What Does 2005 Hold for Mobile?

Source: 160characters

As the new year dawns and with mobile phones celebrating their 20th anniversary in the UK this weekend, here is our round up of thoughts and predictions for the mobile messaging industry for 2005.

"21st Century mobile services in 2005 are set to become more multi-access, multi-speed, multi-media and multi-colour" says Mike Short as Chairman of the UK Mobile Data Association. "The 4th screen of mobile (after film, TV and the PC) is now more persvasive and personal" he says. Short sees the "trend towards multi-mode (2G/3G, 2G/Wi-Fi and 2G/DVB-H to name but three), higher speeds and more functionality will continue. This innovation, coupled with the likely global volume heading towards 2 billion mobiles by the end of 2006, will provide new opportunities."

Partner And Die?
"2005 should see increased partnership activity, collaboration, and potentially, consolidation. Carriers will use partnerships to expand coverage, increase the number of services, improve distribution and extend overall brand value" says Glenn James, president of Unisys Global Communications and Media industry practice.
"The communications industry is undergoing widespread change with new, sometimes disruptive technologies, new competitors with different business models, cost structures, and value propositions, and a shift in choice and control to the customer," says James.

Rather worryingly, John Strand from Strand Consult believes that in just 12 months - at the end of 2005 - there will most probably be significantly fewer employees in the mobile industry and many executives will be looking at a job change.

Customers Are taking Over
From Belgium comes the message that "The public will not tolerate anymore that they have to pay more for basic services such as making a phone call or sending a quick message. In different countries (e.g. France) people already start to rise against the 'absolute' dictatorship of mobile phone companies and their hunger for profit. Communication has become basic, like water. This will lead to the collapse of the high prices for mobile phone calls and text messages" says Stefan Kolgen of Kölgen & Laenen.
Strand agrees saying that "The customers are taking over by demanding simple, understandable tariffs; no monthly subscriptions and prices that do not vary depending on whose network you are calling to or from. At the end of the day, the price for a voice-minute and SMS will become more important than exactly how new and smart your mobile handset is."

Strand says that "There will be a much more fragmented market with more and more customers showing different purchasing behaviours. These new behaviours, combined with falling prices, will result in various changes in the mobile market that will affect the operators, handset suppliers and of course the retail market."

"The name on everyone's lips next year will without a doubt be easyMobile's CEO in UK Frank Erasmus" says John Strand. "His message is simple - cheap mobile telephony and freedom for the customers - cutting through all the mumbo jumbo tariff jungle. 2005 will be the year of the MVNO!"

Listen To Customers
"2005 must bring a return to 'basic' messaging mediums" believes Robert Vangstad, VP Marketing, Mobeon. Recent research from Mobeon Labs has shown that the lucrative youth market prefers traditional mobile phone services such as voicemail and SMS rather than advanced MMS and WAP capabilities.
"It is clear that the industry has misread young people's attitudes towards mobile messaging, and changes must be put in place now in carriers' marketing strategy and product bundling to ensure that new phones carry the services that this market will actually use" says Vangstad.

"Cost control will take a back seat to service innovation and revenue generation in 2005," says Glenn James. "With no obvious single 'killer application' on the horizon, the 2005 challenge for telecommunications companies is to develop and deploy new revenue-generating services for their markets."

"Communications companies are realizing that enhancing their customer's experience will create "sticky relationships" through brand loyalty. The communications company's entire operation must be designed to establish loyalty, emotional connection, and lasting value."

"Cost engineering over the past couple of years was largely about operating faster and cheaper. Now, carriers realise that faster and cheaper must translate to better customer orientation, better customer satisfaction, and better margins. All customer interactions and key internal operations will need to put the subscriber experience first and incorporate customized services such as time-based, location-based, and personality-based content and communications services."

"The traditional orientation around products must be eliminated in favour of lifestyle-oriented solutions that segment customers as opposed to products. 2005 will be the year that carriers re-think their traditional product-led approach with a dramatic shift to subscriber-led business models" says Glenn James.

Java and Portals
Sun now claim that one in three handsets is java enabled so it would seem likely that will lead to an increased focus. Paul Berney Director at Marvellous predicts that "In the UK we will see the rise in use of Java applications full stop, but in particular the use of Java in mobile marketing and service applications."
David Marcus, CEO of Echovox agrees that "upgrades to new, advanced handsets will drive a boom in Java application downloads."

Brands will start to see the potential of Java predicts Nick Ris of MX telecom who says that "one or several large brands will experiment with branded java portals."

While Tom Hume at Future Platforms says "Mobile Java portals will go away, as content owners realise that operators can offer them decent distribution."

However Strand Consult concludes that "In 2005 the operators will announce that their mobile portals are not core business for them, but rather a service offering to their customers. Some operators might even admit in public that the VAS they are selling via their open garden offerings - like premium SMS services - are generating much bigger earnings than their own portals."

Mike Short dosn't see the end of portals just yet. "All the mobile portals should develop into a much wider shopping mall of content and services for all our pockets" he says. "The variety of content on the move will also grow and diversify in areas of participation TV, mobile music and entertainment, mobile marketing, m-commerce and more web/intranet activities for consumers and businesses" says Short.

Mobile Content
"The key drivers for new technologies will be instant communication, presence and personalized content" says Bohdan Zabawskyj, CTO of Redknee.
Craig Shapiro, Vice President, Business Development, Proteus Inc predicts more consolidation. "As has been seen with telecommunications companies, who have been rushing to offer the triple play (voice, video and data), our space is going through a similar consolidation. Moving forward, it is no longer about offering content companies just text messaging or a ring tone. It is about enabling them to fully maximize their content utilizing a mix of messaging, personalization and premium games/applications."

Tony Hallett on silicon.com says that "The big issues will remain manageability, experimentation with terminal design/software improvements and the spread of content, work-related data and voice into more corners of our lives than we probably once thought possible."

Will Business Gets the Message?
"Very mixed messages coming back from the SME/ Enterprise market" says Tony Fish of AMF Ventures. Whilst the underlying idea and concepts of Wireless IP and Mobile Data are well founded and understood, choice and complexity is playing havoc with decision making. Demand is for simple and cheap. On offer are simple and expensive, with the promise of complex and cheap some way off. Still channel to this market is a problem for the existing providers. 2004 has seen good underlying growth, but not so special that will make 2005 an exceptional year."
"2005 will be the year that businesses begin to find the answers through the fine-tuning of their mobile messaging strategies" declares Pieter de Villiers, Managing Director of Clickatell.

"The fact remains that messaging is a natural extension of how a business interacts with its clients, and mobile messaging is certainly here to stay," concludes De Villiers. "All indicators show that the demand for corporate SMS solutions in 2005 will outstrip that of 2004, but with most companies doing it, getting it right will be the differentiator" says de Villiers.

Mike Short suggests that public sector interest will develop in information alerts and transport management. "M-commerce will develop" says Short, "subject to prgamatic solutions on premium rate regulation, digital rights management and e-money regulations."

Mobile Email
Forrester predicts that "there will be more than 3 million active BlackBerry users by early 2006. "Research In Motion (RIM) has licensed its BlackBerry software to manufacturers of most of the handheld devices currently used by multinationals, and more than 70 mobile carriers in 35 countries now offer their customers BlackBerry devices and international roaming services. Their service offers typically include a combination of mobile voice, email, personal information management (PIM), and access to some enterprise applications. BlackBerry is emerging as the international standard for push-based mobile enterprise applications.
But in spite of all the hype around Blackberry, a growing range of other suppliers such as Good Technology, Intellisync and Visto will make considerable headway so that email on your mobile will become increasingly commonplace. With email as standard on i-mode consumers will increasingly get the habit. The penetration of mobile email will continue to be the door opener to the deployment of other corporate applications.

Mobile Marketing
"We are likely to see more major brands investigating the potential of the mobile channel but the focus will be far broader than straightforward mobile messaging promotions" says David Marcus, CEO of Echovox.
"Interactive mobile campaigns have so far been totally under exploited, for example tying a ‘call to text’ into a billboard, print or TV campaign. Consumers find the interactive approach more engaging and this enables marketers to build up an opt-in database of interested potential customers for more targeted future activity" says Marcus.

"Services with a community element will also catch on rapidly. The staggering growth in online communities offers an insight into the potential of services such as SMS and MMS chatrooms, which can be developed on the back of existing services as diverse as radio phone-ins or online dating sites. Mobile entertainment applications such as games and quizzes will become even more popular in 2005" concludes Marcus.

MMS Not Forgotten
It's interesting how few of the predictions sent in mentioned MMS. However given the investment in phones and networks we can be sure to see lots of noise about MMS but take up by consumers to actually send pictures to each other only will grow slowly.
"In the UK 2005 will see continued growth for many of the mobile services that were introduced in 2004" says Nick Ris from MX telecom. "2004 saw many exciting product launches, amongst them MX Telecom launched Voice and 3G Video Shortcodes in the UK and also inbound MMS used to great effect by the BBC, ITV and Endemol" says Ris. "The forthcoming year will see a further convergence of these medias. Several of the UK carriers will also likely start to offer mobile terminated MMS delivery which will massively increase the use of commercial MMS" concludes Ris.

Meanwhile in New Zealand Charles Clark at The Hyperfactory sees "MMS set to make a bigger impact in 2005 with both Vodafone and Telecom NZ investing and supporting MMS with handset penetration and pricing structures."

New Territories To Watch
The USA will no longer be the sleeping giant in mobile. “The number of mobile applications at-the-ready for wireless consumption is increasing every month,” said SMS.ac's CEO Michael Pousti. “Bearing all this in mind, I believe that 2005 will see the U.S. emerge as the one of the top three mobile data consuming nations in the world, measured by data volume. That means awesome growth. And the realization of those phenomenal numbers, along with the revenues they generate should quiet the skeptics that earlier questioned whether mobile messaging would ever happen in the U.S.”
“According to U.S. messaging figures, approximately 14 billion text (SMS) messages were sent domestically in 2003,” said Pousti. “Various industry reports indicate that mobile messaging will reach approximately 25 billion by the end of 2004. And because of the explosive growth SMS.ac is seeing domestically with respect to the exchange of multimedia and textual communications, I am confident that the aggregate number of mobile messages sent within the U.S. will nearly double to 45 billion, in 2005.”

Strand Consult points to India as an exciting country to watch. The world has for some years been focusing on Japan and Korea, but in 2005 the focus will start to shift to markets like India, China and Eastern Europe. All these countries will experience tremendous growth and at the same time Operators will experience a profitability that reflects their low handset subsidies and limited competition on voice and SMS prices.

"India will adopt stringent laws to come into effect on the use of Camera Phones, MMS, Bluetooth etc." says Pradeep Jain from Calcutta, India. "More so post the MMS sex clip being sold on the web - www.baazee.com and it's CEO being arrested."

"In New Zealand the roll out 3G networks by both Telco’s (Telecom Vodafone) in the coming year will see many changes for NZ consumers" says Charles Clark at The Hyperfactory.

"There will also be a rise in New Zealand centric mobile entertainment portals aimed squarely at the youth market to fill a looming gap in the market together with ethnic specific (mobile) content targeting New Zealand’s growing (Asian) minority communities. "

In the UK, the MDA forcasts ongoing growth in WAP to 15 billion page impressions and SMS to 30 billion p2p messages in 2005. GPRS handset penetration should approach 75% of all handsets in use in the UK and 3G should exceed 5M by the end of the year.

Conclusions
It will be hard to avoid the arrival of 3G into the market from main players with both business and consumer offerings. But to what extent consumers will take up 3G specific content is something everyone will be watching closely. Most customers though, even with a 3G phone, will still only use a few services in 2005.
The more interesting wild card for me is the spread of i-mode. While 3G is not really a 'thing' in that it just provides faster networks, i-mode actually makes a difference to the content and services industry by changing the revenue model and making the provision of content much more cost effective. This I believe will have more impact across the mobile content industry that video clips through 3G.

The mobile content industry is poised for take off in 2005. The challenge will be to focus on the basics of providing what consumers actually find useful and interesting and not get too carried away with the technology.

In spite of many previous predictions about the replacement of SMS by MMS, there is no sign of that anytime soon and 2005 will be no exception. As with 2004, the new year will bring continued growth of person-to-person SMS and together with that the steady take of a wider range of mobile content services.