At $100b, mobile data is past the tipping point

28 Jul 2006
00:00

Way back when, at the time i-mode was taking off in Japan, the mobile industry thought its mobile data problems would be solved by WAP.

Then the received wisdom was that GPRS would be the spark. After GPRS arrived it was clear that only 3G would deliver the juice.

Just recently, while punters keenly awaited the HSDPA revolution, experts predicted the World Cup would drive mobile data through the roof. The World Cup being the current big thing, and mobile TV the next big thing, it was a sure bet that consumers couldn't get enough football on their handset.

And so on we go. No one would ever accuse the cellular industry of lacking optimism.

I confess at various times I too may have embraced some of those views, public embarrassment being an occupational hazard.

The World Cup damp squib should be no surprise to those who've followed the mobile data segment. Not because the mobile industry is unable to predict a trend - although the emergence of SMS without any help from the operators might suggest strongly to the contrary. Rather, it is because much time is spent on focusing on the wrong thing - like looking for the killer app.

In truth, the mobile data segment boasts from very healthy numbers. Mobile data revenues for Q1 hit $28 billion, up 17% from a year earlier, according to an Informa study. Last year operators grossed $102 billion from data.

The reason for this growth is that many of the constraints have been dismantled.

Reformatting on the fly

Like bandwidth, for example. Bandwidth has never really been an impediment to basic apps such as email, as NTT DoCoMo proved for many years with low-speed i-mode. The popularity of BlackBerry, even on 2.5G, makes the same point.

Another is content. There has been genuine innovation here, and operators have come to have a sophisticated understanding of what kind of content is required. With ringtones and ringback tones, operators and content owners have created an entirely new segment in both cellular and the music industry.

Interoperability has been yet another drawback, thanks to the multiplicity of platforms. This was never an issue in the PC world (thanks, Bill!). And phones don't have the processing power to be able to cope with multiple standards and formats.

That, too, appears to have been largely solved because handset vendors, content owners and operators have worked hard on content formatting and transport in the last three years.

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