HELSINKI/OSLO- As phone makers increasingly focus on developing their own browsers, mobile browser makers are turning to operators and new software stores to open new sales opportunities to make up for lost sales.
Wireless Internet usage is set to surge in 2010 and beyond as operators and phone makers continue to play catchup with Apple's iPhone, but getting software into phones is increasingly difficult as many handset vendors are pinning their faith on their own browsers.
Compounding the problem for browser makers, the second largest supplier of browsers to personal computers, Mozilla, is also entering the mobile market this year, crashing an already crowded party.
Opera, Myriad, and other smaller browser firms are now refocusing their efforts to sell browsers to telecoms operators, who have a key role in phone distribution on many large markets, including the United States and Britain.
Opera's ticket in is the operators, getting the operators to push phones with Opera pre-installed, said Nordea analyst Andre Adolfsen.
It is important that they get deals with big operators that push to get Opera into the mobiles so that you don't have to download (the browser), he said.
Opera has signed up some top operators, like Vodafone and AT&T, to sell its browser.
Browser makers are also turning to new online software stores like those from Nokia and Microsoft to distribute their browsers. U.S. firm Skyfire said around 1,000 people a day are downloading its browser through this direct channel to consumers.
Tech-savvy consumers have long used cellphones to access Internet on the go, but Internet usage moved firmly into the wireless industry's focus after the 2007 introduction of the iPhone.
All top handset vendors have since scrambled to match the iPhone's browsing experience, by buying software or whole companies, or by trying to build better browsers.
Blackberry-maker RIM's buy last year of browser firm Torch is not expected to be the last of such deals, but many handset vendors, including Nokia, have also increasingly focused on developing their own browsers.
This has hurt business for standalone browser firms including Opera, maker of the world's most used mobile browser and the only publicly listed pureplay browser firm.
In our industry it's not always the case that the best product wins, says Simon Wilkinson, Chief Executive of Myriad.
For large companies it's been always a choice of buy or build. We will constantly go through this cycle. Currently we are at a build. However, they are prepared to buy if you can offer differentiation - especially in terms of an improved user experience, he said.
Opera in November posted a surprise third-quarter loss and its shares have shed 44 percent since peaking at 34.90 crowns mid-2009, compared with 12 percent rise in DJ STOXX European technology shares index.
Opera shares are trading at 35 times expected 2010 earnings of 0.56 crowns per share, valuing the company at $416 million.
BIG MARKET, SMALL REVENUES
Browser market volume is massive. Annually around one billion phones are sold with some browser software on them, and Swiss mobile software firm Myriad says its browser has been installed on two billion devices over the years.
However, little money changes hands as most browsers come from handset vendors themselves. Yankee group analyst Carl Howe puts the average cost of mobile browser at around $0.10.
The success of iPhone has proved smooth Internet browsing is the key driver for the whole smartphone market, where annuallly more than 200 million phones are sold, making the market worth well over $60 billion.
The most used mobile browsers are Opera, Apple and Nokia, according to data from web research firm StatCounter, but market share of traffic is less than 30 percent for case of each of the three rivals.
The wireless browser market is very different from the PC world, where Microsoft's Internet Explorer is used by around 60 percent of consumers, with most other consumers using Mozilla's Firefox browser.
Internet Exporer's success on computers is linked to prevalence of Microsoft's Windows operating system, but the mobile world is much more fragmented with both open-source and proprietorial systems.
Windows is used on close to 10 percent of smartphones, but even top Windows models from makers like HTC are often sold with Opera's browser.
(Editing by Sitaraman Shankar)