, lack of sufficient internal
communication and collaboration) is its biggest threat
Telsis SWOT will be further updated. For more information, please contact Marketing.
2.6.8

Generic SWOT on Routing Solutions


Table 8
Table 8: Routing Solutions SWOT

Strengths

Weaknesses

Performance, flexibility and reliability

Quality of service diminished in


malfunction scenarios

Cheap

Small footprint in size and cost

Telco class?

Telco references if somewhat limited

Late comer in SMSC market

Extremely fast time to market

Requires high performance


applications to work efficiently

Most cases use their own technology

Limited references

Can be used as stand alone solutions or in


combination of fixed and mobile networks

Hampers not enhances QoS?

User-programmable platforms

Substitute technology ie: puts the


problem somewhere else

Know the messaging market (eg:


mBalance is made up of ex-CMGers)

No guarantee of message receipt, ie:


No store and forward

Fancy routing/sniffing features

No CDMA or TDMA support

Limited R&D funds or past


development

Threats

Opportunities
-

TV voting, peak traffic scenarios

New entrant to the messaging


market

Emerging markets

Entry level solution

Lack the same R&D power as


larger players

Large Account traffic/apps (MO)

Credibility

Rationalisation -> potentially bypass SMSC

Small player

OPEX pressure

2003 LogicaCMG Key Competitors

32