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PTT: The New SMS?

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Motorola Inc.'s (NYSE: MOT) efforts to market Push To Talk (PTT) services outside of the U.S. has raised debate over the technology's potential to eclipse SMS as the future messaging tool of choice in Europe and beyond (see Motorola Tries PTT in Jordan).

PTT allows people to use their phones as a walkie-talkie, merely pushing a button to talk to another user or group of users. The technology is arguably the voice equivalent of SMS, the text messaging technology that enables users to send or receive notes of up to 160 characters in length on their phone.

PTT has already experienced significant success in the U.S., with Nextel Communications Inc. (Nasdaq: NXTL) claiming to generate around 20 percent of its revenue from the technology. AT&T Wireless Services Inc. (NYSE: AWE), Sprint PCS (NYSE: PCS)), Verizon Wireless and others are also working on delivering similar voice-over-IP based services (see Verizon Mum on Push-to-Talk).

With the U.S. market established, network vendors and industry startups are now targeting European carriers with PTT offerings in an attempt to encourage a consumer messaging boom similar to the unexpected success of SMS (see Big Three Talk PTT and Radiolinja Trials Push-to-Talk).

According to Forrester Research Inc., 156 million SMS messages are sent in Europe every month, generating revenues of €19.6 billion ($23 billion).

"The mobile world has been racking its brains to find something that will succeed on the scale of SMS," comments James Tagg, managing director of push-to-talk startup FastMobile Inc.. "[PTT] will take off like SMS did. Our estimates suggest that push-to-talk could be worth €150 million ($173 million) in Europe over the next year, becoming a multi-billion-euro market in a few years." [Ed. note: Well, he would say that, wouldn't he?]

Despite Tagg’s drum-banging, European carriers remain skeptical about the long-term benefits of investing in the technology. Few regional trials have been announced, and local analysts seem reluctant to take the service too seriously.

"There isn’t much evidence of PTT’s success in Europe at the moment," says Ovum Ltd.'s principal analyst, Jeremy Green. "It is more of a toy and an interesting niche people will fool around with, rather than the next SMS. It won't be a big earner like text messaging. I don’t believe it is a very big opportunity."

U.S. analysts beg to differ, arguing that it is only a matter of time before PTT becomes a hit with European users. "I find it strange that we haven’t seen that much interest in Europe, as it is a very attractive product," says Ken Hyers, senior analyst at In-Stat/MDR. "Clearly, the strengths of the technology will have to be explained to customers, but people aren’t stupid. They quickly realized that SMS is a useful technology, and I don’t see any reason why they wouldn’t see the advantages of PTT as well."

Hyers adds that the walkie-talkie-style service will appeal to the same segments of the population that SMS initially attracted. "There's certainly no way corporate executives and vice presidents will be using it, but there is a similarity in user demand between the two technologies."

— Justin Springham, Senior Editor, Europe, Unstrung

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User Rank: Light Beer
12/4/2012 | 11:42:53 PM
re: PTT: The New SMS?
What PTT proponents fail to see is that one of the main attractions of SMS is non-intrusiveness. I can choose when to read, and when to reply to an SMS. A whole culture of youth communication, including SMS flirting, is based on that fact. PTT is just as intrusive as a regular phone call, and does not offer any communication comfort zone. It is therefore completely different from SMS. I believe it will remain a niche product.
User Rank: Light Beer
12/4/2012 | 11:42:41 PM
re: PTT: The New SMS?
I have never entirely understood the PTT thing but people love it here in the states, especially on the corporate level. Nextel has done quite well with it as well. I wouldn't discount it. PTT is not necessarily targeted to the teen users and its value is simplicity not lack of instrusion. There seems to be value in that. It also seems to attract a more mature and coporate audience.
User Rank: Light Beer
12/4/2012 | 11:42:30 PM
re: PTT: The New SMS?
I think that what you have to remember is that in Europe we have a different business model for Mobile services which limits one of the compelling reasons to buy PTT services.

We don't pay to recieve calls here in Europe and so price plans are for calls made only. This reduces the cost of ownership, for major corporations we also have a VPN solution that if you are big enough the handsets are treated as PBX extensions.

If you look at this technology behind PTT we have had it here in the UK for longer than we have had mobile phones, it is called TETRA Radio. Dolphin have been strugling to get customers ever since they consolidated the networks here in the UK.

With 18 years experience in wireless I have to say that PTT is more likely to be a rabbit than it is to be Orange!
User Rank: Light Beer
12/4/2012 | 11:42:28 PM
re: PTT: The New SMS?
PTT, at least as implemented by Nextel, has some additional features that are very useful to certain customers. Pre-defined talk groups can be set up and messages can be sent to all in that group (group mailing list). It's an all together different type of service that people seem to love or hate.
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