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Opportunities for wireless developers who use Java technology have never been so plentiful. Because traditional revenue streams have shrunk or at best stopped growing, network operators are in the midst of a cash drought. To increase revenues, mobility businesses are focusing heavily on the growing market of content delivery, namely games, messaging, and data services. And because most of the world is already using wireless Java technology with success, the mobility industry wants to help generate this new cash flow with Java technology-enabled applications. WANTED: Mobile Content Applications "Today there is a tremendous demand for entertainment applications, games, any type of interpersonal communication," says Craig Miller, Mobility Solutions Manager for Sun Microsystems. Interpersonal communication applications like Short Messaging Service (SMS) or Multimedia Messaging Services (MMS) are becoming increasingly important to network operators. Research from Telecom Trends International predicts that by 2008 MMS will not be as widespread as advanced SMS, but that it will generate more revenue because operators will charge more for it as a premium service. Analysis by ARC Group predicts that more than 20 percent of worldwide mobile data users will use MMS in 2007, which works out to about 25 billion messages a year, and that usage will grow exponentially after that. About half of this traffic should come from content-to-person transactions, and should amount to roughly 71 percent of network operators' overall MMS revenue by 2007, the company says. Person-to-person relationships are likely to drive MMS uptake in the beginning, the report continues, but future uses should focus around in-game dialogue or applications sent as messages. Multi-party communication applications, especially those that target mobile-loving youth markets, are poised for tremendous growth and revenue production. Whether it's for multi-player games or to enable communication from a record company to the audience at a concert, taking the handset from its recent past as a person-to-person tool into its future as a mass communication tool could break open a floodgate of possibilities for innovation and profit. On the enterprise side, this mass communications functionality is starting to show up in applications that help connect a corporation's field force. For example, workers far from the home office can use their handsets to update a client profile in the database, or to order parts for a repair. Global Information Inc. says that, according to research from Informa Media Group, mobile games are chipping away at the overall value of the console hardware and software sectors. They have upped their market value from $243 million in 2002 to $587 million in 2003, and are forecast to grow to a staggering $6.9 billion by 2010. A press release from Global Information also highlights a recent report from Telecom Trends International that paints an even bigger picture - there's a lot more entering the mix than your favorite games. The company says that value-added services, built to accessorize and facilitate mobile messaging, will generate more than $8.3 billion in revenues by 2008. The report says that these services will be used to enable a wide range of applications such as marketing and promotional campaigns, corporate and vertical market applications, surveys and voting, transactions, entertainment, and information services. Another emerging revenue stream for mobile network operators is mobile payment: The user can purchase various kinds of digital content remotely online, or buy a bag of chips from a vending machine using a cell phone. ARC Group says that, although these business models are still developing, global revenues from mobile payments are set to grow more than 100 percent annually, to $20 billion in 2005. The company says that the next generation of automated teller machines (ATMs) and vending machines will increasingly be able to interact with mobile handsets, giving consumers access to virtual cash, and facilitating prepaid wireless "top-up" or "recharge" services, which will allow customers to pay for phone time at ATMs. Long term, ARC Group says this capability will grow to accommodate larger payments, turning the mobile handset into a kind of virtual credit card. Feature-rich phones are becoming increasingly popular - the latest include cameras, video players, audio players, and personal digital assistants (PDAs.) "The distinction between devices is blurring rapidly," says Sun Microsystems Strategic Partnership Manager John Mahr. "Phones are becoming more feature-rich, with more functionality, and they're taking on more of the attributes of PDAs. Applications that can capitalize on this trend should be well received." Other possibilities include information services, especially location-based services providing, say, a local street map and directions to the nearest Chinese restaurant or movie theater. In fact, "any sort of quick-hit I-need-some-information-right-now kind of thing is going to be a big draw," Miller says. Winston Choe, a business development manager for Sun Microsystems, says that "from a developer's standpoint, I think this trend of operators needing to build a large mobile data user base is not going to change. The only thing developers need to track is what type of service is successful, and how they can ensure that their application or content can be used in as many of these different services as possible." Given the massive market that already exists for wireless Java technology, developers have a larger available market to target if they use wireless Java technology, says Choe. The Path to Market Generally speaking, the $80 billion mobile communications market is made up of several groups of players who build and support the infrastructure, develop the next generation of innovative applications and devices, and bundle the services that mobile customers want. All these groups work together to bring the latest game or enterprise application into the hands of a mobile world. Here are brief definitions of some of the driving forces of the industry:
Once developers have created applications, how can they get them to end users? And more importantly, how can they work with these different parties to get paid? Two main revenue models are most common today: Network Operator Hosted and Managed, and Third Party Managed. In the Network Operator Hosted and Managed model, application developers either retain ownership of their applications and license them to a network operator; or they sell the applications and all rights associated with them to the operator. The network operator then brands these applications and offers a wide variety of them to end users. The operator can distribute these applications as the owner, or as a third party representing the owner. Developers adopting this revenue model typically keep between 80 and 90 percent of the revenues from their applications. Third Party Managed revenue models pay much less to the developers, about 25 percent of total revenues, but offer a greater chance of getting the application onto mobile devices. Here application developers can help garner visibility for their applications by joining forces with a third party like a content aggregator, or by getting their applications into catalogs like the Sun Content Catalog and java.com. Aggregators will handle the business side of things with the operators, while the Sun Content Catalog will simply work to help developers connect with one of Sun's partners - handset manufacturers and network operators - and let the two parties take it from there. Global Mobile: It's a Java World. Around the world there are more opportunities for applications powered by Java technology than any other platform for wireless development. According to researcher John Jackson, "The Yankee Group estimates a current installed base of 97.7 million Java technology-enabled handsets worldwide, and expects continued rapid growth for J2ME penetration globally." With researchers referring to Java technology as "the common language of the wireless world," and deployment of it by 53 network operators and more than 20 handset manufacturers, Java technology is cemented into the international mobility landscape. Worldwide, the wireless industry is divided into three main types of market: the first comprises technologically underdeveloped countries like Vietnam and Laos; the second consists of developing countries like India and China, that are currently building mobile communications infrastructure; and the third is made up of developed countries like Britain and Japan, where a strong mobile communications infrastructure and a large subscriber base already exists. "Everybody looks to developed countries as pioneering markets for wireless data, and what they have done has now been emulated in other parts of the world," says Choe. Multimedia Messaging Service (MMS) started in Japan and Korea, he points out, and they have very high-speed services that are being introduced. Also, because of strong infrastructure and business models, these markets are heavy with Java technology-enabled downloadable services and applications, which could be an indicator of things to come for the rest of the world. "This is a fully developed market, which the rest of the world is trying to emulate with varying success," Choe says. In developing countries there is a lot of business opportunity, but it can be difficult to pin down how much real opportunity exists in which countries. "Network operators need to introduce data services to bump the revenue curve, and they've started doing that with SMS and now are moving to MMS with success," Choe says. Though it's still not clear whether there are viable business opportunities in some of these countries, they have invested in the infrastructure as well as the systems required to accommodate downloadable services. Underdeveloped countries are still trying to stitch together a network that will accommodate content and data services. In some cases this is a boon to the industry because operators are able to offer innovative plans - "because they are a new entrant they have less baggage," Choe says. Getting in on the ground floor could pay off big in the future, but at this point developers confront challenges in these underdeveloped markets: limited infrastructure and few subscribers. Another challenge that applies to both the developing and underdeveloped countries is that, even though Java technology has a formidable presence in these markets, many of the operators there have launched it in a very lightweight fashion, Choe says. "So the chances of success for the content are not always high. Some network operators may not have a sophisticated enough system to generate more money through different billing scenarios." In the face of these and other challenges, finding the right channels into your target market becomes increasingly important, Choe says. Sometimes it's best to use a direct channel, going through a network operator's developer program - NTT DoCoMo, Vodafone, SK Telecom, and Nokia, to name a few, all have excellent developer programs - while sometimes third-party aggregators and community portals are the better bet. Whatever the channel, the combination of an appropriate partner and Java technology furnishes the power necessary to propel much-needed new applications into the global mobile marketplace. Says Sun's Miller: "Java is important for mobile. What we've done - with a single language and user environment - is basically enable an entire industry to move forward much faster than it otherwise could. With a single language a developer can address a ton of different devices and not have to worry about who the operator is, who the end users are, and where they live. That code can be leveraged globally."
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