The Messaging Wars

Let's start with a question that has nothing to do with the capital markets: Why do I pay Time Warner ─ and don't get me started on that company ─ to get 150 channels when I'm only going to watch about 20 of them? I need ESPN and a few other sports outlets; HBO for Game of Thrones, True Detective and boxing; and I want AMC, FX, FXX, and maybe a half-dozen more, if that. But here I am, paying for the Oxygen and Lifetime networks, Spanish-language distributors when I don't speak Spanish, and countless other outlets of things I don't care about. If you ask me ─ and Senator John McCain ─ I should be allowed to pick stations à la carte.

Which brings me to Wall Street messaging systems ─ naturally. This month Symphony Communication Systems is launching its first messaging offering for its "enterprise" clients. It will look to compete with the likes of Microsoft, AOL, Thomson Reuters and ─ most talked about ─ Bloomberg.

No Comparison

Now, I don't want to compare Bloomberg to Time Warner because the quality of service and product offering of Bloomberg is far superior to that of the cable giant.

But it's worth noting that Symphony is entering the space precisely because they believe there's a market for traders who would prefer to build systems à la carte, rather than take the whole Bloomberg terminal and its hefty price tag when they really mostly use it for chat and a handful of other key functions.

This is hardly a novel idea: vendors have been trying to cut into Bloomberg's market share for decades with varying degrees of success.

But to bring it back to the cable wars: With Netflix, Hulu and streaming services, there's less of a need to pay for cable if you're okay waiting a little while to watch your favorite shows.

Why would a trader want to be unbundled from a Bloomberg terminal when they can start and end their day on one system?

A Change in Message

In mid-July, I went to Symphony's new Manhattan office in the magnificent One World Trade Center building. The company's CEO David Gurle compared his company's business plans to that of a fancy French restaurant. If you want, you can pick from the set menu ... it's going to be special and delicious, but you will have limited options (i.e., in this scenario, Bloomberg). Or, you can go elsewhere, pick and choose exactly what you need and maybe save a bit of money (i.e., again, in this scenario, Symphony).

Now, the set menu is popular for a reason — choices tire people out. So Symphony's strategy will depend on other vendors teaming up with it. Thomson Reuters has said that it's working with the Palo Alto-based company so that the TR Eikon platform and Symphony's platform will be compatible. Markit has already sold off part of its federated chat capabilities to Symphony and is leaving the space altogether. So far, so good.

But traders like simplicity. They like what they know and change is difficult for them to stomach. They like to know where everything is on their screen. It's an area of comfort. Gurle himself acknowledges that Bloomberg is a true workflow solution. A trader can log into their Bloomberg terminal, use the system ─ sans their corporate email ─ for their entire trading day, and then they can use the Bloomberg iPad offering once they leave the office.

So I posed this question to Gurle: Why would a trader want to be unbundled from a Bloomberg terminal when they can start and end their day on one system?

Gurle says that he believes there's a market for firms and traders who want to couple the Symphony messaging platform along with other third-party trading applications. There's a "long tail" of traders that can't afford or are disinclined to pay for the full Bloomberg experience.

Clear Interest

Fourteen banks and Wall Street firms invested $66 million in Symphony. So clearly, there's a real and even vested interest in finding something outside of Bloomberg. But my guess is that at the major banks and asset managers, Bloomberg will continue to dominate for years.

I also can't help but root for Symphony, though. Yes, I may still continue to pay the cable company for top services, but it's reassuring to know that there are other options out there.