Ericsson is to supply at least two of China Mobile’s multimedia messaging service centers (MMSCs) under a two year agreement announced today.

China Mobile is planning to create four MMSCs in the world’s largest mobile market. Ericsson will supply the technology for centres in Shanghai and Guangzhou. The agreement includes implementation, integration and two years of support services. It is unclear as yet who will be awarded the contracts for the Beijing and Wuhan centres, but Jan Malm, President of Ericsson China, emphasised the strategic importance of securing a position in China Mobile’s infrastructure.

“It is strategically important for Ericsson to have footprint in China Mobile’s service network, which will keep Ericsson in a more favorable position in China Mobile’s service and network migration process. Ericsson’s solutions meet China Mobile’s both technical and business requirements in system design and construction. Understanding customers’ demand was the key factor for Ericsson to win the contract,” said Malm.

Insight

Text messaging is booming in China. Based on the trends already observed in other Far Eastern markets, demand for picture and other types of multimedia messaging will be very strong. One potential problem is the patchwork of standards deployed across the country, but if compatibility issues can be overcome, multimedia messaging could be a massive revenue opportunity for Chinese operators and their equipment suppliers.

Conservative estimates put Chinese mobile subscriber numbers at 200m by the end of 2002, so this could represent a market comparable to the whole of Europe. The individual price of messages is likely to remain significanly lower than in Western markets, but network effects should ensure exponential volume growth.