Among the perks that will fuel growth are games, ring tones, and video and music download capabilities. These services will generate both traffic and cash for mobile service providers, IDC said, generating revenues as high as $8 billion in Western Europe in 2008.
Following the success of Short Message Service, a number of operators in the region have begun offering such capabilities over data networks. The United Kingdom's Vodafone and O2 have introduced video and music services, while Japanese operator NTT DoCoMo has rolled out its I-mode service in Europe. I-mode is a technology for connecting to the Internet from a cell phone.
"This underlines that the wireless industry will not see the one killer application that many are still seeking and talking about," Paolo Pescatore, senior analyst for IDC's European wireless and mobile communications service, said in a statement.
Unlike in Europe, data services in the United States are yet to take off. Industry analysts attribute the sluggishness of the U.S. market to the problem of varying standards, including Code Division Multiple Access and Time Division Multiple Access. Europe has gone with a single standard: Global System for Mobile communication.
IDC analysts say that in Europe, demand for ring tones and games has already taken off but that video and music will take longer. The availability of color General Packet Radio Services phones has encouraged most operators to offer Java-based game services. As the market evolves, IDC said, multiplayer games may become popular, further boosting data traffic. The market research company also said the demand for video service is currently not high, compared with ring tones and games, because of problems linked to slow downloads.
In light of this trend, IDC said, operators should start marketing their data services more aggressively. Providers will need to identify the right price points for these services and set up a payment model, choosing a pay-per-event or a subscription-based plan, for example. Operators will also need to make available handsets capable of receiving streamed or downloaded video content.
