Slicing Up the Mobile Services Revenue Pie

Slicing Up the Mobile Services Revenue Pie

Portio Research Limited.
Published January 2008 by Portio Research Limited © Copyright 2008.
www.portioresearch.com
info@portioresearch.com

Disclaimer and Legal Notices
Disclaimer
Every care has been taken in the preparation of this study to ensure that the information contained herein is accurate,
factual and correct to the best of our knowledge, at time of publishing. All opinions, suppositions, estimates and
recommendations included in this document are solely the opinions of the authors unless otherwise stated. Portio Research
Limited accepts no liability for any loss or damage or unforeseen consequential loss or damage arising from the use of the
information contained within this document. The opinions, suppositions, estimates and recommendations within this
document cannot be guaranteed, and readers use this information at their own risk. The information published in this
document is subject to change without notice at any time, and Portio Research Limited accepts no liability or obligation to
inform the reader of such changes.
Portio Research Limited do not promote or endorse any specific companies or products, the views and opinions we express
in this document are wholly our own assessments, and independent from any external interest or influence. Many terms and
phrases and trade names used in this document are proprietary and Portio Research Limited recognises and acknowledges
that all trademarks are copyright, belonging to their respective owners. Where possible, this document accords such terms
and phrases and trade names to their respective owners.
All Rights Reserved. No part of this document can be copied, shared, redistributed, transmitted, displayed in the public
domain, stored or displayed on any internal or external company or private network or electronic retrieval system, nor
reprinted, republished or reconstituted in any way without the express written permission of the publisher.
Forwarding of this electronic document without the correct legal licence is theft. It’s unethical, immoral and against the law.
If you have any questions about the legal licence conditions under which this document has been distributed, please contact
Portio Research on info@portioresearch.com
If you did not buy this document and a colleague or associate has sent it to you, do not assume you are legally entitled to
read it, it is your responsibility to ensure you have the correct legal licence to read this document.

© 2007, Portio Research. All Rights Reserved

1


Contents
Introduction ..............................................................................................................................6
Worldwide Mobile Market ........................................................................................................9
Mobile Data Services .............................................................................................................18
Introduction ........................................................................................................................................ 18
SMS ................................................................................................................................................... 22
Market Overview ..............................................................................................................................22
Value Chain Analysis .......................................................................................................................24
Case Study 1 – India’s SMS Market.................................................................................................26
Case Study 2 – The UK’s SMS Market ............................................................................................30
Case Study 3 – The US’s SMS Market ............................................................................................34
MMS .................................................................................................................................................. 36
Market Overview ..............................................................................................................................36
Case Study 1 – The US’s MMS Market............................................................................................39
Case Study 2 – The UK’s MMS Market............................................................................................41
Case Study 3 – China’s MMS Market...............................................................................................43
Mobile E-mail ..................................................................................................................................... 45
Market Overview ..............................................................................................................................45
Mobile IM ........................................................................................................................................... 49
Market Overview ..............................................................................................................................49
Mobile Video Services (Mobile TV and Mobile Video Downloads)..................................................... 53
Market Overview ..............................................................................................................................53
Case Study 1 – Italy’s Mobile TV Broadcasting Market....................................................................59
Case Study 2 – South Korean Mobile TV Broadcasting Market .......................................................61
Mobile Music ...................................................................................................................................... 63
Market Overview ..............................................................................................................................63
Case Study 1 – UK’s Mobile Music Market ......................................................................................70
Case Study 2 – India’s Mobile Music Market....................................................................................73
Case Study 3 – The US’s Mobile Music Market ...............................................................................75
Mobile Games.................................................................................................................................... 78
Market Overview ..............................................................................................................................78
Case Study 1– Japan’s Mobile Gaming Market ...............................................................................83
Case Study 2 – The US Mobile Gaming Market...............................................................................85
Case Study 3 – The Mobile Gaming Market in the UK .....................................................................87
Other Services ................................................................................................................................... 89
Mobile Payment Services.................................................................................................................90
Mobile Gambling ..............................................................................................................................92
Location-based Services ..................................................................................................................94
Mobile Internet .................................................................................................................................95

Infrastructure Equipment Vendors.......................................................................................96
Market Overview ................................................................................................................................ 96

Mobile Handset Market ..........................................................................................................99
Market Overview ................................................................................................................................ 99

Conclusions......................................................................................................................... 104
Trillion Dollar Mobile.......................................................................................................................104
Shifting Trends in the Mobile Data Services Market.......................................................................114
Beyond Messaging.........................................................................................................................117
Infrastructure Equipment Vendors..................................................................................................120
Mobile Handset Market ..................................................................................................................120

Appendices .......................................................................................................................... 122
Glossary .........................................................................................................................................123
Portio Research Classifications......................................................................................................133
Companies Mentioned in this Report .............................................................................................134
About the Authors...........................................................................................................................136


2


Also available from Portio Research Limited..................................................................................138

List of Figures
Figure 1: Comparison of Mobile Market with Other Sectors – Revenue (In USD Billion, In 2006)........ 6
Figure 2: Comparison of Mobile Market with Other Sectors – Y-o-Y Growth Rate (2006).................... 7
Figure 3: Comparison of Mobile Market with Other Sectors – Y-o-Y Growth Rate (2007E) ................. 7
Figure 4: Worldwide Mobile Subscribers (In Million, 2004-2012E) ....................................................... 9
Figure 5: Net Subscriber Additions – Regional Break-out (In Million, 2007E-2012E) ..........................10
Figure 6: Worldwide Mobile Revenue (In USD Billion, 2004-2012E) ...................................................11
Figure 7: Worldwide Service Revenue and Equipment Sales (In USD Billion, 2004-2012E)...............12
Figure 8: Worldwide Mobile Service Revenue – Regional Break-out (2004 and 2012E)...................13
Figure 9: Worldwide Mobile Service Revenue – Voice-Data Split (2004 and 2012E)..........................14
Figure 10:
Worldwide Mobile Voice Revenue (In USD Billion, 2004-2012E) ....................................15
Figure 11:
Worldwide Mobile Voice Revenue as a percentage of Service Revenue (2004-2012E) .16
Figure 12:
Worldwide Data Services Revenue – Break-out (2006 and 2011E) ................................19
Figure 13:
Worldwide Data Revenue Sharing Arrangement (2006 and 2011E) ...............................20
Figure 14:
MNOs share in Data Revenue Break-out (2006 and 2011E)...........................................21
Figure 15:
Worldwide SMS Traffic Volumes (In Billion, 2006-2011E) ...............................................23
Figure 16:
Worldwide SMS Revenue (In USD Billion, 2006-2011E) .................................................23
Figure 17:
Premium SMS – Value Chain ..........................................................................................24
Figure 18:
SMS-based Enterprise Services – Value Chain ..............................................................25
Figure 19:
India – Mobile Data Services Revenue (In USD Billion, 2004-2007E).............................26
Figure 20:
India – Mobile Data Services – Revenue Break-out (2006) .............................................27
Figure 21:
India – SMS Revenue Break-out (2006) ..........................................................................27
Figure 22:
India – Revenue Sharing Arrangement – Premium SMS Services (2006 and 2011E) ....28
Figure 23:
India – SMS-based Enterprise Services – Revenue Break-out .......................................29
Figure 24:
UK – SMS Traffic Volumes (In Billion, 2004-2007E)........................................................30
Figure 25:
UK – SMS Traffic Volumes (In Billion, January-May 2007) .............................................31
Figure 26:
UK – SMS Revenue (In USD Billion, 2005-2007E)..........................................................31
Figure 27:
UK – Premium SMS Services – Revenue Sharing Arrangement in Case of Large Content
Owners (2006).................................................................................................................................32
Figure 28:
UK – Premium SMS Services – Revenue Sharing Arrangement in Case of Small Content
Owners (2006).................................................................................................................................32
Figure 29:
UK – Premium SMS Revenue Sharing Arrangement (2011E).........................................33
Figure 30:
US – Premium SMS Revenue Sharing Arrangement (2006) ..........................................34
Figure 31:
US – Premium SMS Revenue Sharing Arrangement (2011E)........................................35
Figure 32:
Worldwide MMS Traffic Volumes (In Billion, 2006-2011E) ..............................................36
Figure 33:
Worldwide MMS Revenue (In USD Billion, 2006-2011E) ................................................37
Figure 34:
A2P MMS – Value Chain .................................................................................................38
Figure 35:
US – Data Services Revenue Break-out (2006) ..............................................................39
Figure 36:
US – Revenue Sharing Arrangement – MMS (Except P2P) (2006, 2011E) ....................40
Figure 37:
UK – Data Services Revenue Break-out (2006) ..............................................................41
Figure 38:
UK – Revenue Sharing Arrangement – MMS (2006).......................................................42
Figure 39:
UK – Revenue Sharing Arrangement – MMS (2011E) ....................................................42
Figure 40:
China – Revenue Sharing Arrangement – MMS except P2P (2003 and 2006) ...............44
Figure 41:
China – Revenue Sharing Arrangement – MMS except P2P (2011E).............................44
Figure 42:
Worldwide Mobile E-mail Revenue (In USD Billion, 2006-2011E) ...................................45
Figure 43:
Worldwide Mobile E-mail Subscribers (In Million, 2006-2011E) ......................................46
Figure 44:
Mobile Enterprise E-mail – Value Chain ..........................................................................47
Figure 45:
Worldwide Mobile IM Subscribers (In Million, 2006-2011E).............................................49
Figure 46:
Worldwide Mobile IM Revenue (In USD Billion, 2006-2011E) .........................................50
Figure 47:
Mobile TV (Broadcast Based) – Value Chain ..................................................................54
Figure 48:
Mobile TV (Cellular Based) – Value Chain ......................................................................55
Figure 49:
Mobile Video Download – Value Chain ...........................................................................56
Figure 50:
Worldwide Mobile TV Subscribers (In Million, 2006, 2007E and 2010E).........................56
Figure 51:
Worldwide Mobile Video Services Revenue (In USD Billion, 2006-2011E) .....................57
Figure 52:
Italy – Mobile TV Subscribers (In Million, 2006-2010E) ...................................................59


3


Figure 53:
Figure 54:
Figure 55:
Figure 56:
Figure 57:
Figure 58:
Figure 59:
Figure 60:
Figure 61:
Figure 62:
Figure 63:
Figure 64:
Figure 65:
Figure 66:
Figure 67:
Figure 68:
Figure 69:
Figure 70:
Figure 71:
Figure 72:
Figure 73:
Figure 74:
Figure 75:
Figure 76:
Figure 77:
Figure 78:
Figure 79:
Figure 80:
Figure 81:
Figure 82:
Figure 83:
Figure 84:
Figure 85:
Figure 86:
Figure 87:
Figure 88:
Figure 89:
Figure 90:
Figure 91:
Figure 92:
Figure 93:

Italy – Mobile TV Broadcasting – Value Chain.................................................................60
SK Telecom – Mobile TV Broadcasting – Value Chain....................................................61
Worldwide Mobile Music Revenue (In USD Billion, 2006-2011E)...................................63
Revenue Composition – Mobile Music (2006 and 2011E) ...............................................65
Worldwide Ringtone Revenue (In USD Billion, 2006-2011E) ..........................................66
Worldwide Streaming Audio Revenue (In USD Million, 2006-2011E)..............................66
Worldwide Full-track Mobile Music Download Revenue (In USD Million, 2006-2011E)...67
Worldwide Ring-back Tone Revenue (In USD Million, 2006-2011E)...............................67
Mobile Music Services – Value Chain .............................................................................68
Mobile Music Services – Revenue Sharing Arrangement (2006 and 2011E) ..................68
Penetration – Music-enabled Handsets (1 November 2006–31 January 2007)...............70
UK – Mobile Download Market – Break-out (2006) .........................................................71
UK – Revenue Sharing Arrangement of Polyphonic Tones (2006)..................................71
UK – Revenue Sharing Arrangement of True Tones (2006)...........................................72
India – Mobile Music Download Break-out (2006) ...........................................................73
Mobile Music Service – Revenue Sharing Arrangement (2006 and 2011E) ....................74
US – Mobile Music Revenue (In USD Million, 2004-2006) ..............................................75
US – Changing Patterns of Ringtone Service (2004-2006) .............................................75
US – Revenue Sharing Arrangement of Polyphonic Tones (2006)..................................76
US – Revenue Sharing Arrangement of True Tones (2006)............................................77
Worldwide Mobile Gaming Revenue (In USD Billion, 2006-2011E).................................78
Mobile Gaming – Value Chain .........................................................................................81
Worldwide Mobile Gaming – Revenue Sharing Arrangement (2006, 2011E) ..................81
Japan – Mobile Gaming Service Revenue (In USD Million, 2004–2006).........................83
NTT DoCoMo – Revenue Sharing Arrangement – Mobile Games (2006) .......................84
US – Mobile Gaming Services Revenue (In USD Million, 2004–2006)............................85
US – Mobile Gaming – Revenue Sharing Arrangement (2006, 2011E)..........................86
UK – Mobile Gaming – Revenue Sharing Arrangement (2006, 2011E)..........................88
Revenue from Other Data Services (In USD Billion, 2006–2011E) .................................89
Mobile Payment Services – Value Chain.........................................................................90
South Korea – Mobile Payment – Revenue Sharing Arrangement (2006) ......................91
Worldwide Infrastructure Vendor Revenue (In USD Billion, 2006–2011E) ......................96
Worldwide Handset Shipments (In Million, 2006–2011E) ................................................99
Worldwide Handset Revenue (In USD Billion, 2006–2011E).........................................100
Worldwide Handset Sales to Operators (In USD Billion, 2006–2011E) .........................100
Worldwide Market Share Comparison – by Handset Vendor (2005 and 2006) .............102
Handset Shipments – Regional Break-out (2006 and 2011E) .......................................103
Worldwide Mobile Revenue and Total Handset Sales (In USD Billion, 2004-2011E) ...104
Voice and SMS Revenue as Percentage of Service Revenue (In Percent, 2006-2011E)
105
Figure 94:
Worldwide Mobile Market – Break-out by Services and Handset Sales (In USD Billion,
2006, 2007E and 2011E)...............................................................................................................106
Figure 95:
Worldwide Mobile Market – Who makes how much? (2006 and 2011E).......................108
Figure 96:
Worldwide Mobile Revenue – Regional Break-out (2006 and 2012E)..........................109
Figure 97:
Worldwide Mobile Market – Service Revenue and Handset Sales – Regional Break-out
(In USD Billion, 2006,2007 and 2011E).........................................................................................110
Figure 98:
Worldwide Mobile Revenue – Regional Contribution (2006 and 2011E) .......................112
Figure 99:
Worldwide Mobile Data Services Revenue – Regional Break-out (2004 and 2012E)...114
Figure 100:
Data Services Value Chain (In USD Billion, 2006 and 2011E) ......................................119

List of Tables
Table 1:
Table 2:
Table 3:

4

Regional Mobile Subscribers (In Million, 2004-2012E).........................................................10
Worldwide Mobile Revenue – by Region (In USD Billion, 2004-2012E)...............................11
Worldwide Mobile Service Revenue – by Region (In USD Billion, 2004-2012E) ..................12



Table 4:
Worldwide Mobile Voice Revenue – by Region (In USD Billion, 2004-2012E) .....................15
Table 5:
Average Revenue per Minute (RPM) (In USD, Q2 2007).....................................................16
Table 6:
Forecasted Worldwide Mobile E-mail Subscribers (In Million, 2006-2011E) ........................46
Table 7:
Handset Vendors and Operating System Providers .............................................................48
Table 8:
Worldwide Mobile IM Subscribers – Regional Break-out (In Million, 2006-2011E)...............50
Table 9:
Worldwide Mobile Music Services Revenue (In USD Billion, 2006-2011E) ..........................64
Table 10:
Quarterly Handset Shipments Worldwide (In Million, Q1, 2006 - Q3, 2007) ..................101
Table 11:
Worldwide Voice and Data Services Revenue (In USD Billion, 2004-2012E)................113
Table 12:
Worldwide Mobile Data Services Revenue –Regional Break-out (In USD Billion, 20042012E) 115
Table 13:
Worldwide Mobile Data Services Revenue – Break-out (In USD Billion, 2006-2011E) .116


5


Introduction
In recent years, the mobile communication market has developed rapidly. Mobile services
have touched the lives of millions of people worldwide. From being only a voice
communication device, the mobile handset has gradually become part of the user’s
personality. The mobile handset has evolved into a device that provides information and is a
source of entertainment.
Apart from the growth of mobile services in western countries, there has been a surge in the
subscriber bases in the emerging economies of Asia, Eastern Europe, Latin America and
Africa. In the Asia-Pacific region, the mobile subscriber base has already reached the 1 billion
mark, with China and India being the largest markets in the region. Furthermore, the expected
exponential subscriber growth in countries such as Indonesia, Bangladesh, Ukraine, Brazil,
Mexico and Nigeria, will continue to stimulate the market in the near future.
The worldwide mobile market was worth USD 718.4 billion at year-end 2006 in terms of
operator revenues and is expected to exceed the 1 trillion mark in 2011. Upon comparison
with other services, the mobile telecommunications sector has clearly outperformed (in terms
of revenue) other sectors, such as financial services, pharmaceutical sales, travel and
tourism, and IT services. The mobile and wireless industry, despite being a comparatively
young industry compared to the other sectors listed, has attained great height in a short span
of time. The following figure compares the revenue generated by different sectors for the
fiscal year 2006.

Figure 1: Comparison of Mobile Market with Other Sectors – Revenue (In USD Billion, In 2006)

Revenue (In USD Billion)

800
672.3

718.4

604.5
600
472.6
400
260.2

280.0

Semiconductor
Industry

Consulting
Services

200

0
Financial
Services

Pharmaceutical
Sales

IT services

Mobile Market

Source: Various, see footnotes

1

Moreover, for the year 2006, when the financial services and pharmaceutical sectors
witnessed growth of 3.5 percent and 8.0 percent, respectively, the worldwide mobile market
registered a growth rate of 16.6 percent. Figure 2 shows the year-on-year (y-o-y) growth rate
of different sectors in fiscal year 2006.

1

Sources: http://www.gartner.com/it/page.jsp?id=495223; http://wistechnology.com/article.php?id=4300;
http://www.edn.com/index.asp?layout=article&articleid=CA6436028; http://www.gartner.com/it/page.jsp?id=506001;
http://www.vault.com/store/book_preview.jsp?product_id=43631

6


The worldwide mobile market
was worth USD 718.4 billion
at year-end 2006 in terms of
operator revenues, and is
expected to exceed the 1
trillion mark in 2011.


Figure 2: Comparison of Mobile Market with Other Sectors – Y-o-Y Growth Rate (2006)

16.6%

Mobile Market

6.4%

IT Services

Travel & Tourism

4.6%

Pharmaceutical

8.0%

Financial Services

3.5%
0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Source: Portio Research Ltd.

According to our estimates, the mobile telecommunication sector will witness a y-o-y growth
rate of 11.9 percent in terms of revenue in 2007. Furthermore, the sector is set to again
outmatch the semiconductor industry, consulting services and financial services sectors.
Figure 3 shows a comparison of different sectors in terms of the estimated y-o-y growth rate
for fiscal year 2007.

Figure 3: Comparison of Mobile Market with Other Sectors – Y-o-Y Growth Rate (2007E)

11.9%

Mobile Market

7.1%

Consulting Service

Semiconductor Industry

8.1%

4.5%

Financial Services

0%

2%

4%

6%

8%

10%

12%

14%


E – Estimated

Mobile data revenue forms an important part of total mobile service revenues. As per our
estimates, in 2007, it contributed approximately USD 135.7 billion to the overall mobile
service revenue and is expected to contribute significantly in the coming years as well. The
maximum contribution to data service revenue in 2007 was from SMS, followed by MMS.
SMS contributed almost USD 66.5 billion in 2007 and is also expected to be the highest
contributor in 2011. MMS too will be one of the major contributors. Also, Data services such
as mobile music, mobile games, mobile video and mobile payments are expected to
contribute significantly to the overall revenue generated from data services in the next five
years.


7


The revenue generated from data services is shared among the players in the data services
value chain. Mobile network operators get the maximum share in the value chain. Other
players such as content owners and aggregators get a smaller share than do the operators. In
2006, the operators’ share in the value chain was almost USD 67.6 billion, which accounted
for almost 66 percent of the total revenue generated from data services. In 2011, it is
expected that the share retained by the operators out of total data services revenues will
decrease, and other players such as the content owners and aggregators, will get an increase
in their share of total non-voice service revenues.
The demand for data services is expected to shoot up worldwide in the next five years. To
provide the best service to their customers, mobile operators will invest heavily on
infrastructure in the coming five years. This bodes well for the infrastructure vendors. The
revenue generated in 2006 by infrastructure vendors was almost USD 60 billion and this is
expected to increase at a steady pace in the next five years.
The tremendous growth in the worldwide subscriber base and the demand for replacement
handsets has helped the mobile handset market grow at a very fast pace. In 2006, the annual
shipments of mobile handsets almost touched the one billion mark and it is estimated that full
year figures for 2007 will exceed that magical mark of one billion. In 2006, of the total revenue
generated from the sale of mobile handsets, the maximum revenue came from sales to
operators. Sales to mobile operators accounted for almost 60 percent of the total sales in
2006. In the next five years, revenue from sales to mobile operators is expected remain
steady at 60 percent of the total sales.
With an increase in the subscriber base, the requirement of different kinds of data services
has increased significantly. Due to advancements in mobile technology, newer features are
being added to handsets. Subscribers now use their handsets to play games, listen to music,
read news headlines, surf the Internet and make payments. The mobile industry has
increasingly realised the need to explore the mobile data market and increase revenue by
providing innovative options to subscribers. This has driven players to introduce better and
more innovative concepts and services.
The key features of this report include the following:
•

•
•

•
•
•

8

An introduction and overview of the worldwide mobile market. It analyses the worldwide
subscriber base (2004-2012), total worldwide mobile service revenues (2004-2012), the
break-out of the mobile service revenues into voice and data revenues, and the share of
various data services from total non-voice revenues.
The revenue generated by mobile network operators from mobile services and the share
of various players, such as handset vendors, infrastructure providers, content providers,
etc. in this revenue pie.
An overview of the data services market. It also highlights the revenue generated from
various data services in the period 2006 to 2011. A value chain analysis is done for
various data services, which provides break-out of the revenue pie amongst the players
involved in the value chain.
Case studies – to understand the mobile data market in different countries.
An overview of the worldwide handset market, the overall revenue generated from
handset shipments and the revenue generated by handset vendors from sales through
operators.
An overview of the mobile infrastructure providers market.


The revenue generated from
data services is shared among
the players in the data
services value chain. As of
end-2006 the revenue sharing
arrangement was largely in
favour of MNOs while other
players, such as content
owners and aggregators, got a
smaller share of the total
revenue.


Worldwide Mobile Market
The worldwide subscriber base has witnessed rapid growth in recent years and is expected to
reach the 50 percent penetration mark in early 2008. The increase from a 25 percent
penetration level to 50 percent has occurred in a short span of time. Although it took
approximately 15 years for mobile services to reach the first quarter of the world’s population,
it took less than five years to reach the next quarter of the world’s population. This rapid
growth has been witnessed in fast developing economies such as those in Europe, Asia, Latin
America and the Middle East.
The worldwide mobile
subscriber base is expected to
reach approximately 4.9 billion
by end-2012.

Emerging markets such as China, India and Brazil, are expected to continue to grow at a
rapid pace. In addition, Africa will play a major role in the net subscriber additions in the
future.
Figure 4 shows the projected growth in the worldwide subscriber base from 2004 to 2012.

Figure 4: Worldwide Mobile Subscribers (In Million, 2004-2012E)

Subscribers (In Million)

6000
5000
3,901.3

4000

4,254.3

4,589.7

4,906.9

3,502.2
3,080.9
2,650.2

3000
2000

2,169.7
1,744.5

1000
0
2004

2005

2006

2007E

2008E

2009E

2010E

2011E

2012E

Year

E – Estimated

Figure 4 shows that the worldwide subscriber base grown at a compound annual growth rate
(CAGR) of 23.25 percent between 2004 and 2006. A reduction in tariffs and subsidies on
handsets has led to tremendous growth in the emerging countries. In terms of absolute
subscriber volume, China has emerged as the largest mobile market in the world at end-2006,
followed by the US and Russia. In 2007, India surpassed Russia and is now the third largest
mobile market in terms of subscriber base.
Table 1 shows the number of mobile subscribers by region.


9


Table 1:

Regional Mobile Subscribers (In Million, 2004-2012E)
N&W
Europe

C&E
Europe

North
America

Latin
America

Africa

Middle
East

Asia
Pacific

Total

2004

358.7

198.6

199.8

176.2

79.7

28.7

702.8

1,744.5

2005

391.6

295.3

224.8

225.9

129.8

44.8

857.5

2,169.7

2006

425.2

365.5

251.6

273.0

168.7

64.5

1,101.7

2,650.2

2007E

437.9

397.4

277.5

315.0

211.1

84.4

1,357.5

3,080.8

2008E

447.3

416.6

297.6

351.7

257.5

103.8

1,627.5

3,502.0

2009E

454.8

430.5

314.7

384.7

306.3

122.8

1,887.6

3,901.4

2010E

459.8

439.5

332.9

415.7

351.4

138.1

2,116.9

4,254.3

2011E

464.8

445.8

344.6

446.0

399.7

151.3

2,337.6

4,589.8

2012E

468.2

450.8

353.6

469.3

444.2

162.1

2,558.7

4,906.9

Year


Projections in Table 1 show the growth rate of the worldwide subscriber base after it crosses
the 3 billion mark by end-2007. Operators worldwide are expected to add another 1.9 billion
subscribers by end-2012. As mentioned earlier, the majority of this subscriber growth is
expected to come from the Asia-Pacific region, followed by Africa and Latin America.
Figure 5 shows the regional division of the expected subscriber additions from end-2007 to
end-2012.

Figure 5: Net Subscriber Additions – Regional Break-out (In Million, 2007E-2012E)

Subscribers (In Million)

1500
1,201.2
1000

500

30.3

53.4

Western
Europe

Central and
Eastern
Europe

76.1

154.3

233.1
77.7

0
Asia Pacific

North
America

Latin
America

Africa

Middle East


E – Estimated

In terms of mobile revenues, the worldwide mobile market stood at 718.4 billion at end-2006.
It is expected to increase at a strong rate and reach 1,094.9 by end-2012, which is shown in
Figure 6.

10



Figure 6: Worldwide Mobile Revenue (In USD Billion, 2004-2012E)

Mobile Revenue (In USD
Billion)

1200

803.7

874.3

936.0

993.6

1,045.7

1,094.9

718.4

800
616.4
519.7
400

0
2004

2005

2006

2007E

2008E

2009E

2010E

2011E

2012E

Year

E – Estimated

Table 2 shows the regional break-out of worldwide mobile revenue from 2004 to 2012
Table 2:

Worldwide Mobile Revenue – by Region (In USD Billion, 2004-2012E)
N&W
Europe

C&E
Europe

North
America

Latin
America

Africa

Middle
East

Asia
Pacific

Total

2004

149.4

31.8

97.3

28.7

26.3

16.7

169.4

519.7

2005

161.2

38.7

131.3

41.4

30.9

19.3

193.7

616.4

2006

170.4

47.0

158.3

55.8

37.6

23.8

225.6

718.4

2007E

183.6

54.1

184.5

61.7

42.6

27.7

249.6

803.7

2008E

189.2

58.1

204.5

66.1

47.8

31.2

277.3

874.3

2009E

194.6

62.0

220.1

69.8

52.5

34.5

302.5

936.0

2010E

199.6

64.0

236.9

73.2

56.8

37.1

325.8

993.6

2011E

204.2

65.7

250.7

76.4

61.2

39.3

348.2

1045.7

2012E

208.2

67.2

263.6

79.4

65.1

41.0

370.3

1094.9

Year


Please note that the revenue generated by operators worldwide constitutes service revenue
and equipment sales (i.e., from selling handsets and accessories). Revenues flowing directly
from consumers to handset vendors, accessories vendors and non-voice revenues flowing
directly to content providers are not included in these calculations.

Figure 7 shows the worldwide mobile service revenue and equipment sales.


11


Figure 7: Worldwide Service Revenue and Equipment Sales (In USD Billion, 2004-2012E)

(In USD Billion)

1200

800

91.1

85.8

81.2

95.7

100.3

104.3

108.4

69.3
840.3

941.4

986.5

637.2

783.2

893.3

717.8

2006

2007E

2008E

2009E

2010E

2011E

2012E

61.9
400
457.8

547.1

2004

2005

0

Year
Service Revenue

Equipment Sales

E – Estimated

Table 3 shows the regional break-out of worldwide mobile service revenue from 2004 to 2012.
Table 3:

Worldwide Mobile Service Revenue – by Region (In USD Billion, 2004-2012E)
N&W
Europe

C&E
Europe

North
America

Latin
America

Africa

Middle
East

Asia
Pacific

Total

2004

135.9

30.4

80.4

22.8

24.0

15.2

149.2

457.8

2005

146.7

37.3

110.7

32.5

27.8

17.5

174.4

547.1

2006

157.2

45.4

135.2

46.3

34.1

21.6

197.4

637.2

2007E

170.2

51.5

159.9

50.4

38.7

25.3

221.8

717.8

2008E

176.1

54.6

179.2

54.3

43.4

28.5

247.2

783.2

2009E

181.4

57.1

194.4

57.5

48.0

31.5

270.6

840.3

2010E

185.7

59.0

211.2

60.5

52.1

33.8

291.0

893.2

2011E

190.2

60.6

224.6

63.4

56.3

35.8

310.4

941.4

2012E

194.1

62.1

237.0

65.8

60.1

37.6

329.7

986.5

Year


The worldwide service revenue is expected to increase at a CAGR 10.1 percent from 20042012.
Figure 8 shows the change in contribution from various regions to the worldwide service
revenue for the years 2004 and 2012. As you can see, where Europe was the most valuable
market in 2004, by 2012 Asia will surpass Europe in terms of contribution, and North America
will take the second place above Northern and Western Europe.

12



Figure 8:

Worldwide Mobile Service Revenue – Regional Break-out (2004 and 2012E)

2004
5.0%

17.6%

5.2%

6.6%

29.7%

3.3%

32.6%

2012E
6.7%
24.0%

6.1%
3.8%

6.3%

33.4%

19.7%

N&W Europe
Africa

C&E Europe
Middle East

North America
Asia Pacific

Latin America


E – Estimated

The revenue generated from mobile services consists of voice and data revenue. Initially,
mobile services meant mostly voice services. Over time, people have started using their
handsets for other purposes, such as sending SMS and MMS. As shown in Figure 9, the
maximum revenue generated from data services in 2004 stood at 12.8 percent and the vast
majority of total revenues were contributed by voice services. However, the trend is changing
and data is now contributing more to the overall service revenue picture. Operators worldwide
are focussing on compensating the declining voice ARPU by increasing the adoption of data
services among users. Data is expected to contribute approximately 25.5 percent to total
worldwide mobile service revenues in 2012.


13


Figure 9:

Worldwide Mobile Service Revenue – Voice-Data Split (2004 and 2012E)

2004
87.2%

12.8%

2012E
74.5%

25.5%

Voice

Data


E – Estimated

As the figure above shows, voice services clearly represent a major portion of the mobile
services revenue pie. However, voice average revenue per user (ARPU) has been in decline
in most countries in recent years. It is believed that voice ARPU will further decrease and
voice revenue is expected to constitute 74.5 percent of the worldwide mobile service
revenues by 2012. Mobile network operators are increasingly facing more stringent
regulatory policy on mobile termination rates and, at the same time, competition on the price
front is also making it difficult for operators to maintain current voice ARPU. Moreover, the
continuing addition of low ARPU customers in emerging countries is contributing further to
this decline. See the last page of this study for more details of our report “The Next Billion”,
which looks in detail as forecast ARPU rates in fast growing emerging markets,
Due to the rise in the subscriber base worldwide, the consolidated voice revenue is expected
to be USD 734.6 billion by 2012. Figure 10 shows the worldwide mobile voice revenue from
2004 to 2012.

14


Voice revenue is expected to
constitute 74.5 percent of the
worldwide mobile service
revenues in 2012.


Figure 10: Worldwide Mobile Voice Revenue (In USD Billion, 2004-2012E)

Mobile Voice Revenue (In
USD Billion)

800

600

534.8

582.1

622.5

657.5

687.6

712.9

734.6

2010E

2011E

2012E

468.2
399.1
400

200

0
2004

2005

2006

2007E

2008E

2009E

Year

E – Estimated

The figure above shows that mobile voice revenue grew at a compounded annual growth rate
(CAGR) of 15.7 percent between 2004 and 2006. However, the growth rate of voice revenue
is expected to slow down to a CAGR of 5.4 percent between 2006 and 2012.
Table 4 shows the regional break-out of worldwide mobile voice revenue from 2004 to 2012.
Table 4:

Worldwide Mobile Voice Revenue – by Region (In USD Billion, 2004-2012E)
N&W
Europe

C&E
Europe

North
America

Latin
America

Africa

Middle
East

Asia
Pacific

Total

2004

116.9

27.9

76.4

21.7

22.8

14.0

119.4

399.1

2005

124.7

33.2

101.7

30.2

26.4

16.0

136.0

468.2

2006

132.2

40.2

118.9

41.9

31.9

19.5

150.1

534.8

2007E

136.2

43.8

131.1

45.1

36.0

22.5

167.5

582.1

2008E

139.1

45.9

140.6

47.8

39.9

25.1

184.2

622.5

2009E

141.4

47.4

148.7

50.0

43.7

27.4

198.9

657.5

2010E

143.0

48.4

157.3

52.0

46.9

29.1

210.9

687.6

2011E

144.5

49.1

162.9

53.9

50.1

30.5

221.9

712.9

2012E

145.6

49.6

167.1

55.3

52.9

31.5

232.4

734.6

Year


As mentioned above, the contribution of voice revenue to the mobile service revenue pie is in
a period of steady decline. This is shown in figure 11.


15


Figure 11: Worldwide Mobile Voice Revenue as a percentage of Service Revenue (2004-2012E)
100

87.2

85.6

83.9

81.1

79.5

78.2

77.0

75.7

74.5

2008E

2009E

2010E

2011E

2012E

Percentage

80
60
40
20
0
2004

2005

2006

2007E

Year

E – Estimated

Revenue per Minute (RPM) is another method of comparing prices across carriers and
countries. The RPM rates have been declining worldwide for several years now. Table 5
shows the average revenue per minute and the average consumer’s minutes of usage per
month for 10 selected countries.
Table 5:

Average Revenue per Minute (RPM) (In USD, Q2 2007)
Average Revenue per
Minute (Effective Price
per Voice Minute, In
USD)

Average Consumer’s
Minutes of Use per
Month

Canada

0.10

429

France

0.17

258

Germany

0.21

101

Italy

0.19

134

Japan

0.25

140

Spain

0.23

163

UK

0.20

168

USA

0.04

823

South Korea

0.11

321

Mexico

0.11

144

Country

Source: Merrill Lynch Q2, 2007.

It shows that the average RPM is the lowest in the US; the RPM has declined at the highest
rate in the country. American subscribers use an average of 823 minutes of mobile service
per month and this is nearly five times the use of an average mobile subscriber in an OECD
top 10 country.

16



The average monthly Minutes of Usage (MOU) is on the rise in the US. The average MOU in
2004 was 619 minutes, which increased to 789 minutes in 2006 and to 823 minutes in 2007.2
However, in Japan, where the average RPM is higher than other countries listed in the table
above, the average MOU is declining—the average MOU were 167 minutes for year 2003
and 159 minutes for 2004.3 The figure reduced further to 140 minutes in the second quarter of
2007.4
The above table does not provide the MOU figures for the emerging markets. For operator
China Mobile, the average MOU in June 2007 (January-June) was 440 minutes and then,
showing slow but steady growth, the average in September 2007 (January-September) was
447 minutes.5
In India, the average MOU in 2004 was 309 minutes.6 According to a TRAI (Telecom
Regulatory Authority of India) report, the minutes of mobile usage per subscriber have
declined for the first time in the country. The MOU has fallen for mobile operators on both
technology platforms; for GSM, the MOU declined from 476 minutes in June 2007 to 462
minutes in September 2007, while for CDMA players, the average MOU came down from 432
minutes in June 2007 to 413 minutes in September 2007.
In a nutshell, it can be said that the worldwide share of voice revenue in total service revenue
is expected to decline in the coming years. Operators are increasingly focusing on data
services to compensate for this decline.
The following section presents an overview of the worldwide mobile data services market,
focussing on providing an understanding of the current relevance of data services.

2

Source: http://www.chetansharma.com/6.pdf; http://www.cwta.ca/CWTASite/english/pdf/WallWE.pdf;
http://files.ctia.org/pdf/080108_US-OECD_10_Comparison_Ex_Parte.pdf; http://www.chetansharma.com/6.pdf
3
Source:http://www.atis.org.sg/__C1256EEF000E5F2F.nsf/webStdContent/C2BD2F5157EA7C1E48256EFB0020239
3/$file/ATIE2004Obi.pdf
4
Source: http://files.ctia.org/pdf/080108_US-OECD_10_Comparison_Ex_Parte.pdf
5
Source: http://www.chetansharma.com/6.pdf; http://www.chinamobileltd.com/ir.php?menu=12
6
Source: http://www.chetansharma.com/6.pdf


17


Mobile Data Services
Introduction
Because of stiff competition among MNOs, the ARPU generated from voice services is
continuing to decline in many markets. Operators are increasingly relying on data services
and focussing on adopting advanced network technologies, such as EDGE, UMTS, EV-DO
1X and HSDPA, to offer advanced messaging and other value-added data services.
Wireless ARPU is declining even in countries such as Japan. Data services are currently an
important component in the overall service revenue generation of most operators. Until
recently, SMS has formed the mainstay of non-voice service revenues in most markets, with
Japan being the exception. Now, more advanced data services, such as mobile gaming,
music downloads and mobile TV, have been the major contributors towards increasing data
ARPU for operators in the most mature markets. At the same time, revenue from basic data
services such as SMS, MMS, ring-back tones and information services, are increasingly
becoming an important component in operators’ service revenue generation in emerging
markets.
In 2006, the largest contribution to total worldwide data services revenue came from SMS,
which generated approximately 58 percent of all revenues. The next biggest contributor to
total non-voice revenue was MMS. However, the overall share of SMS and MMS in worldwide
revenues from data services is expected to decline by 2011. Contribution from services such
as mobile IM, mobile music, mobile games, mobile e-mail, mobile video, and mobile
payments is expected to increase by 2011.
Figure 12 shows the share of various data services in the worldwide mobile data services
revenue in 2006 and the estimated break-out by 2011.

18


In 2006, the largest
contribution to total worldwide
data services revenue came
from SMS, which generated
approximately 58 percent of
all revenues.


Figure 12: Worldwide Data Services Revenue – Break-out (2006 and 2011E)
2006
57.6%

13.3%
1.0%

3.9%

14.5%
2.5%

6.7%

0.4%

2011E
14.2%

2.2%

9.0%
3.5%
6.0%

7.9%
39.8%
17.5%

SMS

MMS

Mobile IM

Mobile Music

Mobile Games

Mobile e-mail

Mobile Video

Others


E – Estimated

The revenue generated from data services is split among the players involved in the services’
value chain. The maximum share of the data revenue goes to the mobile network operator,
however the share of other players in the value chain is rising. The figure below shows the
data services revenue split between operators and other players in the value chain in 2006,
as well as the estimated split in 2011.


19


Figure 13:

Worldwide Data Revenue Sharing Arrangement (2006 and 2011E)

2006

66.1%

33.9%

2011E

49.2%

50.8%

MNO

Other Players


E – Estimated

The share of revenues retained by the mobile network operators is expected to decline from
66.1 percent in 2006 to 50.8 percent in 2011 and conversely other players in the value chain
are expected to increase their share from 33.9 percent in 2006 to 49.2 percent in 2011.
Of the overall revenue generated by mobile operators from data services, the maximum
share comes from P2P (peer-to-peer) SMS and MMS, and this trend is expected to continue
in the next five years. In 2006, approximately 80 percent of the revenue generated by the
MNOs from data services came from P2P SMS and MMS. However, the revenue generated
from P2P SMS and MMS is expected to decline in the next five years as the revenue from
A2P SMS and MMS and other data services pick up. Revenue from P2P SMS and MMS is
expected to decline from 80 percent in 2006 to 69 percent in 2011.
Figure 14 shows the revenue generated worldwide by MNOs from P2P SMS and MMS and
from A2P SMS and MMS and other data services in 2006 and the estimated break-out in
2011.

20


Of the overall revenue
generated by mobile operators
from data services, the
maximum share comes from
P2P (peer-to-peer) SMS and
MMS, and this trend is
expected to continue in the
next five years.


Figure 14:

MNOs share in Data Revenue Break-out (2006 and 2011E)

2006
80.0%

20.0%

2011E

68.9%

31.1%

A2P - SMS, MMS & Other Data Services

P2P - SMS & MMS


E – Estimated

In the following section, each data service has been analyzed in detail. A worldwide market
overview is provided for each service and its value chain has been discussed in detail. The
analysis talks about the players in the value chain and their revenue sharing arrangements.
The revenue split among the players in the value chain is provided for the year 2006 and the
expected split in the year 2011.


21


SMS
Market Overview
SMS, the cheapest and easiest form of long distance peer-to-peer (P2P) communication ever
known, has undoubtedly been the most successful data service to date. SMS volume is
growing in all regions worldwide and SMS messages are expected to remain the most widely
used messaging format for years to come.

SMS is the most successful
data service to date.

The adoption level of SMS has varied across different regions worldwide. It is the most
popular messaging technology in Northern and Western Europe. Despite the mobile market in
these regions having reached saturation in terms of the number of subscribers, SMS volume
is still growing at a steady pace. SMS volume is also expected to continue growing
exponentially in Central and Eastern Europe.
After a slow start, the US market is witnessing a surge in SMS traffic volumes after the
signing of SMS interoperability agreements among operators in 2005. Also, aggressive
marketing strategies adopted by operators in the country and the popularity of TV voting
applications have resulted in a tremendous increase in the uptake of SMS-based services.
SMS usage rates, measured per-subscriber-per-month, are now higher in the USA than in
most of Europe.
However, the biggest contribution to total worldwide SMS volumes comes from the AsiaPacific region. The Philippines, which is known as the ‘SMS Capital of the world’, accounts for
approximately 10 percent of the SMS volume worldwide. Smart Philippines’ (the leading
operator in the country) strategy of targeting its low-income customer base with a low-cost
pricing model has led to a high uptake of SMS.7 Some other large mobile messaging markets
in the Asia-Pacific region are China, India and Malaysia. Also of note, Mexico, Brazil and
Venezuela are the largest markets in the Latin American region, adding a further significant
contribution to worldwide traffic.
Latin America is also expected to witness significant growth in SMS traffic in the near future.
Africa and the Middle East only accounted for approximately 3 percent of the total SMS traffic
worldwide in 2006. However, with increasing mobile penetration (especially the addition of
pre-paid customers), the region’s percentage contribution to the worldwide traffic is expected
to increase.
Worldwide SMS traffic volumes are expected to increase at a CAGR of 15.8 percent, up from
1,662.8 billion in 2006 to 3,463.6 billion in 2011, as shown in Figure 15.

7

To find out more please refer to http://www.portioresearch.com/Strategies_end_users.html

22


Worldwide SMS traffic
volumes are expected to
increase at a CAGR of 15.8
percent, up from 1,662.8
billion in 2006 to 3,463.6
billion in 2011.


Figure 15: Worldwide SMS Traffic Volumes (In Billion, 2006-2011E)

SMS Volumes (In Billion)

4,000

3,463.6
3,173.0
2,844.9

3,000

2,482.5
2,088.5

2,000

1,662.8

1,000

0
20 06

2 007E

2 008E

2009E

2010E

2011E

Year

E – Estimated

Owing to strong growth in SMS traffic volume, SMS revenue is expected to grow at a steady
pace. However, declining SMS tariffs worldwide will affect the revenue growth to some extent.
Figure 16 shows the forecast for worldwide SMS revenue growth from 2006 to 2011:

Figure 16: Worldwide SMS Revenue (In USD Billion, 2006-2011E)

SMS Revenue (In USD
Billion)

100
79.8

85.6

90.9

73.4

80

66.5
59.0

60
40
20
0
2006

2007E

2008E

2009E

2010E

2011E

Year

E – Estimated

P2P SMS volumes will continue to account for the largest proportion of the total worldwide
SMS traffic volume. At the same time, SMS traffic volumes will also be driven by an increased
use of application-to-peer (A2P) and peer-to-application (P2A) SMS services among
subscribers. To increase the adoption of SMS among users, operators in many countries are
focussing on premium SMS services, such as SMS TV voting, news, weather information and
quizzes.
Premium SMS is expected to contribute immensely not only to the total revenue of mobile
operators, but also to other players involved in the value chain. It is important to understand
the value chain existing in premium SMS and how this market will evolve in the coming years.
The stakes are high for all players in the value chain and in the future, mobile services will not
only mean voice, but also data and premium SMS services.


23

SMS traffic volumes are
expected to witness an
increase with the rise in the
usage of application-to-peer
(A2P) and peer-to-application
(P2A) SMS services.


Value Chain Analysis
The revenue generated from premium SMS is shared by various players in the value chain.
The revenue sharing arrangement depends on the kind of value added by the player as well
as on the bargaining power of different players.
Figure 17 shows the premium SMS value chain.

Figure 17: Premium SMS – Value Chain

Content
Owner

Content
Aggregator

Mobile
Network
Operator


Advanced and emerging countries have different arrangements for sharing revenue
generated from premium SMS services. In developed countries, content owners and
aggregators get a higher share than their counterparts in developing countries. In most of the
emerging markets, the operators share is quite high (sometimes as high as 60 percent), as is
the case in India and the Philippines. However, there are a few exceptions. In China,
operators get only 20-30 percent of the total revenue through premium SMS services, while
aggregators and content owners share the remainder.
In the case of SMS-based services that are used by enterprise service providers to connect to
mobile users, the revenue earned from a premium SMS is shared between the short code
owner and the operator. Enterprise service providers have recently started using premium
SMS as a marketing tool. An example of this is the tracking of United Parcel Service (UPS)
consignments through SMS. In this service, the subscriber sends an SMS to the operator,
requesting the service, which is then routed to the short code owner. The short code owner
then collects all the information on its server and then passes it to its client (UPS in this case).
The operator gains revenue from two sources, one from the user and the other from the
enterprise service provider.
The value chain for such cases is shown in Figure 18.

24


In developed countries,
content owners and
aggregators get a higher
share than their counterparts
in developing countries.


Figure 18: SMS-based Enterprise Services – Value Chain

Enterprise Service
Provider

Short Code
Owner

Mobile Network
Operator
End-user

Arrows represent flow of money

There is a difference in opinion in terms of forecasting future revenue sharing arrangements
among the players in the premium SMS value chain in developing countries. Some experts
believe that operators will continue to have an upper hand and will command a higher share
in the revenue break-out, whereas others believe that the future trend in developing countries
will be similar to that in most of the European countries. They believe that in the next four to
five years content developers will have a greater share as bigger companies ware likely to
enter the market of content provision. Such companies will command a greater share as they
will have the power to negotiate with operators. Therefore, operators’ exorbitant share in
developing nations such as India is expected to drop from 60 percent to 30 percent. The
remaining 70 percent share is expected to be divided among content owners and
aggregators.


25


Case Study 1 – India’s SMS Market
Market Overview
In the recent past, the mobile market in India has witnessed tremendous growth, and is
expected to continue to grow by adding approximately 6.5 million mobile subscribers every
month for the next couple of years. Operators in the country are focussing on increasing their
subscriber base by adding subscribers from rural regions, with a knowledge that this will lead
to an inevitable decline in ARPU. Set against this rapid growth, declining voice tariffs are
putting pressure on operators margins, due to which many players are now increasingly
focussing on data services to maintain their profits. Moreover, voice is no longer helping
operators in differentiating their services and thus data services are acting as a differentiating
factor for operators to compete with their rivals.
For operators, the revenue from data services varies from 5 percent to 15 percent of total
service revenues. However, since the mobile market in India is still evolving, the share of data
services is expected to increase in the future.
The current growth in revenue from mobile data services is shown in Figure 19.

Figure 19: India – Mobile Data Services Revenue (In USD Billion, 2004-2007E)

Data Services Revenue (In
USD Billion)

2.0

1.8

1.5
1.1
1.0
0.7
0.5

0.3

0.0
2004

2005

2006

2007E

Year

E – Estimated

In order to understand the Indian mobile data services market better, it is important to study
the composition of data services in terms of revenue. The most popular data services in the
country are SMS, mobile music and mobile games. The bulk of operator data revenue comes
from these services. SMS constitutes the maximum share of about 55 percent of total data
revenues.
Figure 20 shows the share of different data services in the total revenue generated by mobile
data services as of end-2006.

26


For MNOs operational in
India, the revenue from data
services varies from 5 percent
to 15 percent of total service
revenues.


Figure 20: India – Mobile Data Services – Revenue Break-out (2006)

35.0%
55.0%

3.0%

SMS

Mobile Music

7.0%

Mobile Games

Others

Source: Portio Research Ltd. and IMRB Research

Figure 20 indicates that the maximum revenue generated in mobile data services in 2006 was
from SMS. A large part of the SMS revenue, as shown in Figure 21 below comes from P2P
SMS (almost 73 percent) and the rest comes from premium SMS services (i.e., P2A and A2P
SMS).

Figure 21: India – SMS Revenue Break-out (2006)

27.3%

72.7%

P2P

Premium SMS

Source: IAMAI

Revenue generated from P2P SMS is higher, as it is the most popular form of communication.
However, premium SMS revenue is increasing at a rapid pace. A major reason for this is that
SMS voting is becoming an integral part of many prime-time television shows in the country.
The following section provides information on the existing value chain of premium SMS
services in India and the revenue split among the various players involved in the process. It
also provides an outlook on the revenue sharing arrangement among these players.


27


With P2P SMS, the entire revenue generated by the service goes to the operators. It is the
premium SMS services revenue which is more important for analysing the value chain. This
value chain sometimes becomes very complex, as there is a possibility of backward and
forward integration and a single player may perform more than one role at a time. Broadly
speaking, the following are the three players involved in the value chain:
• Content owners
• Content aggregators
• Operators
In the Indian market, operators get the largest share of the revenue generated from premium
SMS services. The premium SMS services market is broadly disorganised, with operators
dominating the market. There are only a few big content owners that can influence the
revenue sharing agreements. The share of the content owner is uncertain, as it depends on
various factors, such as the size of the company and popularity of the content. The share of
the content owner in the premium SMS value chain varies drastically from 5 percent to 50
percent.
However, the revenue sharing arrangements in India are expected to change in the next five
years, with content owners and aggregators gaining stronger negotiating powers. The market
is expected to witness consolidation and bigger content aggregators should ensure a shift in
the revenue from operators to themselves. Figure 22 shows the revenue sharing agreement
among different players in the premium SMS services value chain in 2006 and the expected
share of stakeholders in 2011.

Figure 22: India – Revenue Sharing Arrangement – Premium SMS Services (2006 and 2011E)
2006

Content
Owner
15.0%

2011E

MNO
30.0%

Content
Owner
30.0%

MNO
60.0%
Content
Aggregator
25.0%

Content
Aggregator
40.0%

Source: Portio Research Ltd. and IMRB

E – Estimated

Currently, in the case of SMS-based enterprise services, operators in the Indian market again
get the largest share.
Figure 23 shows the existing revenue sharing agreement between operators and short code
owners.

28


MNOs get the largest share of
the revenue generated from
premium SMS services.


Figure 23: India – SMS-based Enterprise Services – Revenue Break-out

30.0%

70.0%

Mobile Network Operators

Short Code Owners

Source: IMRB Research

As mentioned earlier, revenue is expected to shift from operators to content aggregators and
content owners. The share for operators will likely decrease from 60 percent in 2006 to
approximately 30 percent in 2011. The share of content aggregators is expected to grow to 40
percent in 2011.


29


Case Study 2 – The UK’s SMS Market
Market Overview
In the UK, data services contribute significantly to operator’s total service revenues. Data
ARPU has always been comparatively high in the country, and in 2006, 3 UK became the first
operator worldwide to cross the USD 30 data ARPU mark. SMS is by far the most popular
data service in the country and constitutes a large portion of operators’ service revenues.
Other services, such as music downloads, mobile gaming and mobile TV, are also slowly
gaining popularity.
In 1998, SMS gained instant success in the UK when interoperability agreements were
signed. Currently, the UK is the largest SMS market in Europe and one of the key markets
worldwide. The SMS market in the UK grew at a CAGR of approximately 25.6 percent from
2004 to 2006 and is expected to continue growing at a fast pace.
Figure 24 shows the SMS volumes in the UK from 2004 to 2007.

Figure 24: UK – SMS Traffic Volumes (In Billion, 2004-2007E)


60.0

54.0
41.0

40.0

35.0
26.0

20.0

0.0
2004

2005

2006

2007E

Year

E – Estimated

During 2007, on average, Britons sent more than 6 million text messages every hour for the
whole year. Figure 25 shows the SMS volumes in the UK from January to October in 2007.

30


In 1998, SMS gained instant
success in the UK when
interoperability agreements
were signed.


Figure 25: UK – SMS Traffic Volumes (In Billion, January-May 2007)


6.0
5.0

5.3
4.4

4.3

Mar

4.3

Apr

4.5

4.4

May

Jun

4.6

4.8

4.9

Jul

Aug

Sep

3.9

4.0
3.0
2.0
1.0
0.0
Jan

Feb

Oct

Month
Source: www.text.it

With the increased commoditisation of SMS, operators are facing pricing pressures. The
revenue from SMS is not expected to increase at the same rate as the volume, primarily due
to declining SMS prices. Figure 26 shows the overall SMS revenue for operators in the UK
from 2005 to 2007.

Figure 26: UK – SMS Revenue (In USD Billion, 2005-2007E)

SMS Revenue (In USD
Billion)

4.0

3.0
2.3

2.4

2.5

2006

2007E

2.0

1.0

0.0
2005

Year

E – Estimated

Apart from P2P messaging, SMS traffic volume has been influenced by a constantly
increasing stream of premium SMS services, such as mobile news, football scores, weather
reports, WAP access notifications, SMS-based games and TV polling, and thus, premium
SMS significantly contributes to the overall SMS volume. As revenue from premium SMS
forms a significant part of the overall revenue generated by SMS services in the UK, it is
important to understand the current status of the market and its evolution process. In the
following section, an analysis of the premium SMS value chain will provide an understanding
of the revenue sharing arrangement that exists between various players and of how this
industry is expected to evolve in the coming years.


31


As discussed, the entire revenue generated by P2P SMS goes to the operators, therefore
premium SMS services (i.e., A2P and P2A) revenue is the most important for analysing the
value chain. The following are the two widely accepted revenue sharing arrangements among
operators, content owners and aggregators in the UK:
• Revenue Sharing Arrangement in Case of Large Content Owners: In this case, the
content owner receives approximately 75 percent of the total revenue primarily due to
having greater negotiating power. Figure 27 shows the revenue sharing arrangement in
this case.

Figure 27: UK – Premium SMS Services – Revenue Sharing Arrangement in Case of Large
Content Owners (2006)

5.0%
20.0%

75.0%

Content Owner

Content Aggregator

Mobile Network Operator


• Revenue Sharing Arrangement in Case of Small Content Owners: In this case, the
revenue sharing arrangement is balanced between the operator and the content owner,
with their shares ranging from 45-65 percent and 30-50 percent, respectively. The share of
content aggregators remains at 5 percent. Figure 28 illustrates the revenue sharing
arrangement in this case.

Figure 28: UK – Premium SMS Services – Revenue Sharing Arrangement in Case of Small
Content Owners (2006)

Content
Owner
(30-50%)

Content
Aggregator
5%

Mobile
Network
Operator
45-65%


In the next five years, most of the mobile SMS content is expected to be generated by large
owners, implying a lesser revenue share for operators by 2011. Figure 29 shows the
anticipated revenue sharing arrangement in this space by 2011.

32


Revenue sharing arrangement
in the UK varies as per the
negotiation power of the
content owners.


Figure 29:

UK – Premium SMS Revenue Sharing Arrangement (2011E)

10.0%

15.0%

75.0%

Content Owner

Content Aggregator

Mobile Network Operator


E – Estimated

The figure above shows that large content owners will continue to enjoy the maximum share
in the revenue pie. Furthermore, the services offered by aggregators to operators are
expected to become more complex. The aggregators will provide user support and IT
infrastructure for these services, and therefore, will demand a larger share.


33


Case Study 3 – The US’s SMS Market
Market Overview
Text messaging took a much longer time to gain widespread acceptance in the US than it did
in European countries. However, the US market has witnessed strong growth in SMS volume
since 2002. Currently, the level of SMS usage in the country is on a rise and has already
surpassed the levels of Europe, expressed in terms of SMS-per-user-per-month. SMS usage
levels in the US in full-year 2006 averaged 66 SMS per-subscriber-per-month as a national
average. Some European countries (notably Denmark) have much higher usage levels and
some much lower, but across Europe the average is only 38.
The reason for this rapid growth witnessed in US SMS traffic can largely be attributed to
growth in the subscriber base and the increased usage of SMS in reality TV shows such as
American Idol. Consumers in the US are realising the advantages of using SMS. Operators
are offering SMS bundles at lower prices and coupling the service with other messaging
services, such as mobile IM and MMS to take full advantage of the rising awareness.

The level of SMS usage in the
US is on the rise and has
already surpassed the levels
in Europe, expressed in terms
of SMS-per-user-per-month.

Subscribers in the US sent approximately 158 billion SMS messages in 2006, up from 81
billion messages sent in 2005.8 The emergence of premium SMS has been one of the primary
reasons for the growth in SMS usage. The service is used to provide information requested
by a subscriber and in large-scale interactive marketing campaigns such as TV voting.
The premium SMS value chain consists of content owners, aggregators and operators. In the
US, content owners currently get the maximum share in the revenue generated from
premium SMS. Approximately 60 percent of the revenue generated from premium SMS goes
to content owners. The share of revenue depends on the popularity of the content and the
bargaining power of the content owner/aggregator. The operator keeps approximately 30
percent of the premium SMS revenue. The remaining share goes to the content aggregator.
Figure 30 shows the revenue sharing arrangement between various players in the value chain
in the US in 2006.

Figure 30: US – Premium SMS Revenue Sharing Arrangement (2006)

Content
Owner
(60-70%)

Mobile

Content
Aggregator
(5-10%)

Network
Operator
(20-30%)


Figure 31 shows the expected sharing arrangement in 2011.

8

Source: http://www.cellular-news.com/story/22869.php

34


As of end-2006, content
owners’ share in the total
revenue generated from
premium SMS was
approximately 60 percent.


Figure 31: US – Premium SMS Revenue Sharing Arrangement (2011E)

Content
Owner
(70-75%)

Content
Aggregator
(5-10%)

Mobile
Network
Operator
(15-20%)


E – Estimated

By 2011, the revenue sharing arrangement is expected to witness a slight change in the
shares of various players in the value chain. Content providers will continue to exercise their
negotiating power and may increase their share in the revenue to about 70-75 percent.
Consequently, operators’ share in the revenue may reduce to about 15-20 percent. The share
of content aggregators is expected to remain fairly constant.


35


MMS
Market Overview
MMS has not witnessed the kind of success that SMS has. The service is available on
approximately 300 networks worldwide, but the uptake has been far slower than hoped for in
many markets. Factors such as a lack of interoperability and roaming agreements between
operators, a smaller available selection of MMS-enabled handsets in the early days and
limited third-party business models have acted as barriers to the growth of MMS worldwide.
Moreover, MMS messages usually cost considerably more than SMS messages, and this has
been one of the factors that has prevented users from adopting this service.
Although the success of MMS is only a fraction that of SMS, if seen in isolation, this service
has been reasonably successful. The popularity of MMS has grown slowly but steadily in
Europe with networks becoming fully interoperable, widespread adoption of MMS-enabled
handsets and the lowering of MMS tariffs. In the US too, with the establishment of
interoperability among networks in 2005, there has been a surge in the use of MMS and the
volume has been growing ever since. North America witnessed an increase in MMS volume,
from 541.5 million in 2004 to 1,239.8 million in 2005 after the introduction of interoperability
among networks. Innovative marketing ideas in the US have helped operators to increase
their revenue from MMS. Operators worldwide have taken a cue from the US and are now
bundling MMS with other data services to increase its uptake.
In the developing areas such as Asia and Latin America, the uptake of MMS has been low,
largely because of the high cost of MMS-enabled handsets and the lack of MMS
interoperability; Japan and South Korea are an exception to this. In Latin America, the only
country with official interoperability is Brazil. In Africa and the Middle East, the service has not
been very successful. However, MMS traffic is expected to grow at a CAGR of 15 percent in
the next five years in Africa and the Middle East, from 675 million in 2006 to 1,385 million in
2011.
Although MMS penetration has not yet been as high worldwide as many had hoped for, the
volume is expected to rise in the next five years. MMS traffic volumes are expected to
increase at a CAGR of 33.9 percent from 2006 to 2011. Figure 32 shows the worldwide
growth of MMS, from 27.3 billion in 2006 to 117.6 billion in 2011.

Figure 32: Worldwide MMS Traffic Volumes (In Billion, 2006-2011E)

MMS Volume (In Billion)

125

117.6
100.0

100

82.1

75

62.0
44.5

50
27.3
25
0
2006

2007E

2008E

2009E

2010E

2011E

Year

E – Estimated

Worldwide MMS revenue is expected to grow at a CAGR of 16.9 percent from 2006 to 2011.

36


Worldwide MMS traffic
volumes are expected to
percent, up from 27.3 billion in
2006 to 117.6 billion in 2011.


Figure 33 shows the worldwide MMS revenue during 2006-2012.

Figure 33: Worldwide MMS Revenue (In USD Billion, 2006-2011E)

MMS Revenue (In USD
Billion)

50
40
28.2
30

30.8

32.5

2010E

2011E

23.6
19.1

20

14.9

10
0
2006

2007E

2008E

2009E

Year

E – Estimated

The revenue generated from MMS is split among various players in the value chain. There
are several factors that affect the revenue sharing arrangement among players in the value
chain. It is important to analyse the MMS market and understand how it will evolve in the next
five years.


37


MMS can be either sent P2P or A2P. Naturally, in the case of P2P MMS, as with P2P SMS,
all the revenue goes to the operator. It is A2P MMS where the revenue generated is shared
among various players in the value chain. The value chain in A2P MMS comprises
middleware providers, application providers, content providers, and operators. Figure 34
shows the MMS value chain.
In the case of P2P MMS, all
the revenue goes to the MNO.

Figure 34: A2P MMS – Value Chain

Middleware/
Application
Provider

Content
Provider

Mobile
Network
Operator


Middleware/Application providers offer applications and content adaption platforms and
gateways. It also provides a gateway between the handset and the Internet. Content
providers offer MMS content, i.e., picture, animation, audio, etc.
The revenue sharing arrangement among players in the value chain differs from one country
to another. The revenue sharing arrangement in advanced markets such as the US and the
UK is in favour of content providers. In China content and application providers also get a
bigger share of the MMS revenue pie. However, in other emerging markets, such as India,
operators account for a larger share. The trend in advanced markets is not expected to
change much and content providers are expected to get the maximum share. In emerging
countries, where content providers get a smaller share, the trend is expected to change. With
large companies entering into the business of content aggregation and development, the
content providers share is expected to rise.

38


The revenue sharing
arrangement in advanced
markets such as the US and
the UK is in favour of content
providers. However, in
emerging markets, such as
India, operators account for a
larger share.


Case Study 1 – The US’s MMS Market
Market Overview
That MMS would be successful became obvious when two of the largest operators in the US,
Cingular Wireless and Verizon Wireless, signed an MMS interoperability agreement in March
2005. Many other operators followed this trend and MMS soon became a growing source of
revenue. The country also witnessed an increase in the penetration of MMS-enabled
handsets and wireless Internet services, and both these factors fuelled the growth of MMS
use in the region.
As a consequence, MMS traffic volumes in the US have been on the rise since the
interoperability agreement was signed in 2005, and MMS traffic reached 3.7 billion in 2006.
Moreover, the total revenue generated from data services in the US in 2006 was
approximately USD 16.1 billion, of which MMS services contributed approximately USD 1.3
billion. The figure is expected to grow in the next five years.

MMS traffic volumes in the US
have been on the rise since
the interoperability agreement
was signed in 2005.

Figure 35 shows the share of MMS revenue in the total revenue from data services in the US
in 2006.

Figure 35: US – Data Services Revenue Break-out (2006)

91.9%

8.1%

MMS

Other Data Services


MMS in the US has passed the introduction phase of its product life cycle and is currently in
the growth phase. The market will remain in the growth phase until 2011, after which it is
expected to slow down.
The uptake of MMS is increasing in the US and it is important to understand the changes in
the value chain. Service providers (content and middleware/application providers) play an
important role in the MMS value chain. It is important to analyse the present revenue sharing
arrangement and how it will evolve in the next five years.
The revenue generated from MMS is split between operators and service providers. Since the
US is an advanced mobile market, content providers have a greater role to play in the value
chain and a higher share in the revenue generated. Figure 36 shows the revenue sharing
arrangement between the operator and service provider in 2006 and the expected figures in
2011.


39


Figure 36: US – Revenue Sharing Arrangement – MMS (Except P2P) (2006, 2011E)
2006

Mobile
Nerwork
Operator
20.0%

Mobile
Network
Operator
25.0%

Service
Provider
75.0%

2011E

Service
Provider
80.0%


E – Estimated

The share of content providers depends on the value of the content that the end-user
perceives is being provided. If the content is very popular, content providers get as much as
80 percent of the total revenue generated. However, there is no fixed revenue sharing
arrangement in the US. The content provider can achieve up to a share of 50-80 percent. On
an average (as shown above), service providers account for almost 75 percent of the revenue
with the remainder is retained by the network operator.
However, with the entry of large companies in the business of content development and
aggregation, the revenue sharing arrangement is expected to get more skewed in favour of
service providers in the future. As shown in Figure 36, the share of service providers is
expected to increase from 75 percent in 2006 to 80 percent in 2011.

40



Case Study 2 – The UK’s MMS Market
Market Overview
The MMS market in the UK has grown considerably in the past few years. The growth in MMS
revenue in Europe was approximately 33 percent higher in 2006 than in 2005, and this trend
is expected to continue for the next five years. In August 2006, the number of MMS-capable
handsets in use in the UK was more than 50 percent of the 67 million handsets in use during
the period.9 About 88 million MMS messages were sent in the UK in Q3 2006. The figure for
October was the highest (30 million) at that time. The number of people using MMS-capable
handsets is increasing in the UK, and this has been a reason for the growth in MMS traffic
volumes in the country. Improvements in handset technology have enabled its more creative
use. Higher-resolution pictures can be scaled down and sent with hundreds of characters and
voice clips. All of these features have driven the use of MMS in the UK.
To encourage the use of MMS in the UK, the Mobile Data Association launched a Picture
Messaging Campaign in early 2006. The association published information on one of its
websites (www.text.it), educating subscribers how to use MMS services properly. The website
also contains troubleshooting tips. All these efforts, coupled with the demand for user
generated content, have led to strong growth of MMS traffic volumes in the UK, and this trend
is expected to continue in the future. The number of MMS-capable handsets has also risen,
and by end-2007, the handset compatibility rate is expected to be around 80-85 percent.
In the UK, almost 1 million MMS messages were sent everyday in 2006. However, when
compared with SMS volumes, the figure for MMS usage in the UK appears small. According
to the Mobile Data Association, almost 41 billion SMS messages were sent by subscribers in
the UK in 2006.
Therefore, when compared with SMS, MMS still has to develop. The growth rate of MMS is,
however, higher than that of SMS. The UK MMS traffic volume has continued increasing
every month since the start of 2006. In 2006, the total data revenue in the UK was almost
USD 6.5 billion. The contribution of MMS was approximately USD 189 million. Figure 37
shows the share of MMS revenue in the total revenue from data services in 2006.

In the UK, almost 1 million
MMS messages were sent
everyday in 2006.

Figure 37: UK – Data Services Revenue Break-out (2006)

97.2%

2.8%

Other Data Services

MMS


9

Source: http://www.text.it/picturemessaging/press_releases.cfm


41


The share of MMS in the total data services revenue is expected to rise at a fast rate in the
next five years as an increasing number of subscribers will buy MMS-capable handsets. The
penetration of MMS-capable handsets is expected to reach 100 percent at some point in
2008.
Since the use of MMS-capable handsets is on the rise, MMS volumes are expected to
increase, leading to an increase in revenue. The following section illustrates the revenue split
among the players in the value chain and how this is expected to change in the next five
years.
Content providers receive the maximum share in the revenue generated from MMS. The
share in revenue depends on the bargaining power of the various players in the value chain.
The popularity of the content also determines the share of the content provider.
Figure 38 shows the revenue split among various players of the MMS value chain as of 2006.

Figure 38: UK – Revenue Sharing Arrangement – MMS (2006)

Middleware/
Application
Provider
(5-6%)

Mobile

Content
Provider
(50-75%)

Network
Operator
(20-45%)


The revenue shared by content providers can be between 50 percent and 75 percent,
depending on their bargaining power and the popularity of the content. About 5-6 percent
goes to the middleware/application provider and the operator’s share can be between 20
percent and 45 percent. However, in the next five years, content providers’ shares will
increase as larger companies are expected to enter the content market as developers and
aggregators of mobile content. Figure 39 shows the revenue split among various players of
the MMS value chain as of 2011.

Figure 39: UK – Revenue Sharing Arrangement – MMS (2011E)

Middleware/
Application
Provider
(5-6%)

Content
Provider
(70-75%)

Mobile
Network
Operator
(20-25%)


E – Estimated

By the end of this decade, as shown above, content providers are expected to account for
almost 70-75 percent of the revenue generated. The middleware/application provider will
receive 5-6 percent and the remaining share will be attributed to the network operator.

42


As of end-2006, the share of
content providers in the total
revenue pie was the maximum
(50-75 percent). The share is
anticipated to increase further
as larger companies are
expected to enter the content
market.


Case Study 3 – China’s MMS Market
Market Overview
In China, MMS was introduced in late 2002 by China Mobile. The uptake of MMS was initially
slow because of the high cost of MMS-enabled handsets and a higher tariff for the service as
compared to that for SMS. Since the market is still growing, there are ample growth
opportunities for all players in the MMS value chain. The service is still in the starting phase
and will take a long time before it reaches saturation.
From the market-scale perspective, 150 million MMS messages were sent in 2003 through
China Unicom and China Mobile’s networks. As the popularity of the service rose, the volume
touched 600 million in 2004. The revenue generated from MMS in 2003 stood at USD 24.1
million and increased to USD 72.4 million in 2004.10 Since then, the MMS uptake has been on
the rise.
Over the next five years, the MMS market is expected to experience strong uptake as the
service moves into the growth phase. Various factors will influence the growth of the MMS
market in China. One of the positive factors is its similarity with SMS, as the use of MMS is
much like that of SMS. Competition between operators has resulted in the development of
richer MMS content, which has led to the increased usage of the service by end-users.
Moreover, MMS-enabled handsets are gaining popularity, which has led to an increase in
MMS users in China. However, the price of sending an MMS is relatively high compared to
SMS, which could deter end-users from using this service as often as SMS.
Since the time MMS services were initiated in China, service providers have been receiving
the largest share in the revenue generated from this service. Service providers include the
content provider and the middleware/application provider. Companies such as
KongZongWang, TOM, Sina, NetEase and Sohu are the major service providers and account
for the maximum share in the MMS revenue pie.11 It is important to understand how the MMS
market operates and the revenue is distributed among various players in the value chain.
The charging mode of MMS is the same as that of SMS. Subscribers can choose to be
charged either by month or the number of times the service has been used. Both the models
have different charging rates. The revenue from MMS is collected by operators and after
deducting some MMS channel costs, the remaining amount is shared between operators and
the service providers (middleware/Application and content provider).
Figure 40 shows the MMS revenue sharing agreement between service providers and
operators in China in 2003 and 2006. In 2003, operators received 15 percent of the revenue
generated from MMS. However, in 2006, the scenario changed a little in favour of operators
and their share increased to 20 percent.

10
11

VAS China Project
VAS China Project


43

The uptake of MMS in China
was initially slow because of
the high cost of MMS-enabled
handsets and a higher tariff for
the service as compared to
that for SMS.


Figure 40: China – Revenue Sharing Arrangement – MMS except P2P (2003 and 2006)
Mobile
Network
Operator
15.0%

2003

Mobile
Nerwork
Operator
20.0%

2006

Service
Provider
85.0%

Service
Provider
80.0%

Source: IMRB

The revenue sharing arrangement is not expected to change much in the next five years. The
figure below shows the expected revenue sharing arrangement as of 2011.

Figure 41: China – Revenue Sharing Arrangement – MMS except P2P (2011E)

80.0%

20.0%

Service Providers

Mobile Network Operators


E – Estimated

Among the service providers, a major share of the revenue goes to content providers,
followed by middleware/application providers. The content provider has the upper hand, and
this is expected to continue in the foreseeable future.

44



Mobile E-mail
Market Overview
With about 175 billion e-mails sent daily in 2006, e-mail is one of the most popular activities
on the wireline Internet and indeed one of the most popular forms of communication on Earth.
The combined total number of consumer and enterprise e-mail accounts stood at 1.45 billion
in 2006, meaning that worldwide, one in every five people had an e-mail account.12 This figure
continues to increase as a growing number of people begin using the World Wide Web, and
an e-mail account serves as an identity in the virtual world.
Mobile e-mail is also experiencing strong growth, and the number of mobile e-mail accounts is
expected to witness exponential growth as more and more e-mail inboxes are mobilised.
Subscribers worldwide are becoming tech savvy and are gradually getting comfortable with
using data applications on their mobile handsets. Based on our estimates, the revenue
generated by mobile e-mail services worldwide should increase from USD 4 billion in 2006 to
reach approximately USD 13.7 billion in 2011. Figure 42 shows the revenue forecast for this
service from 2006 to 2011.
The revenue generated by
mobile e-mail services
worldwide is expected to
percent, up from USD 4.0
billion in 2006 to USD 13.7
billion in 2011.

Figure 42: Worldwide Mobile E-mail Revenue (In USD Billion, 2006-2011E)
13.7

Mobile E-mail Revenue
(In USD Billion)

15
12.0
10.0
8.5

10
6.7
5

4.0

0
2006

2007E

2008E

2009E

2010E

2011E

Year

E – Estimated

Furthermore, mobile e-mail subscribers are expected to increase from 62.2 million in 2006 to
395.9 million in 2011. Figure 43 shows the forecast for mobile e-mail users from 2006 to
2011.

12

Source: Visiongain report


45


Mobile E-mail Subscribers (In
Million)

Figure 43: Worldwide Mobile E-mail Subscribers (In Million, 2006-2011E)
500
395.9
400
293.5
300

211.3
147.0

200
100

62.2

98.1

0
2006

2007E

200 8E

2009E

2010E

2011E

Year

E – Estimated

Table 6, below, provides the regional forecast for worldwide Mobile E-mail subscriptions from
2006 to 2011.
Table 6:

Forecasted Worldwide Mobile E-mail Subscribers (In Million, 2006-2011E)

Europe

Middle
East and
Africa

North
America

Asia
Pacific

Latin
America

Total

2006

22.02

1.62

20.20

17.17

1.21

62.22

2007E

32.98

2.44

29.25

31.55

1.92

98.14

2008E

46.06

3.41

40.47

54.26

2.77

146.97

2009E

61.37

4.54

54.22

87.36

3.78

211.26

2010E

79.06

5.82

70.91

132.72

4.94

293.47

2011E

99.32

7.28

90.93

192.09

6.28

395.90

Year-End


The markets in Europe, North America and Asia Pacific are expected to contribute the
maximum number of Mobile E-mail users in the next five to six years. As the market grows,
the revenue for the players involved in its value chain will also increase. An analysis of the
value chain will provide an understanding of the share in the revenue generated from this
service.
Broadly, Mobile E-mail can be classified into the following two categories:
• Enterprise Mobile E-mail
• Consumer Mobile E-mail
Enterprise Mobile E-mail
Enterprise mobile services refer to wireless data applications accessible to employees on the
go. Employees can access enterprise e-mail from anywhere outside their office through
compatible handsets and mobile devices such as smartphones and PDAs. Users and vendors
drive growth in the enterprise mobile e-mail market. According to Datamonitor, the potential
market for enterprise mobile e-mail in 2006 was about 260 million subscriptions.13 This clearly
indicates that there is tremendous growth potential in the enterprise segment.

13

Source: http://www.symbian.com/news/pr/2006/pr20063396.html

46


The markets in Europe, North
America, and Asia Pacific are
expected to contribute the
maximum number of mobile email users in the next five to
six years.

Slicing Up the Mobile Services Revenue Pie

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Andere mochten auch

Andere mochten auch (6)

Ähnlich wie Slicing Up the Mobile Services Revenue Pie

Ähnlich wie Slicing Up the Mobile Services Revenue Pie (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

Slicing Up the Mobile Services Revenue Pie