The South African mobile data services market is set to explode, as operators and services providers gain experience in packaging attractive applications, and start to market them aggressively to end-users.

That is the word from Doug Mattheus, marketing director at independent cellular service provider, Nashua Mobile. He says that after years of hype, users are set to flock to new data services that have evolved from popular SMS text messaging.

In a market that has become disillusioned with the promises of technology, it has become common for analysts to revise downwards their forecasts for the growth of a hot new application.

But the mobile data market is performing so strongly that one research firm has amended its forecasts to provide for stronger performance than initially expected, says Mattheus.

Strategy Analytics Ltd. predicts that global revenues from mobile data will grow from around US$61 billion this year to around $190 billion in 2009, with person-to-person messaging representing 48 percent of the market.

The research firm has increased its revenue outlook for the period upwards since its last study, saying that the market is growing faster than it initially expected.

Mattheus believes that the strong performance of the global mobile data market can be attributed to the convergence of a range of trends. These include:

-- Quick penetration of high-end cell phones, with rich features like camera and full-color screens into the market;

-- A growing understanding from operators and service providers of which services are likely to be attractive for users;

-- More aggressive marketing of new-age services that take advantage of the power of GPRS and 3G networks;

-- Falling prices for data services in most parts of the world; and

-- Widespread availability of networks built on high-speed technologies such as 3G and GPRS.

Multimedia data applications are expected to perform strongly in the coming years. Mattheus says sports and news services, downloadable ringtones and mobile gaming will emerge as key data services in mature cellular markets over the next five years.

One initial killer application for mobile multimedia is person-to-person messaging (multimedia messaging services or MMS): the simple transmission of a message that features sound, graphics, animations and so on from one person to another.

This market is being spurred on by rapid distribution of cell phones, with camera into the market by operators.

Operators and service providers are likely to be disappointed, however, if they are counting on MMS to turn into as much of a cash cow as SMS. Says Mattheus: "There is a dark side to MMS for operators: SMS provides margins of up to 95 percent, while marking up MMS to that extent would make it prohibitively expensive for the end-users. Ideally, MMS needs to be used as a hook for luring users towards using more profitable services such as paid-for media content."

Nonetheless, Strategy Analytics does expect lowly text messaging to remain the dominant global data application. By 2009, SMS will still be generating 26 percent of all data revenues.

Mattheus says the growth of the data market will not be strong enough to compensate operators for falling average revenue per user across voice services, but it will nonetheless be welcome in a market where voice services are under severe margin pressure.

Continues Mattheus: "In SA, operators and service providers have yet to aggressively market their data services and prices remain comparatively high. For that reason, MMS and other multimedia applications have yet to take off here.

"However, as the operators look to accelerate their roll-out of 3G services, and as they seek to turn their existing investments into GPRS into revenues, that picture will begin to change. Not only will users be able to access a host of exciting new services, but operators will also be able to diversify their revenue streams and optimize use of their networks."