Wireless Portal Revenue: $42 Billion by 2005

Global revenues for wireless portals will grow from $747 million in 2000 to $42 billion in 2005, according to research by Ovum. The research found that revenues will initially grow slowly, but accelerate from 2001 onwards when operators upgrade second generation and start migrating to third generation systems.

A breakdown of total revenues shows that advertising, placement fees, e-commerce, and content subscriptions will reach close to $17 billion in 2005. Operator revenues from wireless portals, comprising call stimulation, access charges, and subscriptions, will be worth $25 billion in 2005.

Wireless Internet and, increasingly, wireless portals are the new breed of value-added services that mobile operators are turning to as a means to differentiate services and increase revenues – and they are not alone. Terminal suppliers, ISPs, content providers, financial services companies, big brand retailers and many more, are all jumping on the bandwagon. However, market consolidation and the rise and fall of techno-savvy dot-coms create uncertainty about who will lead this market and whether or not the consumer will pay.

“As the mobile market transforms, wireless portals will expand the use of the Internet, making it an ‘anytime, anyplace’ phenomenon,” says Eden Zoller, Ovum senior analyst and author of “Wireless Portals: Business Models and Market Strategies.” “Users will be able to access services and content that leverage the unique features of mobility, such as location, that fixed Internet portals cannot provide.”

Ovum finds that various types of organizations are vying for a piece of this market, each with its own unique value proposition and inherent challenges. For terminal suppliers, wireless portals mean a market for smartphones and other advanced Internet ready terminals. For ISPs and content providers, wireless portals mean a new value-added service for both existing subscribers and new customers, especially cellular users that do not subscribe to their services. Software vendors like IBM, Microsoft and Oracle will also take advantage of this new market to make mobile Internet part of their end-to-end solutions.

Wireless Portal
Subscribers
Year Users
(millions)
2000 0.3
2001 2.3
2002 5.7
2003 9.8
2004 14.5
2005 19.7
2006 24.8
Source: The Strategis Group

Ovum’s report found that established fixed Internet portals such as AOL, Yahoo and MSN are in a strong position. They are experienced content aggregators with well-known brands, good distribution channels and subscriber relationships in the fixed Internet world. But the appearance of new players in the wireless market will dramatically change the existing supply and the concept of customer ownership. As the wireless portal market matures, old notions of a single service provider owning the customer will be replaced by a case of ‘who does the customer want to own’ or buy into.

The report is also quick to point out that partnerships are key.

“No single organization in the supply chain can offer a full portfolio of wireless portal applications and services on its own,” Zoller said. However, for some operators, building a branded wireless portal is not the best option. Such portals require a strong brand presence, high level technical expertise and financial resources to build and market. For some operators it will be best to concentrate on their core competencies and act as a facilitator for other service providers.

The number of wireless portal users will grow to nearly 25 million in the next five years, according to estimates in a report by The Strategis Group.

“We are fast becoming the ‘nano-second’ generation of people who want customized information, ASAP, anywhere, any time,” said Jonathan Dorfman, an analyst with The Strategis Group. “Wireless portals will deliver time-sensitive, localized, and customized content to a variety of devices. Given the mobile environment and limited device screen size, a wireless portal Internet experience will differ markedly from that of the conventional Internet.”

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