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Mobile Forecast

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By: NMK Created on: May 2nd, 2008
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There are nearly four billion mobile phone handsets in use worldwide, roughly four times more than the number of computers. As handsets become more advanced, it seems an obvious route for operators to look at revenue streams other than voicecalls.

orangeTelecoms giant, Orange has recently reported a substantial fall in the demand from its UK customer base for ringtones and wallpapers, as mobile owners take advantage of the improved multimedia capabilities of their handsets. The number of ringtones being downloaded is declining as customers increasingly look to obtain full length tracks. From December to January, ringtone downloads fell by around 14 per cent - from 117,000 downloads to 100,000. This was in direct contrast with full length songs which saw a record number of downloads - 290,000 full length tracks were downloaded during the same time.

As more mobile phones become equipped with high-spec cameras, Orange is also seeing a decline in growth in the number of wallpaper downloads. Customers prefer to use personal pictures taken on their handset as the background for their screens rather than those offered by businesses.

Text messaging, seen as one the mobile industry's most surprising success stories, is also predicted to see a marked drop in usage. Orange customers sent around 1.3 billion messages each month between November and January, up 21 per cent according to the data from the operator. However, global information group, TNS believes that as customers take advantage of more widely available new services, such as instant messaging, the use of text messaging will be affected.

Instant or short?

Research by the company found that of every text, email or picture message that was sent, 38 per cent of were SMS. However, as soon as instant messaging services became available, the percentage of texts plummeted to just 23 per cent.

In the US, there is a similar pattern of customers using more advanced services on their mobile handsets. According to Analysys Research's Mobile Media and Entertainment in the US: Forecasts 2007-2012 report, revenue from mobile media and entertainment (MME) will more than double by 2012.

Analysys predicts that the growth will take place once the necessary technical enhancements have been made to existing network infrastructures. This will allow the general public to access high speed data connections rather than just early adopters.

Last year the US MME services, which exclude messaging and mobile browsing and data charges, generated $3.1 billion. Analysys forecasts that this will grow to $6.6 billion in the next four years, driven by advancements in the capability of devices and simplified pricing options. MME services are expected to account for 12.3 per cent of non voice services.

Make the most of mobile

With the potential of the market, it is no surprise to find that companies are looking to capitalise on this development. However, opportunity comes with its challenges.

Deepak Mehrotra, Vice President, Mobile Terminals, Aricent, believes that developers have a key role to play in the advancement of the mobile Internet.

"Operators seeking to keep apace with the mobile industry are under continuing pressure to roll-out new advanced data services, to keep their lucrative style and technology conscious subscribers happy, and create additional revenue-generating streams in the face of falling voice revenues. Software is increasingly becoming the lynchpin of delivering data services, by connecting the handset to the network, and the operator's service to the end-user," said Mehrotra.

"With success hinged on their ability to develop, deploy and react quickly as the data market evolves, a clear gap is forming between what the operator aspires to deliver to its users and what it has the resources to develop. In a climate driven furiously by the need for innovation and yet limited by resources, the gap is widening," he continued.

Struggling under its own weight

With more data being communicated over the same networks, there is also the issue as to whether the existing infrastructure can cope. Already, ISPs have complained about service such as iPlayer taking up too much bandwidth - the same situation could occur in the mobile industry.

"In a recent report from the Kelsey Group and ConStat, it was revealed that while only 26 percent of US mobile users currently subscribe to a mobile Internet service, almost 45 percent cite Internet capability as a key factor when purchasing their next handset," said Michael Flanagan, CTO of network optimisation company, Arieso.

"The challenge has been laid down for wireless network operators to provide extensive data capabilities and to make them cost competitive for subscribers. This is going to put a massive strain on their network infrastructure in the coming months. The increased desire for mobile data usage combined with growing pressure to improve and clarify budget management means that a new breed of optimisation tools are required to ensure a balance between data capacity and voice quality while making existing infrastructure work harder and providing justification for investment in new equipment," he continued.
Revolutionise the web

However, Marc Davies, Yahoo's social media guru, is convinced that the future of the web lies in mobile. Speaking to the BBC, he believes that the mobile web is more than just about the Internet on a different device - it's about personalised services.

"The mobile web is not just about accessing the web from your phone. Mobile phones that are location aware, temporarily situated and socially connected will transform our experience of the web, the world and ourselves. The next web will be about place and time," he said.

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