| 10th January 2005 - Many
people are starting to talk about the mobile services
market. New large investments in mobile infrastructure
mean that operators must look to new business areas that
can create traffic on their networks and billing systems.
So people are talking about SMS, EMS, MMS, WAP and Java
based services. But to be honest, how much of all this
talk in the telecom sector is actually just based on supposition
and educated guesses, about a future with so many unknowns?
Strand Consult has spent the necessary time to compile
a report that contains no guessing at all- on how the
future mobile services market will develop. We have
analysed the market for mobile services today in relation
to its technology and development, the roles of the
different market players and the business models that
drive and will drive the mobile services market. The
report takes in to account all the factors that affect
a market for mobile services - factors like:
The terminal market: Looking at the existing customer
base today, the sales of terminals that we have seen
the last 2 years - and the fact that most countries
are operating with a high penetration of mobile phones
- means that we have seen numerous operators switch
their terminal sales strategy away from prepaid and
heavy subsidising and start to focus on postpaid subscriptions
and selective subsidising to the heavy user segments.
Terminal technologies: The experience from recent years
show that many new technologies often get delayed compared
to the manufactures planned rollout and marketing efforts.
Amongst other factors that play a roll are, for example,
how many other manufactures support or are compatible
with the announced technology and how user friendly
the products are that enter the market. Right now the
mobile market is largely driven by younger segments,
so it is important to look at when there will be terminals
featuring new technologies in the segment known today
as "mass market".
Service technologies: The new service technologies
must not only be supported by the terminals available
on the market, but it is also important to look at when
you will achieve enough users with access to the technology
to make it attractive for content providers to develop
applications for that platform.
Types of services: Many have ideas or opinions on which
services the customers will use in the future. We have
chosen to disregard many of these often very abstract
ideas, as they more often than not, do not take into
account legal, regulative or market issues that will
have substantial effect on the deployment and success
of these ideas. Our calculations are based on the services
that millions of people are using and paying for every
day - like premium SMS. We have had the privilege of
being given access to actual sales figures from numerous
content providers in Europe, South America and Asia.
Based on what consumers are willing to pay for today,
we have compiled an image of the future market for mobile
services.
The Mobile operators existing ARPU: When you start
looking at the value of the future market for "non-voice"
services, you have to look at how much customers are
already paying operators in different countries. The
mobile market of the future is not just about mobile
services, but also about each customers incentive and
ability to contribute with more money in the operators
till. Terms like "Share of Wallet" will during
the coming years be included in many of the speculations
that the mobile players will have as they contemplate
their future options.
Share of the mobile operators VAS revenue: Today, the
primary source of the operators VAS revenue is derived
from SMS traffic. Revenue from data services is still
very small. Strand Consult believes that the development
in this area will be slower than many expect - not because
the customers do not want or need these services - but
because the operators are slow to create and implement
business models making it attractive for partners to
develop and market mobile services based on the new
technological platforms.
Development of the split between Voice and VAS revenue:
In the same way that there is a limit to the customers
ability and incentive to spend more money on mobile
services, there will also be a connection between the
revenue derived from "voice" and "non-voice"
services. We do not believe in an explosion in VAS revenue,
but expect a constant development that will vary depending
on which terminal the customers have now and will have
in the future.
When to launch revenue sharing: The primary prerequisite
for a mobile services market to emerge is that the operators
are willing to share their revenue with those content
providers who take on the task of developing and marketing
mobile services based on different technologies. The
earlier the operators open up for revenue sharing possibilities,
the earlier they will experience a sound market for
mobile services. Other factors worth mentioning are
the number of operators and service providers who allow
access to their customer base via revenue sharing. The
results from Norway, Denmark, Sweden, Holland and England
show that the market does not explode before the content
providers have access to around 70 - 80% of the mobile
customers.
A countries ability to adopt new technology: In a region
like Europe there can be vast differences in how quickly
the population will adopt new technologies. This can
be seen in for example how the Internet has penetrated
from country to country. In the mobile sector, similar
factors will play a role.
Key Markets: When you speak about the mobile future,
Japan and i-mode has been emphasised by many as the
ultimate showcase. In our calculations we have chosen
not to include what is happening due to several reasons:
·I-mode does not handle "micro-payments",
which in practice means that I-mode users cannot make
impulse purchases, but have to subscribe to the services
they want.
·I-mode operates with a "Walled Garden"
strategy in contrast to Europe, where most operators
in most territories have chosen an "Open Garden"
approach, allowing all content providers access to implement
and market mobile services with revenue sharing.
This report does not just go through the above mentioned
factors and the forces that have influence on the markets
for mobile services, but also includes many actual case
studies from the different mobile services areas - cases
that show what the customers are willing to buy and
pay for today. On some markets we have been fortunate
to have access to the major content providers figures,
which are included in our calculations. We can guarantee
you that this report excels anything you have seen before
- never before has anyone accumulated so much knowledge
about the mobile services market as Strand Consult has
in this report.
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