Update, 25th August 2013
Initial post from 25th June 2013: Swiss telco Swisscom has just launched the independently developed free messenger and VOIP app ‘iO’ that competes with WhatsApp. After SK Telecom, KT and LG Uplus (South Korea, December 2012) and StarHub and SingTel (Singapore, February 2013), Swisscom is another innovative telco that tries to win back the customers that it has lost to WhatsApp with an own tool.

Update 20th August 2013: The newest move on this battlefield: Chinese operator China Telecom unveiled its mobile IM product in collaboration with Internet firm NetEase yesterday, called Yixin, in a move that literally declared war on reigning OTT messaging service WeChat.

The whole story of iO Messenger’s development by an internal Swisscom innovation team and the American creative company Moving Brands can be read here.

In comparison to WhatApp, the free iO Messenger app can also be used to make VOIP phone calls. Swisscom even additionally sells a Swiss flatrate of CHF 15 / USD 15 (to call all subscriber in Switzerland who are not subscriber to iO Messenger) as well as an European flatrate for CHF 25. But on 30th August Swisscom confirmed that it has not yet launched the paid flatrates because the quality of iO messenger service is not stable enough yet, 2 months after the product’s launch. The flatrates are planned for September 2013.

On 16th September, the first app update was released, 2.5 months after the start of the app. Among the updates was that pure voice-over-IP calls are encrpyted.

An advantage for the customers is that the messaging data is stored locally, within Switzerland. The iO messages are SSL encrypted – opposite to WhatsApp that only uses an MD5 hash of the phone’s IMEI number in reverse format.

Enabling feature
Another difference to WhatsApp, iO does not require the user to download the entire address book on a central server. But downloading the address book on a central server is what makes WhatApp so simple to users and it helps enormously in growing user penetration because this enables Whatsapp to show users immediately who of their friends are using WhatsApp, too. iO Messenger can’t do this feature; in iO each contact/chat request is handled individually to see whether the addressed person also has iO installed.

Image
The iO messenger app saw a image damage when newspapers disclosed that Swisscom sends anonymized user data for analytics to USA. This fact was for many iO starters in clear contrast to the earlier stated Swissness and security strategy by Swisscom, which again led within this user group to less activity on the app.

Strategic Options
Swisscom announced that the group chat feature will follow soon. This is the start of new unified messaging platforms. Swisscom could also act with an MVNO offer over iO Messenger. Sure that several further rateplan offers will be launched through the iO Messenger app, but adoption will take time.The former telco monopolist in Switzerland writes in the analyst report Q2/13: ‘New tariff systems will make Swisscom invulnerable against OTT threats’. Geofencing and location-based services will sooner or later be a competitive advantage of regional messaging tool providers. When will the telcos add a virtual fixnet number for these mobile platforms?

Download rate of iO Messenger
25th June 2013:    50’000 downloads
26th June 2013:    111’000 downloads
9th July 2013:        250’000 downloads
7th August 2013:   320’000 downloads
31st August 2013: 365’000 downloads
7th November 2013: 400’000 downloads
31st December 2013: 450’000 downloads

 

Makes a daily download rate of 16’660 in the first 15 days of existence, with a slowdown to 1’650 downloads per day in the following month.

8% of smartphone owners in Switzerland have installed Swisscom iO
With about 3,6m smartphones (and 6,3m feature phones) in Switzerland (February 2013), it can be estimated that about 8% of smartphone owners in Switzerland have already downloaded the iO Messenger app (assuming that 95% of the downloads happened by smartphone users in Switzerland).

There are no official/public figures regarding WhatsApp penetration within smartphone users in Switzerland, but it can be assumed that the WhatsApp penetration rate is as high as it is in Germany (91% in iPhone user). Especially if one considers that Switzerland has with more than 50% one of the highest iPhone penetration rates globally within smartphone sales. Under this constallation, it is clear that it will take a long time until iO Messenger could be a real competitor to WhatsApp in Switzerland. However, Swisscom has good possibilities and the funds to play the local hero with new (regional) features in mobile messaging.

Conclusion on 9th August 2013
The io Messenger app had a good start in terms of numbers of downloads, but most people don’t have much of a clue what to do with it when about 80% of their friends already use WhatsApp for mobile messaging. But this is only the first step of a new telco tool. Above all: Swisscom has made a very innovative statement to Swiss customers who have, in general, a very high affinity to innovation and quality.

Even though Ovum, an international telco strategy consultancy, urges telcos to collaborate for messaging interoperability in the combat of OTT providers, and to use messaging standard JOYN (which has been initiated and promoted by GSMA), Swisscom has decided to develop its own messaging tool. The reasons may be in slow progress in international decisions and collaboration, the wish to make independent decisions, national image emphasis, and low graphical adaptability of the industry solution. Companies like Vodafone, Deutsche Telekom, Movistar, Orange, MetroPCS already use the industry solution JOYN. JOYN also struggles with popularity within the GSMA members as many MNOs (especially in emerging markets) have started to co-operate with WhatsApp in creating new rateplans together.

Excursus: How to calculate the smartphone penetration?
There are two different approaches to calculate the smartphone penetration of a country:
1) Smartphone users per capita,
2) Smartphone users per mobile subscriber (which is also the official measure by UTI and here)

June 2013:
Smartphone users per capita: Switzerland has a population of 8.0m, incl. children; 3,7m smartphones; approx. 45-46% smartphone penetration per capita.
Google IPSOS survey study stated in May 2012 that smartphone penetration per capita is at 43%.
Note: The figure 3,6m/3,7m smartphones in Switzerland is based on a survey and not on actual telecoms device sales figures.
Smartphone users per mobile subscriber: 10.106m mobile subscribers as of 30th Jue 2013 in Switzerland (pre+postpaid of Swisscom, Sunrise, Orange); 3,7m smartphones; smartphone penetration approx. 36-37%.

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