The days when software developed in Ireland dominated the market is all but gone, writes John Collins

Ireland has had a reputation for a number of years as a centre of excellence for wireless software companies.

From the early 1990s, when Aldiscon pretty much dominated the market for software that allowed mobile operators to offer SMS services through to the current generations of 3G technology, software developed in Ireland has been at the heart of many mobile networks.

But the days when small software companies could come up with innovative solutions that would be snapped up by the big Tier 1 mobile operators is all but gone. Instead, the mobile networks are looking to deal with a smaller number of established companies that can help provide newer revenue-generating services to their customers.

Network 365, the company founded by industry veterans Andy DeMari and Raomal Perera in the late 1990s, saw the writing on the wall and merged with Silicon Valley-based iPin in 2003 to form Valista.

Initially focused on mobile payments, it now offers a full suite of merchandising, payments and settlement software and sells not only to mobile operators such as Vodafone, NTT DoCoMo, Orange and 3, but also to service providers such as AOL and Tiscali.

Fran Heeran, chief technology officer at Valista, has seen the market changes at first hand. "The operators are looking at us to provide settlement as well as payment solutions, and even content management as well," he says. "You really need to be able to offer an end-to-end solution."

As a result, Heeran says the company will round out its suite through its own development efforts and from external sources. Licensing in technology or acquiring companies that have suitable technology "are both on the cards".

While Valista has been hugely successful at winning business in Japan, the company is now focusing much of its efforts on the US. It seems a wise move considering the latest statistics show that the US mobile data market will increase by almost 75 per cent from $8.6 billion (€6.7 billion) in 2005 to more than $15 billion this year.

Heeran believes that while the US used to follow Europe in mobile trends, it is now moving faster due to the smaller number of operators.

When virtual mobile network operators and other smaller players are taken into consideration, there are about 70-80 mobile carriers in Europe compared to the US, where there is about a dozen.

"The gap between Europe and the US doesn't really exist any more," he says.

He also expects most mobile content to be offered on a subscription basis rather than through a pay-per-use model. "The cost of acquisition and the fact that the content value is so low means that operators want to push people down a subscription route."

He says operators are also influenced by the success of the i-mode subscription model in Japan - by far the most successful mobile data service yet - although, as he points out, i-mode operator DoCoMo has always kept prices low.

Despite its growth levelling off recently in what Heeran suggests is consumer weariness with the model, DoCoMo is still the number one carrier worldwide with more than $5.1 billion in data revenues for the first half of this year. Heeran expects music downloads to be the next area of significant growth for the mobile operators, but things will have to be made simpler for customers first.

When 3G was introduced, operators did not offer wholesale rates to content providers, which meant users could find themselves racking up network charges of €3-€4 to download a song they had already purchased for €2. "If the iTunes experience is to be replicated on the phone, customers need to know the price they pay is exactly what they are going to be charged," he says.

As the ability to be charged directly to your mobile bill for content from a range of providers, not just the operator itself, become more common, he believes mobile content will become even more popular.

He also says there are a number of technical constraints that need to be addressed before mobile music goes mainstream, such as the storage capacity of phones and digital rights management that does not allow purchased music to be transferred to other devices such as PCs or MP3 players.

"I think what's interesting is that, with Microsoft's Zune media player, there is talk of a mobile phone version being released shortly after it launches. Adding a phone to a proper media player is the right approach I think."

Certainly attempts to do it the other way around - by adding a media player to a phone - such as Motorola and Apple's Rokr, have been poorly received.

In common with most others in the industry, Heeran expects sports - whether live or highlights - to be one of the most popular forms of video content.

He also expects mobi-sodes - specially commissioned content for mobile consumption that either promotes a TV show or movie or provides an additional plot line not pursued on the main show - to be one of the main uses of mobile video. "It's going to be an extra marketing channel."

Although European operators have traditionally resisted outsourcing any of their infrastructure, Heeran says the model is proving popular in the US and Valista expects to be able to announce a significant contract with a major US network early next year.

"It's another prong to our offering to be able to offer the same technology as a managed service," explains Heeran. "There's also a revenue share element for us, which helps with our own revenue streams."