Articles

Apps overtake the world wide web: what does it mean for mobile operators?

A recent study from research company Flurry[1] has found that in June of this year, consumers spent 81 minutes per day using mobile apps, compared to 74 minutes of web surfing. OK, it’s a difference of 7 minutes, but think about it – we’ve had the web for a very long time (forever, if you were born during or after the 80s), but mobile apps have only been widespread since the launch of the iphone in 2007. We’re taking to mobile apps like ducks to water.

An article in Wired Magazine published a year ago entitled “The Web is Dead. Long Live the Internet” announced this trend: “The Web is, after all, just one of many applications that exist on the Internet, which uses the IP and TCP protocols to move packets around.” [2]

SoLoMo

Perhaps even more significant, global shipments of smartphones and tablets are on track to surpass shipments of PCs and laptops this year. This is the year where we can stop saying “the future is mobile”. The present is mobile. We might perhaps say that the future is “SoLoMo” – John Doerr’s portmanteau for Social, Local and Mobile.

The statistics on different platforms bears this out, too; Facebook now has 662 million users, and this number grows at 41% year-on-year. There are 130 million combined users of the iphone/itouch/ipad, with a growth rate of 103%. Nothwithstanding Google’s whopping 972 million users, its growth rate is a mere 8%.[3]

What about non-smartphone users?

apps for feature phonesMany of Jinny’s clients are mobile operators serving emerging markets. The penetration of mobile apps in this space is more complex; for one thing, the majority are using feature phones. Ovum says that the market for apps created for feature phones will almost double to US$1 billion by 2016, betting that feature phones will still account for the largest share of devices worldwide at that point, at a 63% global share. This is a contentious point, as you could argue that the price of smartphones will go down (especially with the rise of the Android platform), thereby encouraging emerging market users to take up the devices. Of course, 3G coverage would have to improve, or this would be pointless. But whether Ovum is right or not, all roads lead to a steady rise in the use of mobile apps.

Many of the things that have historically done well on the web – social networks, product and service reviewing, dating, buying and selling – do even better when you make them local and mobile.  The privacy and personalisation we get from web sites can now be further enhanced with features to ensure that whatever we are doing is tailored for where we are and what we want at any given moment. For example, why would you want to date someone who lives 100 miles away? (Unless, of course, you are happy to spend most of your dates on Facebook or Skype – I’m not judging here.)

What opportunities does this present for the mobile operator?

So what does this mean for the companies controlling the networks? Mobile operators sell the handsets, the voice minutes, the SMS bundles, and the data packages. Should they be getting in on the app action?

According  to Portio research[4], “MNOs have turned to value-added services in order to counter their falling voice ARPUs (Average Revenue per User) … And with mobile applications and services currently taking the mobile industry by storm and creating new opportunities, strategies are witnessing a seismic shift towards a stronger mobile applications focus …After all, this new league of apps and services has attracted millions of users worldwide and has helped MNOs to gain subscribers’ loyalty, and to also drive the next wave of subscriber acquisition.”

So far, so good: all these new apps and services are giving more people more reasons to want a mobile phone. But worryingly, Portio’s report summary goes on to say: “ MNOs need to be mindful of the long term ramifications – including that emerging disruptive applications and services ultimately threaten their key revenue generators: voice and SMS. Many of these new apps and services are placing considerable demands on network capacity, much of which is not consistent with generating increasing service revenues from subscribers.”

There appear to be two main issues:

  1. People are using mobile apps, including VoIP, which is having a negative impact on voice and messaging revenues, and
  2. Mobile apps and services are rapidly filling up network capacity, which creates infrastructure expense.

Maintaining ever greater capacity is expensive, and no one wants to pay for it. The challenge is to tap into the trend for mobile apps by leveraging the infrastructure to provide a level of service that the apps can’t match.

Here is where I start talking about what Jinny is doing to help our mobile operator customers. Our VAVOOMB™ product does something truly disruptive; it’s like Skype and Google voice rolled into one, and –  the Unique Selling Point – solves the problems of the VoIP solutions (delays, poor sound quality, unreliability) by using the voice network. It’s effectively an app that is operator-dependent. VAVOOMB lets people place and receive calls via VoIP on phones, tablets, or PCs, using their mobile phone number rather than a Skype name. And any time there is a problem with sound quality, they can seamlessly move the call to the carrier’s voice network.

Providing a superior alternative to Skype is just an example, and only one way to leverage network assets in the market. Because apps have broken ground and broadened the horizons of what people can do with mobile phones, operators have a real opportunity to add value to their services. It is up to service providers to take the lead and enable innovative new services that will attract customers – and revenue.

Author: Tania O’Connor, Jinny Head of Marketing and Communications

Learn more about VAVOOMB at www.vavoomb.com

Want to hear more about how Jinny is helping mobile operators and enterprises innovate to stay ahead of the curve? Get in touch with an expert

 


[1] http://blog.flurry.com/bid/63907/Mobile-Apps-Put-the-Web-in-Their-Rear-view-Mirror

[2] Anderson and Wolff. The Web Is Dead. Long Live the Internet.  August 17, 2010  Wired September 2010

[3] Meeker and Murphy, Top 10 Mobile Internet Trends (Feb 2011), Kleiner Perkins Caulfield & Byers.

[4] Disruptive Mobile Applications and Services 2011-2015; Analysis of New Disruptive Apps and Growth Forecasts for the Worldwide Mobile Applications Market to 2015. Portio Research.

 

 

A recent study from research company Flurry[1] has found that in June of this year, consumers spent 81 minutes per day using mobile apps, compared to 74 minutes of web surfing. OK, it’s a difference of 7 minutes, but think about it – we’ve had the web for a very long time (forever, if you were born during or after the 80s), but mobile apps have only been widespread since the launch of the iphone in 2007. We’re taking to mobile apps like ducks to water.

An article in Wired Magazine published a year ago entitled “The Web is Dead. Long Live the Internet” announced this trend: “The Web is, after all, just one of many applications that exist on the Internet, which uses the IP and TCP protocols to move packets around.” [2]

Perhaps even more significant, global shipments of smartphones and tablets are on track to surpass shipments of PCs and laptops this year. This is the year where we can stop saying “the future is mobile”. The present is mobile. We might perhaps say that the future is “SoLoMo” – John Doerr’s portmanteau for Social, Local and Mobile.

The statistics on different platforms bears this out, too; Facebook now has 662 million users, and this number grows at 41% year-on-year. There are 130 million combined users of the iphone/itouch/ipad, with a growth rate of 103%. Nothwithstanding Google’s whopping 972 million users, its growth rate is a mere 8%.[3]

Many of Jinny’s clients are mobile operators serving emerging markets. In these markets, mobile phones are often the first, and only, point of contact with the internet for many subscribers. Because they have no history of using web browsers on a PC, using mobile apps will make more sense. It won’t occur to these users to travel first through the layer of the world wide web to access things like gaming, social networking, or banking apps. (Jinny client company Safaricom has proved this with the success of its M-PESA banking service.) Ovum says that the market for apps created for feature phones will almost double to US$1 billion by 2016, betting that feature phones will still account for the largest share of devices worldwide at that point, at a 63% global share.

Many of the things that have historically done well on the web – social networks, product and service reviewing, dating, buying and selling – do even better when you make them local and mobile. The privacy and personalisation we get from web sites can now be further enhanced with features to ensure that whatever we are doing is tailored for where we are and what we want at any given moment. For example, why would you want to date someone who lives 100 miles away? (Unless, of course, you are happy to spend most of your dates on Facebook or Skype – I’m not judging here.)

So what does this mean for the companies controlling the networks? Mobile operators sell the handsets, the voice minutes, the SMS bundles, and the data packages. Should they be getting in on the app action?

According to Portio research[4], “MNOs have turned to value-added services in order to counter their falling voice ARPUs (Average Revenue per User) … And with mobile applications and services currently taking the mobile industry by storm and creating new opportunities, strategies are witnessing a seismic shift towards a stronger mobile applications focus …After all, this new league of apps and services has attracted millions of users worldwide and has helped MNOs to gain subscribers’ loyalty, and to also drive the next wave of subscriber acquisition.”

So far, so good: all these new apps and services are giving more people more reasons to want a mobile phone. But worryingly, Portio’s report summary goes on to say: “ MNOs need to be mindful of the long term ramifications – including that emerging disruptive applications and services ultimately threaten their key revenue generators: voice and SMS. Many of these new apps and services are placing considerable demands on network capacity, much of which is not consistent with generating increasing service revenues from subscribers.”

There appear to be two main issues:

1. People are using mobile apps, including VoIP, which is having a negative impact on voice and messaging revenues, and

2. Mobile apps and services are rapidly filling up network capacity, which creates infrastructure expense.

Maintaining ever greater capacity is expensive, and no one wants to pay for it. The challenge is to tap into the trend for mobile apps by leveraging the infrastructure to provide a level of service that the apps can’t match.

Here is where I start talking about what Jinny is doing to help our mobile operator customers. Our VAVOOMB™ product does something truly disruptive; it’s like Skype and Google voice rolled into one, and – the Unique Selling Point – solves the problems of the VoIP solutions (delays, poor sound quality, unreliability) by using the circuit-switched network. It’s effectively an app that is operator-dependent. VAVOOMB lets people place and receive calls via VoIP on phones, tablets, or PCs, using their mobile phone number rather than a Skype name. And any time there is a problem with sound quality, they can seamlessly move the call to the circuit-switched network.

Providing a superior alternative to Skype is just an example, and only one way to leverage network assets in the market. Because apps have broken ground and broadened the horizons of what people can do with mobile phones, operators have a real opportunity to add value to their services. It is up to service providers to take the lead and enable innovative new services that will attract customers – and revenue.

Learn more about VAVOOMB at www.vavoomb.com

Want to hear more about how Jinny is helping mobile operators and enterprises innovate to stay ahead of the curve? Get in touch with an expert

 


[1] http://blog.flurry.com/bid/63907/Mobile-Apps-Put-the-Web-in-Their-Rear-view-Mirror

[2] Anderson and Wolff. The Web Is Dead. Long Live the Internet. August 17, 2010  Wired September 2010

[3] Meeker and Murphy, Top 10 Mobile Internet Trends (Feb 2011), Kleiner Perkins Caulfield & Byers.

[4] Disruptive Mobile Applications and Services 2011-2015; Analysis of New Disruptive Apps and Growth Forecasts for the Worldwide Mobile Applications Market to 2015. Portio Research.