My 2007 predictions

Thomas Husson | January 08, 2007, 03:34 AM

To start with my first post of the year, I will not avoid the predictions' buzz* we see in many blogs and will give you my own personal take for European mobile (which means this is not a collective and approved vision from the Jupiter staff) and limit them to 5 main categories:

- Consolidation will continue across all the value chain and new players will come into the market: handset manufacturers (those below 5% market share such as Sagem…), mobile operators (in emerging countries but also in Western Europe: I would not be surprised if 3 was acquired even though this is more likely to happen in 2008), pure mobile players (see the recent acquisition of MonsterMob by LaNetro Zed). The value chain is maturing, new entrants are coming in and they will buy the remaining independent players that have the marketing know-how. This will be particularly true in mobile advertising, which is still a very fragmented and technology driven market. MVNOs will continue to expand, even in countries traditionally closed to them such as Italy. Many of them will fail particularly low-cost entrants (remember EasyMobile?), some will reach profitable niches but only 2 main categories will succeed: retailers and FMC players.

- 3G will start moving from a niche audience to the critical mass stage (15-25% penetration rate depending on countries), with most countries starting to catch up with UK and Italy penetration rate. However, HSDPA will still be essentially focused at the business market despite some successful commercial consumer offerings for Christmas 2007. There will be plenty of new demos on HSDPA at 7.6 Mbps and even on HSUPA at 3GSM in Barcelona. We will continue to hear a lot as well of new dual Wifi/GSM phones (however, they will still lack a good battery life) and FMC convergence offerings.

- The hype around mobile advertising, Consumer-Created Content, mobile 2.0 will continue with a mobile MySpace, a mobile Wikipedia and many more announcements. However, mobile operators will be cautious neither to scare consumers’parents (porn, violence, “happy slapping” phenomenon…) nor their media partners (copyrights’ infringements). Legal actions between celebrities and individuals (after citizen journalists, let’s call them "citizen paparazzis" for the occasion) will increase as highlighted recently by Saddam Hussein’s execution. Advertisers have strong expectations on mobile advertising on these new services but the business model will differ from that available online. However, 2007 will be the first year where new offerings move from the trial stage to commercial developments and revenues (ad-funded mobile services, in-stream videos, sponsored links…)…even if they will remain low as whole. Inventory vendors will continue to say they have better click-through rates than on the Internet comparing apples and oranges and forgetting that online rates were well over 0.x% at the end of the 90s.

- Mobile Entertainment will grow dramatically and many players will report double and triple digit growth. However, it will not mean much since the market is starting from a low base. In some countries and for the first time ever, ringtones and logos will represent less than 50% of mobile content revenues. Several countries will do all what they can to launch a mobile broadcasting solution but it won’t drive any significant use in 2007

- Many new innovative applications will be launched and highlight the potential of mobile phones in the future. M-commerce (first NFC commercial launch), m-navigation, biometry, location-based services (Location-based bookmarking services such as that provided by Mojeo or use of keyhole markup language (KML), which developers can use to create place markers (flagging a restaurant…) to highlight point of interest on the version of Google Maps available to mobile phones), remote access to the home, small applications such as widgets, mobile RSS feeds and mobile podcasts, enhanced SIM and memory cards (up to 4Go) with premium content embedded will flourish but will not gain significant adoption.

So in a nutshell, 2007 will be a transition period from a supply to a demand economy. We are still at a stage where foundations are being built (high-speed networks, compelling handsets, affordable data prices, simple user-interface), but 2007 will show the potential of mobile phones for the rest of the decade and how they will be part of our daily lives in the future.

* For my French readers, servicesmobiles.fr (a site definitely worth bookmarking) has asked a dozen players to give their views: have a look here