The majority of telecoms company revenues will come from apps within two years, according to a report by HP and professional services company PwC. 

The paper, titled Embrace New Revenue Sources: Living in an Apps-driven World, predicts that less than 50 per cent of revenues will come from traditional voice and text message services, and says service providers need to urgently address this trend to avoid being left behind. 

Kenny Fraser, partner and member of the PwC Global Communications Industry Leadership says: “When you consider that watching a clip through a YouTube app uses the same network capacity as sending 500,000 text messages simultaneously … its easy to appreciate the current pressures service providers are facing on their networks. 

“However, with innovation in mobile markets moving at the fastest pace since the industrys inception, and apps becoming the favoured way for users to receive content on their smartphones, now is the time for providers to urgently review their entire product strategy and business models. This will enable them to take the lead on the evolving app market and fend off the competition from new start-ups or garage based entrants to their market who are contracting directly with corporates.” 

Ole Krogh Buus, associate partner at HP Enterprise Services says that service providers should explore a range of options. “(They) could consider innovative pricing for new services in data security, smart-metering and location-based services,” he says. “There could also be opportunities to leverage apps across platforms, from smartphones and tablets onto laptops and PCs. This could open up these traditionally low yield assets within the home to a new revenue stream, in much the same way as the TV has changed from the box in the corner of the room to an ever-evolving revenue source.” 

And Fraser says that collaboration with industry players is key to survival in the mobile space. “In order to capture their share of the estimated €4bn (£3.5bn) mobile applications market, service providers need to have a greater degree of assertiveness and independence and collaborate more openly and effectively with other players in the industry,” he says. “Now is the time for a change of mindset from one that concentrates solely on the network footprint, to one of innovation.”

The full report can be downloaded from the PwC website.