By James Belcher - Senior Analyst
Checking MapQuest for directions is an exemplary convenience offered by the Internet. It is the type of free (ok, ad-supported) application, like Google, that keeps people paying their ISP bills every month.
The mobile phone version of MapQuest is not free. The application costs an average of $3.99/month, depending on user location. These fees are added to mobile subscribers‘ monthly bills and they are also charged for the wireless minutes they spend using the application. Despite these costs, however, mobile utilities are bestsellers. A July 2006 study by Telephia found MapQuest Mobile was the top mobile application in terms of revenue share.
In fact, maps and directions were the top downloaded mobile applications by revenue in Q1 2006, according to Telephia. Ringtones and video games get a lot of press, but the Telephia study found that mobile entertainment is only the third bestselling application category, outsold not only by maps and directions, but also by weather information.
Why are consumers paying for mobile phone-based utilities like MapQuest? One answer is that they are especially useful to mobile users. Since mobile phones are often used when meeting up with someone, getting directions (or finding out what the weather will be upon arrival) while away from home is obviously valuable.
Looking at the supply side, mobile carriers can charge for mobile versions of applications which are free on the web because they operate like cable companies. Just as the cable company controls access to individual channels, so too can mobile carriers restrict application distribution as they see fit. A walled garden has resulted, restricting exactly where users can go, but offering some clearly useful applications, at a price, along this restricted path.
It is important to note that mobile application downloading is still a limited activity in the US. Although more than a third of mobile subscribers have sent a text message, according to the May Benchmark Survey by M:Metrics, 10% or less have used any other type of mobile content or service, with the exception of photo messaging, which just under 12% of respondents reported using.
It may be surprising to some that maps are a larger mobile business than ringtones. The reason ringtones get so much ‘press‘ is that they are easily incorporated into mobile marketing campaigns. Ringtones make inexpensive contest prizes and they are a discreet, small product. It is a bit tougher to give away subscription applications and, what‘s more, maps are not generally thought of as being as ‘sexy‘ as music.
Perhaps this should change? Given that more people are clearly willing to pay for maps, sponsors should probably consider these ugly ducklings more often.
