The UMTS Forum claims mobile data revenues will reach $1 trillion by 2010.
The UMTS Forum, which represents mobile manufacturers, operators and regulators globally, yesterday announced its predictions for 3G mobile revenues. The group believes that cumulative revenues from 3G services will reach $1 trillion by 2010, with annual revenue by then reaching $300 billion.
The headline figure looks optimistic – not surprising, given that many of its members have staked their survival on the technology. But at the same time, it’s not worth being overly cynical. The figures are based on analysis of independent research, and the group’s methodology looks sound.
More interesting than the $1 trillion prediction is the Forum’s admission that 3G will be slow to catch on. Datamonitor predicts it will take at least seven years from service launch before mobile operators see a return on their 3G investments. Now, even the industry is prepared to agree. Mobile shareholders may have to wait longer than they are willing to accept for profits.
It’s further evidence that more consolidation is needed. At the moment, despite high revenue growth, mobile operators’ heavy investment is hitting profits. Orange, considered one of the most successful firms, made an overall loss of E582 million for the first half of 2000. Others are doing worse.
The operators’ financial woes are also hitting the manufacturers. Out of the major handset manufacturers, only Nokia is making money. Only this week, Sony and Ericsson agreed to combine their handset operations to try and turn the businesses around. Although equipment manufacturers are in less trouble, they are still being hit. Alcatel yesterday reported a 19% fall in Q1 profits.
Many firms in the industry will not survive the lean years. Instead, partnerships and acquisitions will be the order of the day – with the rumored merger between Alcatel and Lucent just another example. There are too many equipment makers, too many handset makers, and too many mobile operators. Whether or not mobile Internet is a trillion dollar industry by 2010, it will certainly be dominated by far fewer, much larger players.
