• Home
• About Gemalto
  • Our Company
  • Corporate Governance
  • Sustainability
  • Investors
  • Partners
  • Office Locations
• Products & Solutions
  • Telecommunications
  • Financial Services & Retail
  • Enterprise
  • Government
  • Transport
  • Training
  • Buy On-Line
• Contact Us
  • Office Locations
  • Jobs/Careers
  • Tech Support
  • Sales/Other
• Media Center
  • Media Contacts
  • Feature articles

Focus

Making it pay

The big question on the lips of everyone in the business of mobile social computing is how you make it profitable. Indeed, some might even ask if it is possible to make it pay at all. As the Japanese experience reveals, however, monetization is not an issue when consumers are already used to paying for services and goods using cellphone-based billing systems.

The market certainly thinks there is money in mobile social networking. Technology research company Gartner recently reported that, despite having no revenues as such, Twitter had attracted a US$100 million investment based upon a valuation of US$1 billion. But even that pales alongside Facebook, which, at the end of 2007, persuaded Microsoft to make an investment that valued the company at an incredible US$15 billion.

Both valuations were made possible by the massive growth in user numbers the companies have enjoyed in relatively short amounts of time. In one 12-month period, for example, Twitter grew from 3 million to 30 million users, while Facebook saw monthly mobile users grow from 20 million to 65 million in just eight months. Before the dotcom bubble burst, Internet investors used to chant a mantra of ‘content is king’, but today that could usefully be replaced by something along the lines of ‘where users flock, the money follows’.

The latest forecasts suggest that total mobile service revenues will exceed US$1 trillion in 2013, while voice revenues are falling. Mark Newman, Chief Research Officer at Informa Telecoms & Media, says: “The growth in data revenues is being spurred on by the rise in take-up of more advanced technologies and mobile broadband services, as well as new handset interfaces and mobile content strategies based on application stores rather than walled gardens.” Indeed, research company Juniper has predicted that there will be nearly 20 billion mobile application downloads a year by 2014.

 According to Forrester, pioneers which “have entered the market to create ‘made for mobile’ communities in emerging territories… [are] more likely to succeed”. This is due to these markets’ lack of PC penetration and lower awareness of the big brands that more technologically advanced countries take for granted.

Not that we can ignore the big brands when it comes to the bottom line, for it is here that we find the most activity in terms of updating sites and applications to cater for different mobile devices and platforms. Having established that numbers matter when talking monetization, it’s little wonder that handset manufacturers have been quick to partner with the big brands. Forrester predicts that market differentiation will come from “the degree of handset integration with social networking brands” – something that Hutchison Whampoa subsidiary INQ, for example, is doing by positioning itself as a social mobile handset manufacturer.

The network operators are also jumping on this particular bandwagon, not least because (as we’ve seen) mobile social computing users tend to be heavy communicators, and that’s good for business. For instance, Orange has its Social Life service, which aggregates access to multiple social networks. Last year, the company announced that the number of users accessing social networks via the Orange mobile Internet network had nearly doubled, to a little less than a million a month.

The only firms that seem to be finding it hard to carve out a significant niche in the mobile social space are the likes of Google, Microsoft and Yahoo!, which have large shares in the webmail and IM markets but have yet to find a way to convert this reach into a social audience and don’t have any social network revenues to speak of just yet. But that will surely follow in the years to come, in the form of data and communications revenues, advertising, premium content and, perhaps most importantly of all, increased user loyalty – especially in the notoriously fickle network operator and mobile handset market, where user churn is a perennial problem.

See also...