Today, Amdocs — the industry behemoth — swooped in and acquired the mighty MX Telecom, one of the best messaging providers on the planet. I got the news just as I was coming out of a meeting and had to stop everything and send a quick post up to the site here followed by a few more announcement details, including the price.
To bring you up to speed on Amdocs, let me give you the background. Mention ‘Amdocs’ and most people visibly wilt. I’ve heard some describe sitting in an Amdocs press conference as slightly more interesting than watching the proverbial paint dry. However that’s to miss the point about the company. Yes, their website does need quite a lot of flashy graphics. Yes, it does need a lot of crash-bang-wallop footage on the video blog. Yes, the phrase ‘customer experience systems innovation‘ sounds like a part-time marketing executive in Hartlepool worked really hard on that one. Yes, I think they do need a bit of help with their marketing message to the industry and beyond.
But the company is a behemoth.
An absolute behemoth, employing talented people delivering some phenomenal services to companies across the planet.
The Amdocs customer list reads like the Who’s Who of Mobile. Their systems enable critical elements of just about any mobile operator you can name. They are, in many respects, the mobile industry infrastructure glue. If you’re a mobile operator and you’re NOT using Amdocs, you’re generally rubbish, misguided or a bit new to the party. The company knocked back almost three billion dollars in revenue last year with net income of a cool $326m.
So that’s Amdocs.
What are they wanting with MX Telecom, the industry’s messaging expert? Well, Amdocs also owns OpenMarket, a ‘leading mobile transaction hub’ operating in the United States, but with plans to move beyond the States. There are quite a lot of synergies with MX.
I’ve written about MX Telecom regularly here on the site — and I’m a huge fan. I’m a fan because I’ve done business with them. Indeed, I still have a UK SMS shortcode with them. They’re just about the most reliable and well-managed mobile messaging business on the planet. The company is staffed by serious, capable types who — I kid ye not — eat technical challenges for breakfast. I’ve been to their UK offices in the British Standards building here in Chiswick and goodness me, it’s a bewildering experience. It’s like visiting the den of ‘Q’ from James Bond. They’ve got tools, toys and technology overflowing. And some of the services they’ve demonstrated to me… well, each time, I have had to stand back, mouth open, then ask ‘and this isn’t public either, right?’
Not for nothing is MX Telecom lauded as one of the best and most reliable mobile messaging companies, bar none.
So I’m delighted that they’ve been acquired. $104m is a brilliant exit for the founders who thoroughly deserve it.
As for the management and the team, well — it’s the next chapter. Every success to everyone.
I’m looking forward to seeing what MX, OpenMarket and Amdocs can deliver to the market together, bring it on!
In the US, this is the second SMS aggregator to be purchased (Synaverse purchased Verisign's business about 9 months ago). That leaves 4 or 5 in the States. Any thoughts what this would mean for competition and innovation amongst the remaining aggregators?
Here's my rather direct perspective: SMS is over.
It's still — as Tomi Ahonen points out — the biggest mobile application success story on the planet. It still generates a stupendous amount of revenue and is still, when you look at the entire marketplace, the ultimate killer mobile app.
Premium SMS still has a part to play and the medium is continuing to dominate, particularly in the developing economies.
But as I said, (and with one eye on the future), SMS is 'over'. It's a known quantity, it's a defined marketplace and it was moving to commodity years ago.
It's now moving swiftly to beyond commodity.
I need it fast, I need it reliable, I need it delivered to service level — this was all perfected a good few years ago. The difference between A and B service providers today is negligible.
What's far more important now is transaction processing and management, which is why we're seeing almost every messaging provider switching out of 'we do SMS' into 'we do transaction management'.
The issue now is how will SMS transactions be canibalised by next generation offerings? At what point are content providers going to dump premium SMS in favour of (for example) Nokia's Ovi Store? Or direct carrier billing?
The smart carriers are already there and thinking carefully about becoming transaction enablers rather than arsing around with just airtime and text messaging credits. China Mobile has been making noises on this subject regularly and I expect other operators to get stuck in at some point.
Of course, the universality of SMS will trump all for a long time to come. But I think the writing is on the wall.
Ewan:
I think your perspective is at least a few years ahead of what's happening here in the States. Delivering messages via SMS is still new here. We have a lot of P2P messaging, and a small, but growing B2P messaging. That B2P volume is almost all marketing – very little is transaction processing. The carriers, banks, and other players still ask too much for businesses to move transactions to SMS. That's one of the reasons why the App Stores (Apple, Android, Ovi, etc.) are doing well here. The carriers have been taken out of the transaction – no 50% cut for them. It's the same story with NFC or RF/SIM, everyone wants all the transaction revenue.
We'll see what develops over the next couple of years.
Oh yes Michael, I should have been clearer about my perspective being routed firmly in the future, SMS is certainly still relevant. But yes, I'm very interested to see how the market changes over the next 12-24 months.
Future based and location based… I would think that what happens in the UK and EU over the next 12-24 months will happen in the states in 48 – 60 months.
I don't think SMS has changed in Europe beyond becoming interoperable and a little bit more reliable… it could (have done/do) so much more
Right, I've been trying to get an analyst on the phone to talk to me about this, but I've just had doors slammed in my face. Care to do a quick interview, via email, about this that I could publish on IntoMobile?
Go for it!
re. the marketing message(s) of Amdocs.
Ewan, do you you not think there's a reason this is SO bad, other than it not being a priority? Ever consider that it could almost be a stealth tactic of the technically very very good. They don't want to be found or compared and they don't much care how they're presented, providing it's facelessly corporate. It's almost a marker that they must be extremely good at whatever it is that they do, if this is so bollocks. Which can be perceived as arrogance by industry, (I'd wager this deal would've received more attention, column inches and been generally celebrated a little more if these two companies had shared their wealth as they grew: advertised, sponsored, gone to more stuff). Didn't really care though. It's not Hollywood after all, they're happy to just let their solid rep permeate round industry. I could read the Amdocs site page by page and still not be sure how to describe them to you. Went to their offices once for a meeting and I came out none the wiser. Perhaps I just have a short attention span, but it sometimes strikes me that the marketing and comms of technical messages isn't a priority of the technically elite. While understandable from a business sense (look at the numbers, they're hugely successful companies with enough people skills to carry it through – sit in a meeting room with one of the main MDs and you'll feel like you've walked through a hurricane but come out wanting to lick his feet). It still drives me feckin nuts though because their success indicates that solid marcoms can be utterly irrelevant in high-end tech.
That's all. Thanks
Hi there Anon, I don't know the specifics of the Amdocs business operations, but I reckon that a whopping percentage of their almost $3bn of revenue comes from repeat multi-multi-year contracts that are highly bespoke.
If that's the case — if, for example, 80% of Amdocs revenue is derived from multi-year deals that go on and on irrespective of the company's marketing — what's the point in advertising, sponsoring or getting the name out beyond one or two trade shows? Isn't it a total waste of money?
Like I said, I totally understand the business case. So in that sense yes, I agree. But it can be frustrating for marketers, and I imagine peripheral organisations – events organisers, publishers etc – may find this too; when companies get a lot out but aren't (or aren't seen to be) putting much back. Not that there's any obligation. No crime, it's just like wanting the frosty barmaid to crack a smile once in a while.
I'm with you, Anon.