Mobile operators predict that income from app downloads will become their largest source of revenue by 2013.
The Economist Intelligence Unit conducted a survey of 391 global mobile industry executives, which found that 37 per cent of respondents expect application downloads income to overtake voice services, which currently make up 70 per cent of their revenues, in three years’ time. The survey was commissioned by law firm Freshfields Bruckhaus Deringer.
However, the survey also found that 36 per cent of respondents believe voice will still be a main revenue source, while 32 per cent expect video downloads to bring in the bulk of income.
Meanwhile, 35 per cent of mobile executives agreed that a critical challenge mobile operators will face over the next three years is the ability to expand the variety of content and services to users.
To address this, nearly 80 per cent of mobile operators believe they will be more competitive by opening their platforms to independent application developers, while 45 per cent believe they should open their own app stores.
Natasha Good, co-head of Freshfields’ mobile group, said: "There are clear signs of a shift in industry practice towards greater collaboration. To maintain profitability, network operators will look to join forces with content providers and application developers."
Data privacy and security concerns, however, were cited by many respondents as barriers to mobile operators expanding their service offerings.
Nearly half (47 per cent) of respondents said that data privacy concerns were hindering their ability to offer third-party applications to customers, for example. In addition, the main security risks were believed to be loss of customer data through hacking (43 per cent), downloading viruses (34 per cent) and the lack of security software on handsets (34 percent).
Analyst house Forrester recently warned businesses to carefully consider the benefits of developing an app before succumbing to “application hype”.