Application usage is key to data revenue benefits

Direct and indirect revenues from mobile applications are expected to exceed USD25bn (GBP17bn) by 2014, according to a report by Juniper Research.

This growth, according to Juniper, will be fuelled by a raft of store launches targeting both high-end and mass market handsets.

The report found that while the majority of application revenues are accrued from one-off downloads, the increasing utilisation of in-application billing to enable incremental revenues from additional mobile content will see value-added services (VAS) providing the dominant revenue stream by 2011.

It also noted that many Tier 1 operators would seek to deploy their own application stores in a bid to maintain content revenue share.

However, the Juniper mobile applications report stressed that in the longer term, the greatest benefits to operators would be derived from data revenues associated with application usage rather than from the retail price of applications and content - providing that the operators rejected the walled-garden approach.

Dr Windsor Holden, author of the report, said: 'Data revenue growth is dependent upon operators embracing policies that enable open access - a policy that also involves facilitating application stores that compete with their on-portal offerings.

In addition, the report noted that, given the fact that application stores cater exclusively for smartphones, then operators, developers and content providers would be unwise to ignore opportunities from traditional application and content distribution and monetisation channels.

Games will remain the largest category in terms of overall application downloads and revenues, although multimedia and entertainment applications will attract the greatest share of VAS revenues from 2009 onwards.

Application stores present a challenge to traditional content aggregators who may be obliged both to expand the range of their content portfolios and to amend their business models to remain viable.

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