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Bad news for mobile operators: apps don’t generate revenue and don’t attract customers

Research says this is a stark warning for mobile operators who should focus instead on rich communication services


Bad news for mobile operators: apps don’t generate revenue and don’t attract customers

Research says this is a stark warning for mobile operators who should focus instead on rich communication services

Consumers’ appetite for downloading apps appears to be over; normal call and text services remain the most heavily used revenue generating functions on mobile phones, research commissioned by OpenCloud has found. In a survey of 1,000 UK consumers, 45% of all mobile users have the ability to download apps but only 39% of those who can downloads apps, regularly do so. Significantly, 38% of smartphone users only download free apps, while 50% of smartphone users downloaded no apps in the last month.

By far the most frequently used function on mobile phones is still text messaging, with 83% regularly doing so compared with the other top five features – taking pictures (47%), mobile internet (29%), storing and playing music (28%) and emailing (22%). The mobile phone is certainly more than just a ‘telephone’, however these are local features of the mobile device itself and do not deliver incremental revenue to the operator.
These significant findings are a warning to operators who have been tempted by the siren call of the “App Store”.

Consumers care more for the functionality of their mobile phones and the pre-loaded key apps, such as location-based services (maps) and social networking, than downloadable apps themselves.

Additionally, the revenue generated from app downloads is perhaps not the nirvana first hoped for as half the respondents only downloaded free apps anyway. The research strongly suggests that Operators should concentrate their app strategy on enhancing their traditional comms services and delivering rich communication services, as this is their core skills area and what the users value in their phone.

While the penetration of social media and 3G applications has certainly seeped into the nation’s consciousness, they are not the key factors for consumers when choosing their mobile phones. 21% of users identified social media services as their main reason for getting a smartphone, while 25% identified map and location based services – these ranked 8th and 7th respectively for key drivers. Compared with the top reason, at 46%, of simply enjoying “having the latest gadgets”, these are only apps that people want, downloaded and regularly use.

It’s clear that apps themselves do not influence mobile users in their decision making process, however consumers increasingly favour social media and “one-to-many” communication services.

What will have mobile operators even more concerned is the apathy of smartphone users towards apps, with the average user only having downloaded 14 apps and a fifth never having downloaded an app at all. Furthermore, 43% of smartphone users are not planning to download any more apps.

“This research indicates that mobile operators need to look at their mobile and smartphone strategies. We know that consumers are increasingly savvy with technology and, in particular, their use and expectations of mobile phones. However, apps are not the reason consumers buy their phones, and they are certainly far from being the ‘cash cow’ operators hoped for,” said Jeff Gordon, CEO at OpenCloud.

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