Shakeup predicted for mid-range mobile market

According to independent telecommunications analyst, Paul Budde, the market for mobile software applications has risen as consumers use phones to watch videos, catch up on sports scores or blog.

Budde said: “At the high-end of the market, commuters are increasingly switching to more advanced devices, called smart phones, that can handle applications such as email, and web browsing.

“Smart phones should grow in popularity as they decline in price, due in large part to companies such as Nokia and Google developing free operating systems. However, at the same time, sales of simple cheap mobile phones are booming as other phone makers move into emerging markets.”

A report by ABI Research predicts that in five years both the high and low-end mobile devices will rise sharply, whilst the mid-tier market declines.

It predicts globally that 441 million mid-tier mobile phones will be shipped in 2013, down from 854 million in 2007.

Budde claims mid-tier devices have some capabilities beyond voice calling but lack the features of smart-phones.

He said: “A key problem here is that these enhanced phones such as Motorola’s RAZR 2 and the LG Voyager use closed operating systems, so new software can’t be added to the devices. The closed operating systems that run enhanced phones are typically built internally by phone makers.”

High-end market smart phones run open operating systems such as Windows Mobile or Symbian, which means users can load software applications from independent developers.

Budde confirms: “Using open systems that are free saves money and gives customers access to a greater selection of applications, which aids carriers because they get more revenue when subscribers sign up for data plans to browse the Internet.”

The Windows Mobile operating system costs between $US8 and $US15 a unit. Symbian licences, which Nokia intends to make free, cost $US5 a unit on average.

While free mobile operating systems save only a small amount on a per unit basis, they have a more substantial effect on lowering internal development costs, according to Budde.

He predicts that a rise in low-end users and a drop in mid-level users could radically alter revenue for some companies.

“Major handset manufacturers are expected to change their product development in anticipation of these changes. Nokia is already taking this move and is developing phones to meet the high and low-end demand. Its most advanced models let people play music, take videos, manage email and navigate foreign cities with street-by-street guides,” added Budde.

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