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There's no mobile killer application, for now
Posted on 21-May-2004 21:09 | Filed under: News

There's no mobile killer application, for now
According to a report published by IDC, mobile consumer applications will drive the take-up of data and generate traffic and revenues for mobile operators. Operators are seeking new ways of differentiating themselves as they strive to gain a head start in the data game. Vodafone is working on live!, O2 has introduced some video services and the first over-the-air music service, and DoCoMo continues to roll out its i-mode service in Europe. IDC believes that the mobile consumer applications market, which includes gaming, ring tones, video, and music, will be worth just under $8 billion in Western Europe in 2008.

"This underlines that the wireless industry will not see the one killer application that many are still seeking and talking about," said Paolo Pescatore, senior analyst for IDC's European Wireless and Mobile Communications Service. "It is very much a cocktail and these applications will drive usage over GPRS, EDGE, UMTS, and HSDPA. All these applications - ring tones, gaming, video, and music - will eventually find their place on a mobile." Pescatore believes that some applications, including ring tones and gaming, have already found their place, but video and music will take longer.

"It's all about data and it's all about how to market applications to consumers," he said. "Clearly operators need to start marketing and selling mobile data services, which is something they have not been used to, as previously voice sold itself. Operators need to identify the right price point for these services and there are various models that can be implemented such as pay per event, subscription based, etc. Up until now, pricing in the market has consisted of application plus traffic, but some operators are moving to one price, bundling both the application fee and traffic. There are also issues surrounding handsets and how sophisticated they need to be to play MP3s and receive video content, whether that be streamed or download. In addition, how robust are GPRS networks to handle such data traffic when ultimately capacity issues will arise?"

With the introduction of color GPRS-enabled handsets most if not all of the operators have launched a games service based on Java. Users have always played games on mobile phones and this started with the popular Nokia "snake" game, which saw all of the handset manufacturers include a number of preloaded games on their handsets. This then evolved to many SMS and WAP games and now we have the games we used to play as kids. In the future they will continue to evolve, with a lot of emphasis on real-time multiplaying gaming. However, in the short term once the game is downloaded operators will need to find new ways of enticing users to continue downloading games.

Marketing of games will be important and in general they will be the hot games of the moment. Clearly as the market evolves more users will try to compete with each other in a multiplayer environment, thus generating more data traffic. Users will also want to post high scores and operators could entice users to do this by offering weekly or monthly prizes, which again will drive traffic.

Ring tones have been a big hit with users and this is set to continue as more users take up GPRS. Up until now ring tones have mainly been delivered and charged via SMS. Via an operator's WAP service the user is presented with a greater choice of ring tones categorized for their convenience. Therefore the look and feel is very much intuitive and the user can also see who the content owner is, which to some is very important due to brand quality. Ring tones will continue to be a popular application for users who like to personalize their phones to suit their moods and personalities.

Operators are keenly looking into video and agreements for rights with key players. Currently the demand for video services isn't as high on consumers' lists as ring tones and games. There is also a danger of overloading consumers with many data applications in one go. Equally the user experience of receiving and watching video on a wireless device isn't as desirable as one would like it to be. Clearly the transmission of video clips will be greatly improved on UMTS and HSDPA networks.

The industry has to be careful how to address this market not to over hype (easier said than done) and project what the user experience will be like. Many refer to video services as TV-style services, but this is not the case. Quality of images does not compare to the experience of watching the same images on a TV screen. Over the next few years the quality and array of devices will improve as technology evolves, resulting in larger quality screens, but such devices will require greater power consumption.

In terms of content what IDC is currently seeing in the market is a good reflection of what to expect in the future and where the battle will lie. The main theme will be centered on sport, particularly football. Other types of video content will include news, weather, and adult entertainment.

Operators will need to offer new and exciting content and be able to move with the fashion. This will mean they may have to spend a considerable amount of resources securing rights or more importantly widening their footprint of content partners to demonstrate innovation and creativity.

Given the success of ring tones and revenues generated for mobile operators and content providers, it is quite surprising that there have not been moves to launch music services. People are always listening to music, whether it be on the radio, CD, Mini disc, tape, or MP3 player and whether it be in the car, on a train, at the gym, or even at work. So adding mobility to the equation provides operators with a very compelling reason to offer music services. Equally they are very well positioned provided they secure agreements with the record owners.

Music, like all the other consumer data applications, will find its way onto the mobile device, but it will take a bit longer. Operators are making plans to deploy music during or at the end of the year, whereas video is already widely deployed.

The study, Western European Consumer Mobile Data Applications (IDC #HW01L, May 2004), analyzes the opportunity for consumer mobile data applications in Western Europe. It focuses on applications such as ring tones, gaming, video, and music services, and also highlights other applications that will generate traffic and revenues. One of the factors behind the study is the success of SMS, which has been a money-spinner for all in the wireless value chain. The study will look at operators' efforts to migrate users from SMS-based applications to GPRS downloads; the role the various platforms play and which applications work best on which platforms; and what services we can expect to see and the main challenges to the take-up of these new services.

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