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There are three ways in which a service can be provided on a mobile handset these days: it can be integrated, downloaded or served from “the cloud”. The multi-Million dollar question is – which one is going to rule?

A few years back, the only real way for a service to be noticed on a mobile device was by having it as an integrated part of the handset from day one. But these days, especially after the iPhone became the light tower for both mobile browsing AND application stores, there are more ways a service can be served.

The Integrated Service

The integrated service is one that comes out of the factory (or the operator’s hands). Most phones these days offer integrated capabilities for making voice calls, text messages (SMS) and multimedia messages (MMS); a rudimentary address book and call history; and some basic “organizer” features, such as calendar,  alarm clock, etc.

To become an integrated service, one needs to work really hard. Vision Mobile coined the term “the 100 million club” to indicate a vendor that was able to place its software on over 100 million handsets. What it really means, is that the vendor achieved the status of an integrated service on enough handsets to be relevant (it might not necessarily be a service, but it’s where vendors would LOVE to be).

It requires a lot of hard work, and usually tons of business connections, and there will always be a few of those only.

The level of integration required also means that it’s quite a headache to move the service between platforms – they will usually be embedded into the heart of the handsets hardware and operating system.

The Downloaded Service (aka Application)

Apple’s App Store has more than 100,000 applications these days – the essence of the long tail taken to the mobile applications domain. Everyone will find something there to suit their fancy.

I don’t have a smartphone myself, so I haven’t been playing around with the different application stores out there, but I think it is safe to say that applications there can be split into these broad categories:

• Casual Games – The ultimate time wasters. This includes the iFart , as well as other, more esoteric apps there.
• Productivity -Things that will actually enhance what you can do with your phone. Those apps you’d actually pay to use.
• Extensions – Applications that are designed to connect you to other, non mobile services (some of these can be filed under productivity as well). The vendors of these applications are after your money, but not by monetizing their application, but from connecting you to the service they have elsewhere. Pizza Hut’s iPhone app is a good example – it is said to generate an extra mil of sales.
• Replacements – Applications that are there to replace the integrated phone capabilities. A good example is an application that allows you to dial VoIP to reduce costs or enable you to connect via other means.

Downloadable applications will never achieve a large market penetration. They will be relatively easy to program, but will have to follow the restrictions of the application store that hosts them. A good example is the Apple App Store. Many developers jumped on its wagon, but are less than happy about the experience these days.

The Cloud-Based Service

There’s a new way to run your service on a handset these days, which is cloud computing – place your whole application on the cloud, make it accessible through the web and provide it to handsets via the phone’s browser.

A cloud-based service would be the easiest to modify for different mobile handsets and to make it available to a variety of platforms – from netbooks to PCs. Alas, it would be the most limited one in terms of the functionality and UI it can provide. It will also be the hardest to find when using a phone, and would require connectivity to work.

The Future?

It is safe to say that the downloadable application paradigm rules on today’s mobile handsets. It is where developers put their focus, it is how users see applications work.

The real question is what will happen next – will there be a changing trend of moving from downloadable applications towards the cloud, as we see today on PCs; or will the current changes in the mobile industry move the PC to the application store, where applications will be downloaded from dedicated stores instead of from a multitude of open websites.

Only time will tell.