Editor’s Note: Welcome to our coverage of 25 years in wireless. RCR Wireless News is celebrating with a package of stories detailing the advances of the past three decades. For full coverage please visit RCRWireless.com/25years.
The history of mobile data teems with unrestrained hyperbole and hockey-stick projections that all too often flatten as they become low-grade inclines of uptake. But – and stop us if you’ve heard this one before – the future has never looked brighter.
The space started (believe it or not) as a nationwide network about three dozen years ago, when Motorola Inc. helped establish a two-way network to allow IBM Corp.’s service technicians to stay in touch as they worked on copiers and mainframes. The network, dubbed Ardis, proved remarkably advanced for the time, eventually selling to Motient Corp. and becoming a key component of Research In Motion Ltd.’s service in the early days of its BlackBerry service.
Meanwhile, no-frills mobile services were beginning to take off in a few vertical markets. Public-safety organizations began to use wireless data centers in police cars and other vehicles, allowing officers to perform such tasks as license-plate checks, and that interest spurred the buildout of a pair of nationwide wireless data networks. Both McCaw Cellular and AT&T built infrastructures based on IBM’s Cellular Digital Packet Data technology in an effort to bring the Internet to wireless.
While the market may not have been ready for the McCaw and AT&T networks immediately, traffic began to take off in the mid- to late 1990s as the fixed-line Internet grew from a techie curiosity into a mainstay of American business types. E-mail quickly became a must-have in the enterprise, spawning a surge of on-the-go e-mail users and marking mobile’s transition from niche vertical markets into mainstream U.S. business use, and high-powered executives dumped their two-way pagers in favor of the BlackBerry. And developers such as Vindigo leveraged that small window with lifestyle applications that helped those with high-end devices access restaurant reviews, movie showtimes and other information from their phones.
Ring ring
But the uptake of mobile e-mail services was surpassed by an application that initially was greeted as a laughable novelty: ringtones. Downloadable ringtones debuted in Finland in late 1998, and enjoyed immediate success as a kind of mobile bumper-sticker for young users looking to project their personality. Monophonic tones gave way to polyphonic clips, which in turn gave way to realtones as the stuff became more contagious than mononucleosis, generating an astounding $6.6 billion in worldwide revenues in 2006, according to Jupiter Research.
Indeed, ringtones – and, to a lesser extent, e-mail – offered the only real bright spots on an otherwise bleak mobile data landscape in the wake of the dot-com implosion. The bursting bubble forced longtime wireless players such as Motient into bankruptcy (the company has since resurfaced as TerreStar Networks Inc.). Carriers responded by shifting their gaze away from eye-catching data services, tightening their belts as they focused on filling in coverage gaps in an effort to reduce churn. And the wireless Web was over-promised and under-delivered, leading consumers and industry insiders alike to rightly conclude that “WAP is crap.”
Other signs of hope began to appear, though, as the national economy recovered. Mobile gaming – which had captured the imagination of Nokia Corp. users a decade prior with the introduction of Snake – stumbled with the doomed N-Gage device, but then was hailed as the next big thing following a remarkable IPO from Jamdat that saw the company raise nearly $90 million. (Jamdat became EA Mobile after the video-game behemoth acquired it a year later for $680 million.) Mobile video seems to be gaining solid ground, with MobiTV gaining steady ground since its 1999 launch (its subscriber base recently surpassed the 4-million mark) and Qualcomm Inc.’s MediaFlo USA Inc. service attracting attention.
Simple success
The true success story in mobile data’s three-plus decades, though, is text messaging. U.S. carriers report 160% growth in text messaging during the last year, according to industry trade association CTIA, delivering 75 billion messages in June alone. This despite a series of price hikes over the last year or so that have essentially doubled rates among tier-one operators.
“There were more texts sent and received during the first half of this year than in all of 2007,” CTIA President Steve Largent said at last month’s CTIA Wireless I.T. & Entertainment 2008 event in San Francisco.
That pace can’t be expected to be duplicated worldwide, of course: Some markets in Asia and Western Europe were much quicker to embrace text messaging (and may even be peaking), and analysts expect revenues from instant messaging to begin to cannibalize text-message profits in the next few years. But there’s still much room for growth, according to ABI Research, which predicts text messaging will account for 83% of all messaging revenues and generate a staggering $177 billion annually by 2013.
Potential remains
Whether any other kind of application can mirror that kind of success in the next few years is doubtful, of course. While full-track music download services continue to spin their wheels and ringtone revenues plateau, ringback tones are quietly generating tidy sums for operators around the world. Location-based services are beginning to take off – finally – thanks to slick, carrier-branded navigation apps from Sprint Nextel Corp., Verizon Wireless and AT&T Mobility. Mobile game makers continue to struggle – aside from the top couple of players in the food chain – and adult content remains an intriguing play, with U.S. vendors finding success in a handful of overseas markets even as they’re stymied by operators here at home.
This does appear to be a pivotal time for the space, however. Apple Inc.’s iPhone helped consumers view cellular handsets as much more than just something to talk and text through, and the rise of application storefronts such as the App Store and Google Inc.’s Android Marketplace are also sure to educate users as they showcase the latest in mobile entertainment and productivity offerings. The industry is sure to struggle with an increasingly fragmented marketplace and a confusing proliferation of mobile platforms, and it’s far from clear how much users will be willing to pay for mobile applications (or how much advertising they’ll accept in exchange). But the flurry of activity from high-powered newcomers is sure to help raise all boats as feature phones slowly give way to more sophisticated devices, according to Handango’s Bill Stone.
“The one single biggest issue that Handango has had is just the awareness that customers can put any single application on their device,” Stone said. “From my vantage point, the key takeaway is that lots of these announcements are building awareness of a brand new space. I don’t care if it’s BlackBerry, Symbian, Microsoft; I want to see them all be successful.”