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Orange: Success in Access, Failure in Apps - Lessons for mobile business models?

We’ve been doing some rummaging around Orange UK’s latest figures on data and application usage. They put a positive spin on them, of course, but here’s our take:

Good news: SMS, as expected, is delivering the goods, but the hidden gem is mobile access. The numbers of people using mobile broadband was large (1.4m) - it was almost as much as fixed boadband (1.6m). People are either paying per megabyte or have a contract. This positive trend is being repeated across the pack in the UK - vodafone (via data cards), 3UK (dongles) and T-Mobile UK (via web ‘n’ walk).

Bad News: The applications (MMS, selling music, games etc) are performing poorly. Here’s how they didn’t present the information:

MMS: 7.4m/month at average of 4.3/customers gives 1.72m active users which is just over 11% of the base - ie hasn’t crossed the chasm yet by a long chalk. Compare with 1bn sms/month at 71 messages/customer.

Games: 690k games downloaded in the quarter say average price of £3 and 50% margin = approx £1m gross margin per quarter which is basically not worth the orange management’s team time.

Music: 295k music downloads/month. Again not worth the effort.

Video Downloads: 938k for the 1st half - very low - film clips are #1. Question: why they don’t allow movie trailers to be downloaded for free as part of their Orange Cinema brand?

TV - They say: “All this has led to tremendous growth in subscriber numbers - so much so that revenue from mobile TV is almost double the forecast.” We say: The figures must be really low if they won’t release them and yet have published such low data from games & music.

Orange Images:
Logo’s & Wallpaper - Around 97k/month. This market has been severely damaged. Thought: they would be better just giving them away.

Photo album - 700k/month. Real potential here as a substitute for flickr if Orange/FT ever got their act together (esp as flickr is probably declining under the yahoo umbrella).

Overall, pretty depressing data for anyone thinking of mobile beyond voice and texting. So, the battle lines are being drawn: mobile operator applications and portals versus the handset players (eg Apple & Ovi) versus the OTT internet players. Partnering will be key..

…but with the Mobile World Congress coming up fast in February, is it now time for the industry to seriously consider a new type of model - a two-sided business model?

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