IDC eyes app gap in mobile consumer market


25 May 2004

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Mobile consumer applications will represent a US$8bn market in Western Europe by 2008, IDC has forecast. Comprising games, ringtones, video and music, this market looks set to generate both data traffic and revenues for mobile phone operators.

“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.”

According to Pescatore, whereas ringtones and gaming have already found a place on mobiles, video and music will take longer. The findings are part of a new IDC study, Western European Consumer Mobile Data Applications.

In a bid to differentiate themselves, mobile operators are enhancing their data services. IDC noted that Vodafone is bolstering the content on its LIVE portal, O2 has introduced innovative video services and the first over-the-air music service, while DoCoMo continues to roll out its i-mode service in Europe.

“It’s all about data and it’s all about how to market applications to consumers,” Pescatore commented. Other issues include the need to identify the right price point for these services and the various models that can be implemented such as pay-per-event or subscription-based. Pescatore also mentioned issues surrounding handsets and how sophisticated they need to be to play MP3s and receive video content and whether that be streamed or download.

Games on mobile phones have evolved from the popular ‘snake’ game preloaded onto handsets to SMS and WAP games. That evolution is to continue, IDC said, 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. They point the way for generating greater amounts of data traffic as the market moves to multiplayer games. Users will also want to post high scores, IDC said, and operators could entice users to do this by offering weekly or monthly prizes.

Ringtones have been successful with users and will continue to be popular as more users take up services over operators’ GPRS networks. IDC has identified a shift within the market, away from delivering and charging for ringtones via SMS. Offering ringtones through a Wap service, for example, presents a wider choice of downloads categorised for user convenience. The ability to display who the content owner is will be important for companies with brand recognition, said IDC.

With video services, demand is not as high now as it is with consumers’ interest in ringtones and games. IDC has also warned of a danger in overloading consumers with many data applications in one go. “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,” said Pescatore.

The industry must be careful in how to address this market and not over-hype any services. Image quality doesn’t compare to the experience of watching the same pictures on a TV and any services should be marketed accordingly. Although devices will improve in the coming years, resulting in larger quality screens, such devices will require greater power consumption. As far as content is concerned, the current market already offers pointers to the future, however. The main theme will be centred on sport – particularly football. Other types of video content will include news, weather and adult entertainment, IDC said.

IDC said it was surprising that the success of ringtones and revenues generated, had not led to moves by mobile operators to launch music services. “Adding mobility to the equation provides operators with a very compelling reason to offer music services,” IDC found. As with all the other consumer data applications IDC is confident that music will find its way onto the mobile device, but it will take a bit longer – video, by comparison, is much more widely deployed than music is now.

By Gordon Smith