THE KILLER COCKTAIL

Over the past 18 months, the hope that a killer application for mobile data would emerge was replaced by the concept of a killer cocktail — a combination of data services that together would incrementally boost revenues. But the question of which applications to offer to which segments still remains.

In the consumer arena, most hope is being vested in photo messaging. Despite some disappointing early usage figures for multimedia messaging service, or MMS, Strategy Analytics is convinced latent demand does exist and that MMS will succeed as a platform for delivering both messages and, in time, content.

By 2008, MMS will generate $4.5 billion in service revenues in the U.S. Growing the installed base of MMS-capable handsets, particularly camera phones, remains the single most important strategy for operators and handset vendors. A close second is the need to increase the addressable market through interoperability and roaming agreements. European operators, which saw short messaging service volumes boom after the introduction of cross-network interoperability, were generally quick to do the same for MMS. In the U.S., however, carriers remain technological islands.

Mobile music downloading is another emerging area to watch. Rising transmission speeds and advancements in audio file compression standards are making commercial downloading services increasingly feasible. As evidenced by Apple's i-Tunes service, the critical success factors for downloads are price, customization, product innovation and ease of purchase. Operators also will have to lower transport charges dramatically.

Strategy Analytics believes the provision of music download services can successfully extend sales of recorded music, but that the volume uptake of music downloads will not occur on any real scale until after next-generation networks are in commercial use. We estimate that by 2008, 35 million users worldwide will download 635 million music files to portable media devices over wireless networks, generating revenues of just over $1 billion — roughly 2% of recorded music sales worldwide.

The launch of brands like Get it Now from Verizon Wireless and mMode from AT&T Wireless marked the end of the beginning for mobile Internet services in the U.S. and are a strong foundation for services like music downloads and MMS. Color-screen devices are arriving in volume, and carriers finally are following some of the basic principals of consumer marketing in shaping attractive data service propositions.

Has the tide turned for mobile content? Wireless operators could do more to speed development, but things are looking up.

DOSSIER PHIL TAYLOR

Occupation: Senior Industry Analyst of the Global Wireless Practice for Strategy Analytics

Location: London

Current reading: “The Count of Monte Christo” by Alexandre Dumas

Favorite Web site: www.strategyanalytics.com (of course)

Next project: Developing multimedia strategies for mobile messaging technologies