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73 Seiten, Note: very good
List of abbreviations
List of tables and figures
2. Multi purpose devices, their functions and basic services
2.1 Multi purpose devices
2.2 Communication - Voice / Video
2.3 SMS, MMS, and email
2.4 Camera and Video function
2.5 MP3 Player
2.6 Design Factor
3. Mobile content and content providers
3.1 Mobile content outline
3.1.1 Ringtones, Ringtunes and Ringbacks
3.1.3 TV, video applications
3.1.4 Business applications
3.1.6 Information services, location and tourist services
3.1.7 Online services (WAP)
3.1.8 Other services
3.2 Content providers and content management
3.2.1 Main content providers
3.2.2 Content management
4. Research - Survey
4.1 Collection Method
4.2 Scope and Limitations
5. Impact on content providers:
5.1 Challenges and Opportunities
5.2 Competition and Threats
5.3 Viruses and Protection
6.1 Technical prospects
6.1.1 Patent-based innovation trends
6.1.2 3G and beyond
6.1.3 Forthcoming developments
6.2 Economic Prospects in an evolving global market
6.2.1 General considerations
6.2.2 A new business landscape in the mobile world
6.2.3 A decisive factor: “Technology Readiness”
List of references
First and foremost, I would like to express my deep gratitude to my research advisor and Chairperson of the research committee, Prof. Dr. Donyaprueth Krairit, for her most helpful guidance, true support and mentorship throughout the whole research study. My sincere appreciation also goes to Dr. Nicholas J. Dimmitt and Dr. Willi Zimmermann for serving as committee members
Furthermore I want to express my sincere thanks to all my Professors at the School of Management who were great Teachers and who substantially enriched my course of study of two semesters at the AIT
My very special thanks go to Dr. Michel Goudelis (Director of Telecommunications at the - European Patent Office, EPO) for his invaluable technical advice, scientific support and personal views on technical subject matters so generously extended to me
I also express deep gratitude to Dr. Renate Remandas - Braendli and Prof. Dr. h.c. Paul Braendli for all the motivation and help they gave me and their tireless encouragement. Indeed, their support has been very valuable for me Last but not least, indeed above all, I would like to express my heartfelt gratitude to my parents, Dr. Peter and Ingrid Hanser-Strecker, who gave me the opportunity to study abroad at the AIT in order to fulfill my dream of graduating with an MBA degree. Without their support, love and continuous comfort I would not have been able to reach this goal. Due to their encouragement, I was able to pursue and complete my master degree study at the AIT, living at the same time a unique intellectual and cultural experience that will enhance and positively mark my future life. I therefore dedicate this MBA degree to my parents
The acceleration of technological developments in wireless networks up to 3G and beyond, as well as in the production of multi-purpose handsets has given rise to a large variety of content offerings. As a consequence, content providers deployed continuous efforts to enhance their services by multi-media features, m-Commerce and wireless Web related applications. In order to consolidate indications resulting from theoretical research, a survey has been conducted in view of assessing future development prospects in the area of content services. The relevant impact on content providers has been defined in terms of competition, challenges, threats and opportunities. Under this latter aspect, it seems to be established that the “digital divide” is shrinking, at least in the field of mobile communications. In an outlook, patent-based innovation trends in tele-communications are outlined, as well as technological developments expected in mobile network configurations and handset specifications as related to specific forms of content. The economic prospects for the mobile “players”, namely content providers, seem to be more interesting in certain areas than in others, the consumer demand being largely driven by “technology readiness” which could lead to impressive shifts within the global market
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Table 1: Worldwide Mobile Terminal Sales to End-Users in 2005 (Thousands of Units)
Table 2: Computer and video games market by sector 1999-2008 (2003-2008 estimate)
Table 3: Selected cellular subscribers in 2003
Fig. 1: World Wide Mobile Phone Market Share, 4th Quarter 2005
Fig. 2: Mobile Content at the intersection of three industries
Fig. 3: Top 10 mobile operators by proportionate subscribers, Dec. 2004
Fig. 4: Participants per regional groups
Fig. 5: Educational level of participants
Fig. 6: Are you using a 3G cell-phone?
Fig. 7: Do you subscribe to mobile content?
Fig. 8: Light mobile content
Fig. 9: Enriched mobile content
Fig. 10: High value-added content
Fig. 11: Number of downloads by regions in relation to content
Fig. 12: Mobile Communication: Shrinking of digital divide
Fig. 13: Yearly growth rates in the 1990’s
Fig. 14: EPO Patent filings in the Telecom field
Fig. 15: Wireless Evolution
Fig. 16: 3G Mobile Phone Subscriber Worldwide, 2005-2010 (millions)
Fig. 17: Annual average growth rate in mobile subscribers, 1999-2004
At this very moment there are more than a billion mobile phone owners in the world. Incredible but true, according to Nokia’s business forecast as published in February 2006, there will be up to 3 billion mobile phone owners until the year 2010. In 2005, worldwide mobile phone sales totaled 816.6 million units, a 21% increase from 2004. According to economic forecasts, the growth rate of mobile content services will approximately double in Asia, the USA and Europe from 2003-2006, reaching a volume of about 8.6 billion US $ in 2006.
In 1999 mobile communications had by far the highest growth rate as measured by the specific indicator of patent filings: an average of 20% annual growth, far beyond all other fields of technology. The whole telecommunications industry is geared toward providing new handsets with new functionality and design, faster networks and ever more innovative services, especially content related multi-media ones to meet costumer needs.
3G mobiles which bring the world to your finger tips, are no longer a mere element of lifestyle or status symbol, but they lead to a new way of life altogether. It should also be highlighted that enhanced forms of mobile content could well be promoters of the knowledge society of today and tomorrow.
Mobile phones are no longer a simple “gadget”, but associated with mobile content delivery they have become an economic instrument of paramount importance in the emerging mobile industry value chain.
Over the last decade, the mobile cellular industry has moved from a niche voice service provider to a mass-market, a multi-billion US$ industry. However, with aggressive competition and mere mobile voice usage, this business is reaching saturation in many countries. Therefore, there is a need for industry to increase its revenues from non-voice services. Especially multi media and data services are increasingly used to provide more value to the different players in the value chain, irrespective if they are network operators, mobile phone or content providers. Thus mobile multimedia content has been the goal for technologies and the mobile industry alike and nowadays many components are coming together to make it a reality.
This very aspect of evaluating the impact of mobile technology developments on content services as well as on content providers is the focal point of the present study. The keyquestion to be answered in this respect is whether the explosive growth of mobile communications will continue at a steady rate at the global level, so as to justify the tremendous investments made by the mobile industry and content providers. It is expected that a potential new source of revenue in the form of mobile data services - including m- Commerce - might soon revitalize the mobile communication industry.
This hypothesis could be confirmed or infirmed in accordance with a new concept defined by modern management science: the technology readiness (TR) of the customers. At this very point, I believe that I discovered in my study an interesting aspect as a kind of inter-cultural phenomenon: the technology readiness, i.e. the propensity of consumers to embrace and use new mobile communication technologies, is highly developed in Asia, Asian people being very open minded and receptive for these new technologies, especially if the price rates drop further. On the contrary Americans seem to be much more reluctant and conservative in this respect, also in relation with the high rate of fixed line telecommunication penetration in this mature market, Europeans being actually somewhere in the middle of the spectrum. This technology readiness factor will have in turn a substantial impact on future market developments that could become fragmented and unbalanced at a global level in favor of Asian countries.
Due to my German origin, a number of examples and quotations used in this study refer more specifically to Europe. However, in the questionnaire of my research survey, I tried as far as possible to get an international network of respondents covering Asia, the USA and Europe.
On the basis of the answers received, it will be evaluated what kind of content is desired by customers and to which extent mobile phones as wireless instruments are appropriate to receive ever new content functionalities and technologies, i.e. whether the whole content can be packed in one single “all-in-one-solution-device”. Or will there be, on the contrary, rather a split between audio functions and visual functions, whereby different devices would be more convenient for specific applications?
Summarizing the results of my research and the survey, the impact on mobile content of existing and foreseeable technological developments in the three industrial segments mainly concerned, i.e. network operators, handset producers and media/entertainment industries shall be evaluated. Due consideration shall be given to challenges and threats arising, as well as to competition and opportunities.
In a technical and economic outlook, I will try to assess whether today’s prevailing feeling about the future of the mobile communications industry including content of course might be over-optimistic or too euphoric. Or will we be confronted with a highly diversified situation within the global market where strong market potentials exist in selected regions of the world as Asia for instance?
However, economic growth is not a value of its own, especially under ethical considerations. Growth should be balanced between developed and less developed countries alike, so as to provide new opportunities for economic development and social welfare at a global level. My assumption is that - at least in the area of mobile connectivity - the digital divide is continuously shrinking. Are fair digital opportunities provided at a world-wide level, at least for mobile communications, in a world becoming increasingly wireless?
These and many more fascinating questions are still not answered: Mobile communication - quo vadis?
Mobile network infrastructures are the backbone of modern mobile communication technologies. The development of this infrastructure shall be outlined as well as its basic underlying concepts. This concerns primarily the development of mobile technology from the first to the third generation, i.e. from 1G to 3G. Within this concept, the relevant mobile technologies of today will be described as well as their position within the history of mobile technologies corresponding to their functionality and their use.
The dream of unlimited mobility has been there ever since and with it the rising demand to communicate wireless worldwide without any boundaries. In our days no one can imagine a world without modern communication technologies embedded in our daily life. Especially mobile communication via mobile phones enables us to communicate all over the world independent from our location.
In order to illustrate how efficient mobile technologies are today the first steps of mobile systems and how everything started back in 1958 shall be briefly introduced. As a rule when talking about mobile technologies, the magic code- names 1G, 2G, 3G will be mentioned.
While everything began with 1G the capacity of the networks belonging to this generation was extremely limited due to the fact that it used an analogous technology and calls were passed on by hand. In 1972 another network was introduced which was still based on the analogous infrastructure but included the fully automatic imparting from calls just as roaming between different countries. Roaming can be understood as a process of transmitting calls from one mobile system to another. But both technologies had in common that the requirement of knowing the subscribers location in order to dial the correct area code (Elko 2005, URL). This inconvenience was removed when roaming was replaced by a process called “Handover” which indicated an automatic switch from one call to another, after locating certain subscribers. However, the inefficiency of the system due to low capacity, high operating costs and bad quality changed with the introduction of the second generation 2G.
The first digital cellular phone call was made in 1990 when the first GSM network opened in Europe. GSM stands for “Global System for Mobile Communication “. It is transmitted in the range of frequency of 900 and 1800 MHz in Europe, and 1900 and 850 MHz in some parts of the USA. Even today, GSM is the most popular standard which is applied in Europe, Asia, Australia, North- and South Africa and even America (Walke/Seidenberg 2001, p. 29). All 2G phone systems to which the GSM technology belongs have one thing in common. They are all concentrating on voice data and not on non-voice data transmission.
An improvement was achieved in 1996 when the following mobile technologies were invented:
- HSCSD (“High Speed Circuit Switched Data”): The higher data transmission standard is achieved by bundling several channels, the maximum speed being 57.6KBit/s.
- GPRS (“General Packet Radio Service”): A true data-transmission-turbo that can reach a speed up to 171.2 KBit/s. By analogy to the Internet Protocol the data are split into small packages before transmission trough different channels.
- EDGE (“Enhanced Data for GSM Evolution”): By broadening the frequency- band of a single channel up to 48 or even 56 KBits/s and by bundling up to 8 channels, up to 384 or 432 KBits/s can be transmitted (Mobile Zeit 1/2006a, p. 96).
- These technologies are also called the 2.5G and were originally conceived for a temporary use, being based on existing and implemented technologies, whereas the 3G technology is introduced step by step.
The well developed network infrastructure, the existing handsets and the steady improvement like EDGE, are the reasons why after the introduction of the 3G generation the systems of the second generation have not been eliminated. In many countries like Germany the license contracts for GSM are lasting until 2016 and are likely to be extended even thereafter.
First of all, the second generation was build as mentioned above for voice data transmission which makes even today most of the mobile- traffic. However, the trend develops more and more to services and applications which require non-voice data transmission. For this purpose the third generation was invented to optimize both voice data and non-voice data transmission. Even though there are a couple of standards that are developed in different parts of the world the 3G is often subsumed under the term IMT-2000 (International Telecommunication at 2000 MHz).
At the beginning of the 21st century, 3G mobile phone systems such as UMTS (“Universal Mobile Telecommunication System”), CDMA 2000 (“Code Division Multiple Access”) and China’s own 3G standard TD-SCDMA (Time Division - Synchronous CDMA) that has been introduced recently have now begun to be publicly available. Especially China tries to reduce its dependence from foreign technologies; China seems to determine preferably standards of its own rather than implementing foreign standards (Süddeutsche Zeitung (German daily newspaper) 24-1-2006, p. 19).
All the standards mentioned above are registered at the ITU (International Telecommunication Union) which was established last century as an impartial, international organization within which governments and the private sector could work together to coordinate the operation of telecommunication networks and services and advance the development of communications technology (International Telecommunication Union 2005, URL).
Important characteristics of these technologies and standards are that they strive for a global contactability with the same handset and handle a mix of voice, data, audio and video signals. The aim is to guarantee a smooth transition from the networks of the 2nd generation to the networks of the IMT-2000 family. Unfortunately this process did not standardize on a single technology, but rather on a set of requirements.
In a nutshell and without going into depth, it can be summarized that there are three major different standards in the world at the moment , all of them belonging to the 3G technology that enables high voice data and non-voice data transmission in a way that has not been possible before. This prerequisite is required to satisfy supply and demand in the mobile content industry of the 21st century. However, due to implementation problems as well as frequent use of the 2G/2.5G technologies, the final success of these 3G -systems is still an open question (European Commission 2004, p. 7; OECD 2004, URL; Bohlin et al. 2003, p. 48; Rao et al. 2005).
There is no doubt that the mobile phone is the most popular device associated with mobile communication. However it is often forgotten, that notebooks and PDAs belong to this group as well. In this outline the main focus will be put on the handsets which are much more than just a tool for mobile communication in the traditional meaning. It is rather a multi purpose device that bundles functions of specific devices together in a single “all-in-one-solution- device”.
Not so far ago, in its infancy the mobile phone started its extraordinary development as a single purpose device. Only voice transmission was possible in compliance with the Greek origin of the word telephone, tele (Gr.τηλε) meaning distant and phone (Gr.φωνη) meaning voice. However, this original concept was rapidly enhanced by adding transmissions of various forms of content. Therefore, a mobile as multi purpose device offers a multitude of functions.
Mobiles in general are classified under the term “basic handsets”. This expression can be put down to the fact that the size of a mobile is mostly as big as a palm and is operated with the hand. As a rule, the great majority of handsets is assembled in a similar way and differ more in their design than in their functions.
The main components of a mobile, to mention a few only, are speakers, microphone, keypad, screen and a kind of microcontroller. In addition it has an antenna for sending and receiving any data transmission and an accumulator to provide the necessary power. Altogether it can be taken for granted that a mobile exists of up to 400 components (Mobile Zeit 2/2006, p. 2).
There are a considerable number of handset producers worldwide who sold in 2005 all in all around 816 million handsets, but there are just a few manufacturers who have an outstanding position in the global market (Süddeutsche Zeitung 19-1-2006, p. 25).
The most popular global players in this business are the following:
Nokia, Motorola, Samsung, Sony-Ericsson, LG., BenQ-Siemens, Panasonic, and other smaller companies like Sagem, or Alcatel.
Fig. 1: World Wide Mobile Phone Market Share, 4th Quarter 2005
Source: Mobile is good 2006, URL
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Table 1: Worldwide Mobile Terminal Sales to End-Users in 2005 (Thousands of Units) Source: Gartner 2006, URL
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Nokia is the market leader in this segment and holds the lion’s share. In 2005 Nokia sold 265.6 million handsets and has a worldwide market share of 32.5 percent (Langer 13-2-2006, URL).
Especially in the last two years there has been a distinct trend leading handset manufacturer to proceed to mergers and acquisitions in order to stay competitive and to deal with the challenges of this rapidly expanding market.
Following the maxim “east meets west” some dynamic, successful alliances and joint- ventures have been established recently, thereby strengthening the Asian presence in this market segment. So it happened that Ericsson merged with Sony in the handset market to provide competitive products with the technology of Ericsson and the design of Sony. At the end of 2005 an acquisition took place when Ben Q (Taiwan) bought the handset branch of Siemens. Moreover, the important positions of Samsung and LG (both Korea) within the global market are uncontested.
The manufacturers often have co-operations with network operators, thus some mobile models are exclusively sold with certain contracts. In February 2006, Vodafone (the world’s leading mobile cellular operator in terms of turnover), entered a strategic agreement with the Chinese telecommunications manufacturer Huawei in view of distributing high-quality, Chinese 3G mobiles under the brand of Vodafone. The planned business volume shall amount to yearly 500.000 mobiles, from September 2006 onwards. This new partnership will substantially strengthen the Asian presence in this field of business and will reshuffle to a considerable extent the existing market shares (as shown in Fig. 1 and Table 1) (Zitzelsberger 27-2-2006, p. 22). These co-operations, with mobile operators are current practice in order to attract the customers who quite often are keen on special brands and therefore demand certain models.
For regular communications the brand is not relevant due to the fact that all handsets are compatible. Nevertheless the “pairproblem” might occur while using certain functions that the other handset may not support. Furthermore, because of different operating systems and display sizes more problems can turn up. Therefore content providers currently ask for the model number of each handset before delivering a specific content (Varesi 2004, p. 32).
As already announced in the headline the handset in its original meaning is focusing on telecommunications and is therefore just one of the devices in the field of mobile communication. Blackberries, PDA (Personal digital Assistant), Palmtops or even Notebooks belong to this category as well and they have one thing in common, they provide maximum mobility while offering user-friendly interfaces. The design of these interfaces is not set according to technology thresholds but rather for reasons of convenience. On the one hand they should not be too big in order to obstruct the mobility and on the other hand they should not be too small because they would not be usable anymore.
Blackberries and PDAs are mostly mobiles which offer an additional value just like calendar functions, address book and email support. The operation in contrast to normal handsets varies with the so called touch screen that is normally bigger and touch sensitive. As a rule, they are equipped with a pen that is used to write on the screen and special software translates and formats the written words in characters.
Even higher is the efficiency of Palmtops, which can be described as small pocket computers who run on the common operating systems and offer tools like word-processing, spreadsheet programs or presentation modules. Both Notebooks as well as Laptops offer the same performance as a desktop computer. They only differ in size and weight and offer the possibility to be run with accumulators.
It seems that this business area, especially as to mobile transmissions, is a high risk enterprise built on moving grounds. Up to now, the Canadian firm RIM (Research in Motion) held a dominant market position with its Blackberry for mobile e-mail transmission. However, at the 3 GSM World Congress (the world’s largest mobile communication congress) in Barcelona (Spain) in February 2006, the US Software company Microsoft announced in a press conference that it intends to enter the mobile communication, especially the smartphone market in a business alliance with HP and Fujitsu in the near future. This could only be the beginning of a new market dynamic in this area (Riedl 15-2-2006, p. 22).
Taking a closer look at the development of mobile devices in general, it becomes evident that the field of mobile communication is undergoing a substantial change due to the merger of traditional telecommunication electronics and computer networks. The evolution of those devices is far from reaching its end (Smyth 2004, p. 6). Despite their similarities they certainly will not replace common computers but hold a replenishing position (Schiller 2000, p. 27).
The mobile phone itself offers different communication channels which can be a simple voice transmission, a short message (SMS) or even the transmission of pictures, emails or images in real time. Last but not least the handsets have a hidden entertainment platform as none of any other device at this size and form.
The different ways of use of a mobile will be illustrated hereafter and will confirm why today’s mobiles are classified as multi purpose devices.
The mobile offers different ways to control the voice communication. The different functions are partly accessible even with fixed line phones, but have their origin in the mobiles. It enables to have group calls in order to have telephone conferences or offers the call waiting service which informs about incoming calls even though the line might be busy. The function hold-the-line enables to switch between two phone calls. Furthermore most providers offer a mailbox which is similar to the functions of an answer machine. An innovation that still is in its early stage is called push-to-talk (PTT). PTT is comparable to the features of a Walkie- Talkie. After pushing the button a voice message of limited duration is transmitted to a predetermined group or person. The voice of the sender resounds on the predetermined mobile without any previous ringing. This function is available since the middle of 2004 and is integrated in just a few handsets like the Nokia 6230 or the former Siemens CX 70 (Varesi 2004, p. 70). PTT can be very valuable for certain professional groups like cabdrivers, who can renounce on more expensive devices in order to communicate between each other.
The push to talk function is complemented by a pull function enabling the owner of a mobile to receive automatic information on certain preselected events, under the proviso, however, in both cases that the handset is “always online” and that the mobile browser offers i-mode access. The i-mode technology was invented in 1999 by the Japanese Telecommunications Company NTT DoCoMo (Teletarif 2006, URL).
The video telephony was introduced with the third generation and sets a new standard. It is mainly offered by the operators to demonstrate the potential of the new broadband technology UMTS, as an example. And this exercise is quite effective because it is understood by the subscribers immediately. A prerequisite in order to support this service is that the mobile has one swivel camera or two cameras one on the front and one on the back of the device, so that the user can be taped and see the other person at the same time.
The attraction or rather the fascination of new inventions in living memory favors video communication. However, the success of this new way of communication is not predictable and will remain an open question for quite some time. First of all the costs for such a transmission are still prohibitive, and moreover there are reservations due to reasons of privacy.
The customers of this new service acquire the possibility to share certain moments with the ones they feel related to. Therefore trips, sport events or concerts can be broadcasted to friends by mobile. Maybe this mobility factor will lead this service to success because the former video telephony over fixed line connections via ISDN (Integrated Services Digital Network) failed, because in the consumer perception the costs were out of proportion regarding the benefit offered by this service. In general it can be stated that the video telephony would bring a considerable change in consumer behavior so that the final success is dependent on the acceptance by the subscribers.
The SMS (Short Message Service) is the popular written communication form via the mobile. The new handsets have no character limitation but one still pays for 160 characters which equal one SMS. Initially the SMS was a by-product, which was offered free of charge by the mobile network operators. In 1992 the first SMS was sent from a Computer to a mobile in the British Vodafone-network and so the success story began (Wikipedia 2006, URL). Today this function is integrated in every handset and, thus, is one of the most frequently used mobile functions (ACTA 2005, URL).
An improvement of the SMS and a successor of this feature is the MMS (Multimedia Messaging Service). All the multi-media messages that can be sent between two subscribers or even a selected group belong to the category MMS. Multi-media refers to the integration of videos, images, sounds and text data (Ralph et al. 2004, p. 21). Any content can be sent, which may either consist of movies or of pictures taped with the mobile’s camera. However, there is a limitation, because video clips cannot be longer than 15 seconds and the attachment should not be bigger than 50 KBit. The operators advertised this service as a convenient substitute for postcards. However, the high costs, in average 30 US$ cents, as well as the impersonal character of this new feature might have been the reason why it did not achieve the popularity that the operators were striving for.
The camera function in handsets appeared the first time in the year 2000 and was generally not integrated but an additional device that had to be plugged in the mobile. This inconvenience and especially the low quality were improved in the following years. The Siemens S65 was the first photo mobile that was introduced on the German market which had an integrated one mega pixel camera und could therefore shoot pictures with a resolution of 1290x960 pixels.
This improvement was accompanied with the introduction of the color displays that replaced the ever since uncolored displays. Today there are even handsets that have integrated 7 mega pixel cameras and are rather a digital camera with mobile functions than a mobile with camera function (CEBIT 2006, URL).The upgrade from pictures to moving pictures is a set standard of our days. The videos can be sent attached to a MMS or transmitted to a computer where they can be saved in a video gallery or even edited as short movies.
The possibility to listen to music on the run was realized for the first time in the 1980s when the Walkman was invented by Sony. Today, the MP3 player replaces the former Walkman, as a direct consequence of the digital age that revolutionized consumer behavior rapidly. Since 2004 the MP3 player function is embedded in some of the mobiles and it is getting more and more common. Dependent on the brand, different mobiles offer their own software to manage the MP3 songs. The most successful music player is for the time being i-tunes from Apple which is even available on some Motorola handsets to guarantee a smooth operation. The transmission of the music from a computer to a mobile can either take place via USB (Universal Serial Bus), cable, Infrared or Bluetooth.
The music storage on the mobiles is normally both on an integrated memory as well as on special storage cards like the memory stick from Sony. These storage cards are available with different memory capacities, while the range differs from 32 MB to 4 GB at the moment. One song in the MP3 format has normally 4 MB. The companies are developing more and more storage and, thus, it has been announced that 10 GB Flash-memories shall be available in 2007. Compared to hard drive memories they have the advantage that they are much smaller and use less energy. Unfortunately they are still double the price of a hard drive (Süddeutsche Zeitung 8-2-2006, p. 9). The music files can be procured in different ways. The desired songs can either already be on a computer or they can be downloaded from certain content providers. This feature will be discussed in detail in chapter 3.
Last but not least the design factor shall be highlighted here. It is a fact that mobile phones are imperative elements of status symbol and modern life-style. They have become fashion items and at least part of customer behavior is exclusively guided by reasons of design (Mobile 1/2006b, p. 24).
Today the most outstanding design feature is embodied in the so-called “futuristic flatman”, i.e. the Razr V3 mobile of Motorola which has been qualified as THE design mobile. Since the presentation of its black edition given as a gift to the actors who got the 2005 Oscar-film- award, a real “Razr-mania” has spread around the world after this highly successful publicity event.
While digital content is still a relatively new industry in the mobile environment, it is viewed as a major driver of growth for the telecommunications and media industries. Estimates vary, but it is clear that the mobile content markets, particularly in the areas of music and games are promising substantial growth.
There are various actors involved in the mobile content industry which can be divided in big and small players. Established players include mobile operators (or carriers), device manufacturers, and finally the content providers such as movie studios, broadcasters, record labels and game publishers. In the second part of this chapter, an outline on content providers will be given.
As a rule, the three following basic types of data services are offered through mobile networks:
- Communications-based data services, primarily involving peer-to-peer communications such as messaging (SMS and MMS) and email.
- Transactional data services, including financial transaction services.
- Content-based data services, including music, entertainment-based educational content, games, video, news, transport information, adult entertainment (OECD 2005, p. 8).
This last category - content based services - will be the primary focus of this chapter 3.1.
Starting in Asia, ringtones became very popular, especially in the youth market. Initially, monophonic ringtones changed the device’s ring to a recognizable tune. Relatively simple ringtones customized the sound the phone made when a call was received. The typically short tunes were familiar or popular tunes using the monophonic keypad tones for the mobile device.
As device audio sophistication advanced, so did the ringtone, becoming a polyphonic tune. Despite their seeming simplicity, ringtone providers still need to face some technical issues in order to maintain a quality product. In Japan, for example, content providers who create ringtones for iMode must take into account the differences in sound quality among various handsets that work on the operator’s network.
Ringtones are very popular. Users are willing to regularly purchase new ringtones. Ringtone revenues go far beyond CD single sales in some markets, including the United Kingdom and Germany (Burt 30-6-2004, p. 9). In the United States, more people download ringtones based on popular songs than they download the songs themselves from the Web’s many music services (Karif 28-6-2004, URL). All this consumer interest in ringtones is generating significant revenues for the industry.
Ringtones laid the groundwork for ringtunes, snippets of actual recordings that are downloaded and used as mobile phone rings. Unlike ringtones, which are recreations of popular music titles, ringtunes are actual clips of original sound recordings by the original artists. These clips are downloaded to the phone and play whenever a call is received. Ringtune providers try to appeal to consumers by differentiating their service with unique benefits, such as access to certain titles or in broad access to a wide range of titles. Many mobile operators have established deals with recording labels to provide their customers with ringtunes.
Ringback tones, also known as Ring-up-Tones, belong to this group as well and allow the user to select what callers hear before the phone is answered. Ringbacks are another way that enables users to further personalize their mobile phones, which seems to be a major driver in user interest in mobile content. The ringback tone is not limited to music; jokes, clips of celebrity voices are also potential ringback candidates (ibid). While ringbacks are popular with the youth market, they also have a corporate impact. Companies can use ringbacks to have customers listen to their jingles or advertisements. Korea Telecom (SKT) first launched ringback tones in April 2002 and realized revenue of US$ 100 million within 15 months and subscriber penetration of 35% after 18 months of this service (Barrack 26-6-2004, URL).
Due to the fact that ringbacks operate from a network server, they work with any kind of phone, wireless or fixed line, unlike ringtones, which work only on wireless handsets capable of downloading, storing and playing music. Moreover, callers tired of the same audio clip when they call may put pressure on their friends to update the outdated ringbacks, thus, stimulating repeated purchases. With caller line identification, users can select different tones for different callers.
While many possibilities exist for generating attractive mobile content, nowadays music - especially music downloads - is a key source of mobile content. Growth in the mobile music markets mainly concerns song reproductions or snippets that do not raise specific industry concern over the copying issue. As offerings become more full track-oriented, however, these concerns will probably increase, especially in terms of Intellectual Property Rights (IP) and Digital Rights Management (DRM).
With the introduction of portable cassette, CD and MP3 players, music went portable, but continued to require separate physical media (tapes or CDs) or access to a PC to music content. Today, music can also be downloaded directly to mobile devices without access to a PC, and the relevant market is growing. Music content has been a major driving force of mobile content use by consumers, largely due to ringtones, now recognized as having promising potential (Ollila et al. 29-9-2003, p. 12). First and foremost, ringtones caught the imagination of the public, and particularly the youth segment, generating a large market for mobile music. This market has been of high benefit for mobile operators.
One of the more recent developments in the mobile music world has been the development of downloadable full music tracks. According to a US research study, consumers are ready to move beyond ringtones and acquire more full featured music/audio services for their wireless phones, including music and news/talk content available as downloadable content or on demand. The greatest interest, according to the study is in downloadable digital music files, followed closely by the ability to listen to streamed music on demand (InStatMDR 14-7-2004, URL). Today, subscribers of many mobile providers can download music directly to their mobile phones to play as an MP3 or, most recently, to share with friends. While music tracks have been available in Japan for some time, delays in other markets in the launch of these services can be attributed to licensing, technology, DRM and revenue problems.
Outside Asia, O2 first launched mobile music services in the autumn of 2003 that allowed users to download songs as MP3 files to memory sticks to insert and play on their mobile phone (Mc Cartney 26-11-2003, URL). In 2001, Orange announced a new Music Player service, powered by Chaoticom, which will allow full-length music downloads directly to the phone. The service is compatible with nine phone types. Music Player is downloaded free from the Orange World portal and is about 600 kbps.
It is expected that mobile music downloads will be even more popular than Internet downloads because they will enable spontaneous purchases and because consumers will be more comfortable paying via their mobile phone bill than by credit card over the Internet (Malkani 115-3-2004, URL). In a press release issued by the International Federation of the Phonographic Industry (IFPI) this statement is somewhat confirmed due to the fact, that it announced that while handsets achieved to become established music players, the revenue generated by music downloads via mobiles is estimated at 400 million US$ in 2005.The worldwide turnover of music downloads in 2005 was 1.1 billion US$ (IFPI 2006, URL).
And demand is increasing in 2006 due to the fact that the handsets get bigger storage capacities like the Samsung SGH-i310, which has been introduced at the CeBIT in March 2006 and provides 8 GB hard-drive storage and a slot for storage cards to save any kind of content like music (Spiegel Online 7-3-2006, URL). Another content provider serving this sector is Napster, formerly known as a file-sharing network, who is cooperating with Ericsson in order to provide songs at cost price (Süddeutsche Zeitung 16-2-2006, p. 23).
Another service to be mentioned here is offered for instance by Vodafone and Gracenote Mobile and is called either Music-finder or MusicID. It enables music fans to dial a certain number and hold up their mobile phone to the music source for a couple of seconds. The search begins in the Vodafone database, which manages 1.7 million tracks, sending the customer a short massage identifying the tune being played (Enderle 27-2-2004, URL). Last but not least, in the audio segment next to music tracks, audio-books are becoming more and more popular. There is an emerging market for audio-books which are read by narrators. The relevant offerings of audio-books increase at a steady rate. This trend can be illustrated by the fact that Random House, the world’s largest publisher entered an agreement with the German publisher Bertelsmann as to its participation in “Vocel”, a company offering mobile book related content via the network operator Verizon. (Heise Zeitschrifen Verlag 21-2-2005, URL).
The next technological challenge requires an assessment to establish the extent to which mobile platforms are appropriate for TV broadcasting.
At the moment, mobile TV is mostly streamed over 3G networks. But sending an individual data stream to each viewer is inefficient, just like Sprint PCS’s MobiTV which provides live, streamed television to mobile phone customers of Sprint PCS’s Vision service. This service will be unsustainable in the long run if mobile TV takes off.
There seems to be general agreement that 3G streaming is the initial stage to the construction of dedicated mobile-TV broadcast networks, which transmit digital TV signals on entirely different frequencies to those used for voice and data transmission. In this area, there are three main standards: DVB-H (Digital Video Broadcast Handheld), favored in Europe; DMB (Digital Mobile Broadcast), which has been adopted in Korea and Japan; and MediaFLO, which is being rolled out in America. Watching TV using any of these technologies requires a TV-capable handset, of course. However, there are only few handsets available on the market which can mainly be found in highly technology-oriented Asian countries.
At the beginning of March 2006 a specific problem in Germany was the absence of a final decision as to the choice between the DVB-H and the DMB standard. This entailed insecurity as the mobile broadcasting of the soccer World Cup in summer 2006 in Germany (Kremp 2-3- 2006, URL). However, to the great relieve of the football fans and mobile owners it seems that a satisfactory solution has been found at the CeBIT.
Just as there are several competing mobile-TV technologies, there are also many possible business models. Mobile operators might choose to build their own mobile-TV broadcast networks, or they could form a consortium and build a shared network, or broadcasters could build such networks. Some channels will be given away for free, while others are for paying subscribers only. The outcome will vary from country to country, depending on the regulatory environment and the availability of spectrum (The Economist 5-1-2006, URL).
Mobile video applications
Mobile video applications have often been praised as the promise of 3G. With greatly expanded network capacity, 3G enables mobile delivery of video content. Projections vary as to whether and if a mass market exists for such content. In the meantime, mobile operators and content providers have developed several video offerings that are available over today’s 2.5G and 3G networks. The quality over 2.5G networks can be a problem, however, resulting in choppy viewing. At present, mobile video offerings are mostly short clips of selected content specifically targeted to key user interests. Thus, the content needs to be suitable to be packaged into short clips; many believe that most mobile video content will need to have a maximum length of about a minute or two (Ollila et al. 29-9-2003, p. 32). Sports video content has proved to be a particularly popular content offering for mobile operators, although the operators are reluctant to disclose the popularity of their services with their customer base. Mobile video also means that consumers can use their mobile devices to record and share their own video content.
One logical extension of the music download offering is the move into music video downloads. MTV and Motorola have reached an agreement that will allow MTV content to be downloaded on mobile phones. “3”, a 3G mobile provider, announced a deal with MTV giving users daily video newsreels as well as exclusive MTV footage of live band performances from the TV channel.
The segment business applications is broad and comprises M-Business, M-Commerce and M- Payment. M-Business and M-Commerce refer to the terms E-Business and E-Commerce and simply changes the letters E for Electronic into M for Mobile, which means that the usage is based on mobile devices. These two business sectors apply to the relation between both business and consumer (B2C) as well as business two business (B2B). The definitions are close to the ones for e-commerce and e-business and the mobile sector is considered as a subgroup. Zobel (2001, p. 3) defines M-Business as all services, goods and transactions exchanged on mobile devices.
The most common business applications in this field are wireless payment services. One developing mobile application is access and use of financial services for wireless payments using the mobile phone. Introduced in June 2004, the Japanese Telecom Company NTT, DoCoMo’s FeliCa mobile wallet service - QUICPay - enables customers of its iMode service to use their cell phones as a debit card. Users can make payments, check balances and payment records with this service. In July 2004, the service was enhanced to allow users to access their JCB credit cards via the IC chip, with charges appearing on their credit card statement. Other credit card companies are expected to be added in the future (Rush 20-7- 2004, URL).
There seems to be a demand for mobile payment services in low-cost transactions, such as transportation costs and cinema tickets. Mobile payments schemes such as E-ZPass and Octopus were quite successful by providing a solution to specific customer needs. E-ZPass is a North American wireless toll collection system that considerably improved the convenience of paying tolls without queuing. Octopus, a card-based payment service was originally invented for public transportation in Hong Kong, and provides a convenient way to pay for transportation fares and items in grocery stores (Bowie 2005, p. 41).
However, despite the expectations put into the bright future of mobile payments, this promising application has so far not been as successful as anticipated. This lack of success can be explained by the infancy of the market and the absence of harmonized standards (Ondrus/Pigneur 2005, p. 9).
Games are a key focus of many mobile content developers, and increasingly, games are being developed for mobile platforms. To date, the market has focused on fairly simple embedded games, but there is a growing market for more complex, interactive and multiplayer mobile games. Industry standards and interfaces would greatly enhance development of mobile games by allowing developers to address an even broader market. As more sophisticated games are developed, the software can potentially be adapted for enterprise training and educational purposes. These follow-up-versions are sometimes referred to as “edutainment”.
Mobile phone manufacturers entered the game market in 1997 with Snake, embedded on Nokia phones and received a positive public response (Pelkonen et al. 12-11-2003, URL).
Today, the mobile game industry is emerging and most mobile devices include simple embedded games. But the market is also beginning to develop more sophisticated downloadable and multiplayer games. Outside Asia, games as a revenue source are just starting to emerge. The mobile game industry still faces multiple obstacles to distribute more sophisticated games, and market growth depends on developing the right content for the particular screen size at affordable prices.
At present, the most advanced business models and game concepts for mobile devices are found in Asian markets. While the mobile game industry is well developed in Asia, particularly in Japan and Korea, it is still in its early phase in other regions. While mobile games are gaining a footing in Europe, they have been slower to take hold in North America. Many major game developers are only just entering the mobile game market, led by THQ Wireless, Sega Mobile and Disney. Activision, Atari, Electronic Arts, and Microsoft have licensed their content for mobile games. In addition, Japanese game companies, including Bandai, Namco, Taito and Dwango are becoming active on a more global scale.
Mobile games are also confronted with the poor user experience with the introduction of WAP games.
In the current situation mobile games can be divided in certain groups:
- Online mobile games: SMS/MMS and browsing
- Multiplayer games
- Location-based games Cross-platform games
- Public sector game applications
Downloadable games will probably replace ringtones as driving service for Western European entertainment services revenue over the next years (Cellular-News 6-12-2002, URL).
The following table estimates the revenues of wireless games and predicts an attractive content business sector (Price Waterhouse Coopers 2004, p. 42).
Table 2: Computer and video games market by sector 1999-2008 (2003-2008 estimate) US$ millions
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One area with an interesting potential is the provision of information, location and tourist information services over mobile platforms. While this area is just beginning to develop, the importance of spatial and locational information of all kinds, from simple directions and location of particular facilities to more complex spatial data, is seen to be a key area for mobile content development. Therefore, handset suppliers are beginning to provide handsets with enhanced spatial and locational features and services. However, location based services (LBS) must be developed to comply with national privacy laws. This is necessary because this service provides the possibility to locate the position of specific subscribers. Especially for parents this service could be of great interest, in order to get informed when their children leave a certain predetermined area (Varesi 2004, p. 96).
From maps and directions to information on tourist attractions, bus and public transportation routes and other location-driven information become a critical component of mobile content offerings. Most mobile operator portals contain location-based data. Map services, such as Mappy, in France and Mapquest, in the United States, offer maps and directions for download to mobile devices, such as PDAs. A key component to most mobile operator portals is access to location-specific information, such as restaurant locations, tourist attractions and weather information.
Apart from sports information, discussed above, general news services and publishing are also going mobile. News information is generally available on mobiles for free, although certain premium services require a subscription. In the United Kingdom, T-Mobile has launched a mobile newsstand called “News Express”, which is delivered twice-daily to T-mobile customers. The service includes four channels: news, sports, weather and entertainment.
While initially free, users will subsequently be charged a fee for the service. T-Mobile expects to expand its offerings to other news and lifestyle magazines, essentially creating a virtual newsstand for its mobile subscribers. One report suggests that newspapers while likely to be slow to embrace the mobile environment, will find many benefits. Mobile interactivity allows readers to communicate quickly and easily with news organizations. Another benefit is the increased ability to target news, and advertising, to specific audiences (Masnick 9-7-2004, URL).
The Commission of the European Union (EU) launched a project in 2004 funded by the EC’s eContent program called MINDS. It comprises a consortium of news agencies, publishers, technical partners and network operators in Europe. The group aims to facilitate delivery of compelling news content in the mobile environment, including real time news, personalized news and even regional paper pictures to mobile users. The goal of this project consists in providing more media variety to Europe’s mobile world and to distribute attractive high value-added mobile services (Enderle 27-2-2004, URL).
Proponents of the mobile Internet argued that with 300 million people using mobile phones and only 120 million owning internet-connected computers, the mobile phone could easily become a more popular way of accessing the net than the traditional computer (Ghemawat 7/2004, p. 2).
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