Technology | Media | Telecommunications

Wednesday, February 27, 2008

One Trillion Dollar Voice & SMS Advantage

According to Portio Research, forecasts predict that 2008 will be the year that the worldwide mobile phone industry becomes a one trillion dollar industry. For an industry to go from zero to 1 trillion in just 20 years is a staggering achievement, equal to a CAGR of almost 30 percent sustained for 20 years -- an achievement previously unequalled by any other industry at any time in human history.

2007 became the year to see worldwide mobile handset shipments exceed 1 billion for the first time, and as 2008 begins so the world also crosses the highly significant 50 percent mobile penetration point, and the industry enters a year where gross industry revenues are set to reach 1 trillion Dollars. This is truly an exciting time to be in the mobile and wireless industry.

As mobile voice prices have declined and margins have come under intense pressure, network operators have been forced to look at non-voice services to win new customers and boost their profit margins.

A wide variety of value-added non-voice services have emerged, from messaging and mobile music, to email, mobile TV and video downloads, location based services, games, gambling and mobile payment services.

In 2007, worldwide, non-voice services accounted for 18.9 percent of total mobile services revenues, and this figure looks set to keep growing, reaching more than 25.5 percent by the end of 2012. To put that in context, worldwide consumer spending on non-voice mobile services in 2012 will exceed $251 billion -- more than a quarter of a trillion dollars per annum.

In 2008 Portio estimates MNOs worldwide will collect total revenues of $874.3 billion. Interestingly, voice and SMS get little publicity in the mobile world these days. Just take a look at the conference agenda for the annual Mobile World Congress in Barcelona in February 2008.

Looking down the list of topics covered in the 4 day conference, all the talk is about mobile TV and video, HSPA, mobile IM, DRM, mobile finance, mobile search, social networking, data pricing and mobile enterprise solutions.

All of these are prospective growth areas offer a great deal of promise for the future. But amid all this excitement, there is barely one mention of voice as a subject, and barely any mention of SMS as an application, yet voice and SMS generate 90 percent of the total service revenues flowing into this industry right now, and it's predominantly voice and SMS that have built this 1 trillion business over the last 20 years.

Portio's forecasts show that in 2008, 88.9 percent of total MNO service revenues worldwide will come from voice and SMS, and that figure is likely to remain as high as 85 percent even by the end of 2011.

But that still leaves more than $161 billion from data services in 2008, rising to over $251 billion by 2011, and this report looks in detail at those services to see where the money is coming form and how it's split out among the various players in the value chain. Portio Research analyzes the MNOs share in content revenues and looks in detail at how that share is changing over the next 4 or 5 years.