News
Issue #2003 - 08 (March 2003)
(Updated Mar. 10, 2003)

APPLICATION SOLUTIONS & APPLICATION DEVELOPMENT

Consumer Wireless Data Market to reach US $ 71 Billion in 2007

Ovum, the analyst and consulting company, expects the mobile consumer data traffic to reach US$71 billion in 2007 and it believes that operators must put their mobile consumer application strategy in place now to capture a share of the market.

Ovum, the analyst and consulting company, expects the mobile consumer data traffic to reach US$71 billion in 2007 and it believes that operators must put their mobile consumer application strategy in place now to capture a share of the market.

According to Ovum's analysis, traffic and subscription revenues generated by consumers using their mobile phones to send data will account for 93 per cent of operators' data revenues this year and 78 per cent by 2007. These figures do not include the value of premium content and other transaction revenues, which will further boost operators' incomes.

"With the take-off of multimedia message services (MMS) and the increasing availability of Java phones, 2003 is the crunch year to prepare for consumer mobile applications," says Michele Mackenzie (left), senior analyst with Ovum. "Picture messaging and mobile gaming are just two of the key applications that will generate new growth and operators must ensure they are best positioned to offer consumers these services. This means investing in the technologies and tools, such as wireless middleware, which will enable operators to develop the platforms and services for consumer applications."

Ovum's forecasts also show that messaging, including SMS, MMS picture messaging, instant messaging and mobile e-mail, represents 85 per cent of total consumer mobile data spend. Information and entertainment respectively account for 10 per cent and 5 per cent.

This balance will shift slightly by 2007, but the uptake of messaging applications will still drive most of network traffic with 80 per cent of total consumer spend.

"This is good news for operators as messaging is currently an 'operator keeps all' application. It mainly depends on the network and therefore requires few or no third party partnerships, operators do not have to share the revenues it generates," said Mackenzie. However, she said the potential of the information and entertainment categories should not be ignored. "While traffic revenues from these groups are significantly lower than messaging, operators will boost their revenues through premium content and transaction value from revenue sharing agreements with third parties, such as content developers," she says. 

Most operators have their eye on this opportunity, but not all are in a position to benefit from it, warns Mackenzie. "Attracting the best content and application developers means ensuring a robust services platform with middleware that allows good partner management," she says. "Operators need solid systems that allow them to manage simultaneously numerous contracts."

Ovum's research shows that Western European markets take the lion's share of total consumer data revenues worldwide with around 46 per cent in 2003. In second place, Asia Pacific accounts for 32 per cent of the global revenues including more than half generated by the Japanese and Korean markets where wireless data is already established and continues to enjoy accelerated growth. 

By 2007 the distribution will become more even, with Europe's share diminishing to 31 per cent, Asia Pacific's to 25 per cent and North America and China/India taking 18 per cent and 13 per cent respectively.

MobileInfo Comments and Advisory: Ovum continues to be optimistic about wireless data. Market size of $71 billion in 2007 is a pretty good number. Ovum hopes picture messaging and wireless gaming will give it the boost. You need 350 million subscribers to spend $200 annually (or 50 million subscribers spending $1400 annually) on consumer wireless data applications. We are more pessimistic. Ovum has had poor track record in forecasting market sizes. We would like reality to prove us wrong.

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