At the mobile industry’s biggest event, the Mobile World Congress in February 2010, Eric Schmidt, CEO of Google said that the sector had now reached the historical point where mobile phone capacity, attractive services and network infrastructure capacity were meeting. LTE, the iPhone, Android and Apps are some of the new developments driving the market forward at record speed. Researchers like Screen Digest estimate that mobile content, and especially mobile TV, video, games and music will grow by 50% globally over the next four years, generating sales of nearly SEK 85 bn.
Infrastructure and Networks—the Advent
of LTE and 4G
High-speed networks are a vital precondition for good user experiences of mobile premium services like mobile TV and music. Sector organization UMTS Forum estimates that there are over 500 million 3G users worldwide. The world’s first commercial LTE networks were launched in Stockholm and Oslo in late 2009. LTE (Long Term Evolution) is regarded as the next big thing in mobile radio communication en route to fourth-generation mobile communication, or 4G. 4G will offer speeds of some 100 Mbit/s for mobile users and 1 Gbit/s for stationary users. Sector organization the GSA (Global Mobile Suppliers’ Association) stated that in February 2010, 59 operators in 28 countries had confirmed that they would be building out LTE . The GSA estimates that up to 22 LTE networks will have been launched by year-end 2010, and 37 by year-end 2012.
Handsets and Operating Systems—Smart Phones in High Growth
The iPhone is the biggest development driver on the mobile market. Apple launched an updated version of its iPhone in the year, the 3GS, and the company doubled deliveries of handsets in the year. The market share for smart phones grew from some 8% in 2008 to over 14% in 2009. 2009 was also the year when Google’s Android operating system was released on the market, and new Android-based phones were launched by HTC, Samsung, Motorola and Sony Ericsson. Android’s market share grew from 0.5% in 2008 to nearly 4% in 2009. Symbian remains easily the largest operating system on the market, but sales of Symbian-based phones fell sharply, with market share falling some 5 percentage points to 47%. New mobile have faster processors and more memory, larger displays and better resolution, and thus are better equipped to use multimedia content like videos and TV. Researcher IDC estimates smart phone sales at 174 million units in 2009, or some 15% of the overall market of just over a billion mobile phones. But sales of smart phones increased by 39% in the fourth quarter of 2009 and Nokia, Samsung, RIM, Apple, Sony Ericsson, LG and HTC are increasingly investing in advanced handsets. (Sources: IDC, Gartner Research)
Open Distribution Channels Expand Usage
An important component of mobile services usage is how easy consumers find buying or downloading services. The advent of open distribution channels like Apple’s App Store and Google’s Android Market meant that it became far easier to download applications to mobile phones in 2009. This means that people can access services like mobile TV and music far faster.
Mobile TV
Research indicates that the general population has not started to watch TV on their mobiles yet. The share of mobile phone owners that have seen mobile TV or video clips at least once is some 5% in countries like Sweden, the US, France and Italy. However, there were several examples of how mobile TV had evolved from being a service for early adopters to reach the wider population in 2009. For example, tailored mobile TV campaigns targeting iPhone users had a hit rate of over 50% in their target groups.
Basically all researchers estimate that the mobile TV and media market will grow robustly. For example, because mobile phones can be used anywhere, and not just at home,Screen Digest estimates that video on demand subscription services have high potential. The company estimates that sales will double over four years, and that the highest growth share will be in 2010. Screen Digest forecasts the number of mobile TV subscriptions doubling over the next three years, to reach to 230 million by year-end 2013, equivalent to global sales of some SEK 15 bn. In 2012-2013, estimates indicate that operators will increasingly offer mobile TV through new LTE networks.
Music
IFPI’s Digital Music Report in 2010 estimates that digital music sales grew by 940% from 2004 to 2009, while the music market overall contracted by 30% in the same period. Growth in digital sales from 2008 to 2009 was some 12%, and global sales were over SEK 30 bn. Digital music represented a total of 27% of global music sales, up from 21% in 2008. Forrester Research and Screen Digest estimate music to mobile revenues growing by 25% in the coming years, despite a substantial sales downturn of ringtones, which are also factored into these numbers.
A completely new music streaming market opened up in 2009 through services like Spotify, Deezer, Sky Songs and Rhapsody, where instead of buying tracks and albums per unit, users rent access to a global music archive. With mobile applications for the iPhone and Android, users can also take music with them wherever they go.
Several players, unlike Aspiro, offer advertising-financed music streaming services or target consumers directly. Spotify of Sweden, for example, is best known for its advertising-financed services. Other competitors include We7 of the UK, which operates mainly in the UK, Real Networks ofthe US, focusing on the US and Deezer of France, which mainly supplies customers on its home market. Apple’s iTunes remains the biggest vendor of digital music and download services, and its acquisition of Lala in late-2009 triggered speculation of a potential entry into the streaming market.
Mobile Solutions
The market for mobile services to businesses remains in its infancy, and estimates indicate high growth. In 2009, IBM Research announced that it intends to invest over SEK 700 m in R&D in the mobile segment, mainly in how mobiles can simplify communication between companies and consumers. Market researcher Gartner forecast that mobile payments would be one of the largest mobile applications in 2012. Sector analysts at Screen Digest predict that sales of mobile services excluding voice calls and regular text would double between year-end 2009 and year-end 2013. Apple’s App Store is cited as one of the development drivers.
Mobile Search
The market for text-based directory inquiries is in a slow downward trend. The Norwegian text-based directory inquiries market is estimated at about twice the size of its Swedish counterpart, and significantly larger than the Finnish market. The directory inquiries market was deregulated in the Nordic countries at the millennium, and all channels - manual directory inquiries, text and Internet - are open to competition. A number of companies deliver these services and marketing to consumers has increased in recent years. Apart from Aspiro, Eniro, Opplysningen 1881, Advista AS, Opplysningen 1890 and 1888 Værsågod also advertise on TV and radio in Norway. This market is forecast to continue its slow downward trend.