Mobile Services Shift to Indirect Revenue Model in Search for Scale

Logos of mobile services companies

Summary

Many phone-makers and platform suppliers either already have a suite of online services or are looking at building one. Apple has iTunes, the App Store and MobileMe and is rumoured to be building up a much larger services capability; RIM has its tightly integrated e-mail and messenger services, plus BlackBerry App World; Google has a number of services that are increasingly available on Android ahead of other platforms; Nokia has its suite of Ovi services as well as others such as Life Tools; Motorola has Motoblur; Sony Ericsson has PlayNow; Vodafone is pushing into the area with Vodafone 360. Samsung has made a start with mobile content, a movie store and a software store.

This trend is spreading to laptops, notebooks and PCs. Intel's AppUp Center steers application developers toward its Atom-based netbooks. HP has a deal with Omnifone for a streamed music subscription to be supplied with some computers sold in Europe. Dell has an agreement with Napster for a similar service.

As phone-makers and platform suppliers try to build up these offerings, the services landscape for mobile devices is changing in two major ways:

  • Some companies are competing by bundling more, so the range of services needed is growing. It now encompasses e-mail, music, application stores, online backup and storage, search, maps and navigation.
  • A few suppliers are making big bets on a shift to indirect revenue models and are making services free to users. Indirect business models include advertising, and revenue sharing on tickets, bookings and purchases.

We review these trends and draw conclusions for the mobile industry and its major players.


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