Business Models for Mobile (lecture 6)

Written by: Jonathan Briggs

March 8, 2005 [3798 views]

Most mobile business models are based on revenue sharing between the operators and content and service providers. It is too complex for most content owners to build their own billing systems for mobiles so they must rely on the operators to bill the customer.

With WAP 1.0, the operator made money off the calls (GSM) or data transfer (GPRS) but the developer made nothing.

With i-mode in Japan, the operator took 10% giving 90% to the developer or content owner.

With Vodafone Live! Vodafone takes 60% proving 40% for the content or service developer.

UK content or service developers

• want to get access to customers
• want to be listed on portal or make it easy for customers to access their service
• could bill customers via the web (subscription)
• could allow customers to buy and download an application (purchase)
• could bill customers via proxy mechanism (premium number or reverse billed SMS)

Operators

• have significant debts from spectrum licenses
• have seen decreasing revenues from users (ARPU)
• often subsidise costs of terminals (manufacturers may subsidise too)
• create complex tariff offerings to discourage switching
• recognise the failure of WAP 1.0 “surf the BT Cellnet”

Japan’s i-mode service

• launched by NTT DoCoMo in 1999
• 30 million customers
• customers pay 50p – 1.50 per month for each premium service they use
• easy to subscribe and unsubscribe
• 3000 official and 12000 unofficial services (horoscopes, chat, email, news, sport, weather, dating)
• Speeds comparable with GPRS (ready for upgrade to 3G)
• colour handsets, polyphonic ringtones and Java downloads before Europe (including from European manufacturers such as Nokia)
• now being licensed to other operators including O2 in the UK

NTT DoCoMo

How can you make money from your proposed businesses?

• Be clear about who is paying for development
• Be clear about the work involved in delivering
• Test out whether your market really wants to pay
• Consider the genuinely unique aspects of mobile (location, presence, personalisation, communication, always on)
• Be careful of free alternatives (even if they are slightly less available)
• Work out the charging mechanism
• Consider the issues of selling your idea to the operators
• Consider licensing the idea to a company that understands how to sell to the operators

Orange developers site

Some interesting articles

The mobile games market
WiFi Revenue Models
Bluetooth hotspots, business opportunities
Vodafone improves its Live! portal

Some questions for you to think about?

• Why did handset and operators push camera phones so hard?
• Will consumers pay for value added services delivered over WiFi?
• How can you charge for a Bluetooth service?
• What role will you as a designer or programmer be playing in the development of commercial services?

What do you think?

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