Australian mobile telecommunications providers face five tough years, according to industry analysts Frost & Sullivan, but the rapidly-growing mobile security market could be one lifeline.
The company predicts that the growth in mobile revenue, already down from double-digit figures in previous years to just 7 per cent in 2011, will flatline. Compound annual growth rates (CAGR) will be less than 1 per cent through to 2016, they told a media briefing in Sydney yesterday.
Australia is already ahead of most developed countries, with near-universal 3G coverage, smartphones representing 55 per cent of the user base, and 70 percent of customers using mobile data. There's little left to grow.
Meanwhile, increased competition will reduce the average revenue per user (ARPU) from $59 in 2011 to about $52 in 2016.
However, one of the game-changers identified by Frost & Sullivan — along with LTE/4G technology, the National Broadband Network, mobile payments and machine-to-machine communications — is the rise of the mobile security and safety market.
In 2011, Australian telcos earned $15.5 million in revenues from a total market of $55 million. That included 11.5 million for remote monitoring services such as home safety cameras, and $4 million for mobile security services such as anti-virus.
Frost & Sullivan expects the telcos' market share to grow to $50 million by 2015 ($33.6 million from remote monitoring and $16.4 million from mobile security) out of a total market of $141 million. That's a CAGR of 34 per cent.
Growth in remote monitoring will be driven in part by cheap hardware and bundled cloud services. Home monitoring cameras such as D-Link's DCS-930L cost less than $120 and can be monitored from the web or apps for Windows, OS X, iOS or Android.
Growth in mobile security is the natural response to the rise of mobile malware.
"Frankly yes... as the number of phones grows and as the kind of information you have on your phone is getting increasingly more sensitive," Marc Einstein, leader of Frost & Sullivan's mobile and wireless analyst team in Asia Pacific, told CSO Online.
"The more complicated things get the higher the risks are," he said.
Does this mean the cost of a smartphone will include, say, $40 a year to a security vendor?
"What it really depends on is how the business model evolves," Einstein said. "I think that you might see somebody like a Telstra or an Optus buy it and pay that themselves and bundle it in."
That's effectively the same model as Telstra's BigPond Security product for broadband-connected PCs, or Lookout Mobile Security for Android.
"But the issue with the Web 2.0 era is that Microsoft or Apple or somebody else on Android might try to sell it to you directly for maybe a cheaper price. So it'll go both ways," Einstein said,
"Frankly, you have examples out there like BigPond and all that, but it's usually the telcos who are laggards. It's usually the over-the-top players that are jumping into the space. That's what we see in other countries."
Meanwhile Frost & Sullivan finds that mobility's flipside, the cloud, is being seen as less risky and the risks they do see usually aren't about security.
The company's Q2 2011 survey of IT managers and CIOs found that 35 per cent agreed and 6 percent strongly agreed with the statement "At this stage, the risks of cloud far outweigh the benefits", while 41 per cent were neutral.
"Every time we do cloud surveys, security and privacy decline in importance as inhibitors. They are still there as challenges but other issues such as data integration are growing in importance," Andrew Milroy, Frost & Sullivan vice president, told CSO Online.
But with the survey's N=100, the margin of error is around 10 percentage points, so take that with a sack of salt.
Contact Stilgherrian at Stil@stilgherrian.com or follow him on Twitter at @stilgherrian