Frost: Inexpensive Smartphones Benefit Global Mobile Software Vendors

July 15, 2008 // Published as a news service by IHS

With expansion of memory, increase in processor speed and availability of better networks that allow for faster data transfer, mobile software is in for exponential growth.

Recent analysis from Frost & Sullivan of the world next-generation mobile software market found earned revenues exceeding $17.9 billion in 2007, with estimates to reach $67.3 billion in 2013.

The mobile software market expects to grow at a faster rate than the total software market, thereby increasing its segment size.

However, analysts said mobile carriers are extremely cautious about spending and mobile software vendors have to prove the value proposition and return on investment (ROI) of their products before clinching the deal.

One viable business model for software developers would be to partner with mobile carriers and obtain revenue by troubleshooting and fixing day-to-day business model problems.

Analysts said new carrier services require fixes to the billing, marketing and early product life cycle bugs. By tackling these issues quickly, mobile software vendors can be a huge help to the carriers.

"Over the next decade, the cycle of software development, where many mobile software products and applications were developed originally for other types of devices, will reverse," said Frost & Sullivan research analyst Daniel Longfield.

"This reversal is likely because the number of mobile devices manufactured is expected to continue to outpace all other types of personal electronics, and also due to smartphones possessing more processing speed and memory."

Mobile software vendors can expect significant opportunity as the numbers of mobile devices should grow with more than a 100% penetration rate, analysts said. This is likely to be enhanced by the steady increase in minutes of use.

Analysts said there is a mass move toward mobile devices, as people use them for tasks that a few years ago were performed on a desktop computer, a laptop, an MPEG audio layer 3 (MP3) player, an electronic gaming platform or a digital camera.

Mobile software is key to placing mobile devices at the forefront of consumer habits by incorporating the applications and capabilities of other electronic devices into mobile devices.

This, in turn, will benefit all members of the mobile value chain.

Going forward, the mobile software market expects to witness greater standardization, technological advances and competitive changes. Analysts said all these will further increase the mobile software market size.

"Mobile software vendors are poised to receive large revenue increases from carriers and other mobile market value chain members," said Longfield. "However, these spoils will not come without great effort to patch endless gaps in the current carrier service infrastructure and business models."

Source: Frost & Sullivan.