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What does the changing mobile industry mean for media execs?

There is no question that mobile is the next disruptive technology, according to report by ContentNext Media.

ContentNext released its report titled, "The changing mobile industry and what it means for media executives." The report acknowledges rapid innovation in handsets and how it affects the mobile space.

"The biggest finding for me was the skepticism towards mobile marketing and that it is still in its nascent stages," said Lauren Rich FIne, research director at ContentNext Media Inc. "Given that phones are the one "cookie" that doesn't change, i.e. your phone number, I am amazed that marketers aren't all over it and with tremendous creativity."

The smartphone category has proven to be the catalyst for a better consumer experience.

In addition, the proliferation of applications has led to specula¬tion over which content areas will command actual payments from consumers.

"This report is intended to provide insights on the future direction of mobile, with a particular emphasis on content," the report said. "It isn't meant to be comprehensive about all aspects of mobile, but hopefully will provide a good overview and snapshot of where the industry is today."

To the degree that the market is seemingly fragmenting, the carriers and networks have become increasingly relevant to determining whether any one area of applications, let alone a specific ap-plication, can actually scale.

And then there are mobile browsers, which are improving rapidly, dramatically enriching the entire mobile experience by allowing the phone to replace the PC for many people.

It is easy to take mobile for granted as it's been around for a while; however, the rapid improvement in user experience (courtesy of, in large part, the iPhone) and acceptance of a phone being more than a phone will likely cause huge dislocation in many areas.

The economic downturn could hamper the ability of the carriers to grow the average revenue per customer/unit (ARPU) through content and service packages, but it could push more consumers to become wireless-only customers, according to the study.

"If consumers face difficult spending choices, it isn't completely crazy to imagine a pick-up in mobile video services in lieu of home cable, although near term it is more likely to drive increased PC internet access," the report says.

"While mobile advertising and marketing has yet to live up to expectations, the medium is increas-ingly becoming accessible and scalable and the creative is improving such that there are a growing number of campaign success stories," it says.

"Notwithstanding a weak economy, we think this is a sector that can do well near term as marketers seem to be embracing its lower out-of-pocket cost com¬bined with targeting capabilities."

According to the report, location-based services are in early innings and they will have dra¬matic implications prospectively as they will heighten the ability to target marketing messages.
Location-based services could really open up the local ad market and add a new dimension to social networking.

Video usage should increase dramatically as the experience is improving daily, according to the report. However, concern and confusion about cost and hardware could mute near-term growth.

"Carriers still have a decent hold on the pipe, so to speak, and are doing a good job of getting paid for service such as mobile Web access, messaging and etcetera," the report says. "In our research, carriers were cited as obsta¬cles in delivering innovative services but we suspect they are doing everyone a favor by forestalling the same moves to free that has transpired elsewhere within media and telecom.

"For the U.S. mobile market to really open up and allow phones to be used both as payment mecha-nisms and for commerce, a better payment system needs to be in place near term, at least for mi-cropayments, the carriers could be key," it says.

The June 2007 launch of Apple's iPhone, with AT&T as the exclusive carrier, has proven to be a significant event despite still relatively modest market share in the U.S.

We would further note that the iPhone has 28 percent share of the smartphone category.

As of early March, there were more than 27,000 iPhone and iPod touch applications available via Apple's App Store, according to Mobclix.

Mobile games are almost a quarter of downloads. Three quarters of downloads are premium titles.

The iPhone touch screen is a pretty big departure from most phones that have a keyboard.

For heavy emailers it might not be ideal, but it is for games, video and the like.

Prior to the iPhone, the market was more or less controlled by the carriers. Now carriers are losing some control.

There are approximately 270 million U.S. cellular subscribers, or 84 percent penetration of the population.

Almost 18 percent of house¬holds are wireless only, a percentage that is likely to grow as services such as Google Voice create the op¬portunity for one phone number that can be accessed through multiple technologies.

Between M&A, investments, dedicated funds and IPOs, ContentNext found 1,115 transactions.

There were 472 M&A transactions, 613 investments, joint ventures, IPOs and funds. In terms of number of deals, content and software and services were the two largest areas for both M&A and investments, although M&A included more content than software deals and the reverse was true within investments.
The commerce area had the smallest numbers of deals.

"We are big believers in the mobile payment area and would expect investments to pick up in this area," the report says. "Soft¬ware & services should remain vibrant as there is no question consumers want their phones to do increasingly more.

"We are uncertain regarding continued investment in content as the business model remains unclear; further, so much content exists already and can be reformatted for mobile," it says. "Increased consumer usage of non-voice services will drive the ad/marketing component so we are optimistic about activity in this arena as well."