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Mobile Experience Promises to be Personal

Channel Partners

March 1, 2001

8 Min Read
Mobile Experience Promises to be Personal

Posted: 03/2001

Mobile Experience Promises to be Personal
By Josh Long

Crawling through Los Angeles traffic gridlock on a Friday night, a car dealer
uses his mobile phone to access the company Intranet to re-examine his staff’s
sales numbers.

Through a pair of instant messages, he learns his starched shirts are ready
for pick-up, and that an airline is offering a $100 first-class, round-trip
ticket leaving for Seattle, where his children live, in 45 minutes.

Don’t be surprised: You have just entered the universe of mobile mania, circa
2004.

Mobile Dollars

Today, mobile commerce is an ambiguous phrase. One thing is certain, however:
Operators have coughed up billions of dollars to build next-generation networks,
and from ESPN (www.espn.com) to Disney (www.disney.com)
to Amazon.com Inc. (www.amazon.com), every
dot com and brick-and-mortar behemoth is forging information and commerce-based
alliances in the mobile environment.

At the very least, they and other business sectors, like the highly-involved
financial institutions, are testing the airwaves.

"I wonder how far it is really going to go," muses Dale Gonzalez,
vice president of wireless engineering for Air2Web Inc. (www.air2web.com),
a hosted mobile Internet applications platform. But as Gonzalez chimes in later
of the mobile phenomenon that has gone bonanza already in Asia and Europe,
"Time has to pass."

Research group IDC (www.idc.com) predicts
"rollout of mobile-specific commerce applications will be slow and steady
rather than rapid," and that m-commerce will only generate $1 billion of
the worldwide business-to-consumer Internet commerce market out of an estimated
$95 billion this year.

Other analysts anticipate staggering cash flows in a few years. By 2006, 325
million people around the world will generate $230 billion in m-commerce
revenues, according to a recent study issued by Strategy Analytics (www.strategyanalytics.com).
However, only a byte-sized portion of revenues–3 percent–will fall into the
hands of operators, according to m-commerce and 3G guru David Kerr, vice
president of wireless services at Strategy Analytics.

"They [operators] ought to be cautious about prospects for short-term
returns," says the mobile analyst, who notes that even he is not bullish
enough to "bet the farm on rampant demand" in contrast to the European
operators who have spent $150 billion so far to buy 3G licenses.

Wireless carriers, Internet leaders such as Yahoo! Inc. (www.yahoo.com),
and infrastructure providers who support mobile transactions will share in the
revenues, says managing director Marianne Wolk at investment banking firm
Robertson Stephens Inc. (www.robertsonstephens.com),
a Fleet Boston financial company. Wolk says the split will depend on which
companies garner customer control.

"We believe it is too soon to say who will carry the lion’s share of
revenues," she adds.

Baby Steps

Mobile commerce is in its infancy–at least in the United States, where PCs
represent the average citizen’s first exposure to the Internet in stark contrast
to a Finn or Japanese citizen.

Still, there were more than 109 million U.S. wireless subscribers as of
January 2001. Carriers have introduced data-related commercial service during
the past few years, and the number of subscribers is mounting steadily.

For example, 1 million customers had signed on with Sprint PCS Wireless Web (www.sprintpcs.com)
by early January. The service was launched only about 18 months earlier.

AT&T Wireless Services Inc. (www.attws.com),
which only released third-quarter results for 2000 as of press time, reported
that 300,000 people subscribed to its AT&T Digital PocketNet Service since
its introduction in March 2001.

And, Verizon Wireless (www.verizonwireless.com)
reported a total of 750,000 data subscribers at the end of the fourth quarter,
which included mobile web and cellular digital packet data (CDPD) network
subscribers.

"I think the biggest challenge is demonstrating value to
customers," says Jeffrey Nelson, a spokesperson at Verizon Wireless.
"We need to throughout the industry demonstrate why wireless data service
is important and how it can improve people’s lives."

Americans thus far have demonstrated a considerable interest in obtaining
information-based services such as travel and financial reports, and actual
business transactions are beginning to play a greater role through dot coms and
other enterprise partnerships, sources say.

Wolk says the financial services sector has been the most aggressive in the
mobile arena followed by technology companies like Dell Computer Corp. (www.dell.com)
and Sun Microsystems Inc. (www.sun.com).

Others coming to bat in the m-commerce game include consumer products,
education, health care and manufacturing, she says.

"Psychologically I think many companies did not want to be left behind
the wireless Internet or be the last to market," Wolk explains.

Carriers in the United States and abroad have spent billions of dollars to
acquire 3G licenses and deploy networks that promise Star Trek speeds.

Strategy Analytics predicts operators will spend $250 billion during the next
three years to acquire licenses for 3G services, and an additional $600 billion
to build and deploy networks.

Inferiority Complex

For now, mobile technology in the United States is too inferior to seriously
challenge web minutes on the PC.

Data speeds on mobile devices are slower than on a home or office PC,
Internet content is limited, color is not an option, and even the best eyes must
adjust to a screen half the size of a credit card.

Plus, operators often charge a per-minute fee on circuit-based networks
rather than a flat rate, which will become feasible using packet-based
infrastructure such as Universal Mobile Telecommunications System (UMTS).

Analysts say 3G systems will hold greater appeal.

Downloading content at 14.4kbps–the speed mobile devices now often
support–is like topping out in a 10-year-old automobile at 50 miles-per-hour,
says analyst Kerr. A 3G deployment, which will enable 384kbps in a mobile
environment, is the equivalent of driving a Ferrari, the analyst explains.

Cultural Distinctions

Of course, prowess is not the only impediment to mobile mania. Cultural norms
help explain the higher penetration rates and inclination to use mobile-based
data services abroad.

In Tokyo, for instance, Japanese citizens spend hours each day on the public
transportation system.

"I took the train every single day when I was in Tokyo," says
AT&T Wireless spokeswoman Danielle Perry, who spent her junior year abroad
at Sophia University (www.sophia.ac.jp).

What is more, many countries throughout the world introduced wireless devices
ahead of the PC. Even now, Internet penetration is much lower in Asia, for
instance, than the United States–a factor that may explain in part why NTT
DoCoMo Inc.’s (www.nttdocomo.co.jp) i-mode
service is so successful.

Although the mobile phone does not reproduce the experience of a PC, "it
does some really cool things, and they are getting cooler all the
time,"says Verizon Wireless’ Nelson. "While we don’t believe we will
ever replicate the experience on a PC, we have learned a lot from peoples’ uses
of PCs and connectivity, and that is everyone wants something different."

Indeed, the mobile possibilities are vast. Air2Web’s Gonzalez says mobile
commerce has three aspects: business or information-based transactions over the
web; use of the device as an alternative payment system to buy a coke at a
vending machine, for instance; and businesses spending money behind the scenes
to advertise or provide a sponsorship on the web.

Tracking Locations

Customizing content will be the golden ticket to mobile commerce and
operators must lock into the daily routines and personalities of their
subscribers, sources say.

Location-based technology–the ability to track a subscriber’s whereabouts
and deliver appropriate content via a mobile device–is hogging all the hype.

Research group Ovum Ltd. (www.ovum.com)
predicts mobile location services driven by m-commerce will generate $20 billion
by 2006. Ovum says operators, location technology vendors, and content providers
must offer consumers services that are "personalized and easy to use"
to maximize earnings.

Picture this: Your customer is standing at the movie theater waiting to see
the new Indiana Jones movie. Harrison Ford memorabilia pops up on his mobile
wireless device, then a discount on popcorn and Coke is displayed. However, if a
viewer is sitting in the theater glued to the opening scene, he probably does
not want a movie review at this time.

Because a subscriber’s "contexts" or circumstances change rapidly
in a mobile environment, technology must be suited to adapt to these changes on
a minute-by-minute basis, says Ralph Kenney, COO at R Systems Inc. (www.rsys.com),
an IT solutions provider that focuses on contextual computing.

Privacy Problems

The ability to track a customer’s location and his evolving circumstances
raises privacy concerns. Kenney and others say customers must specify they want
to opt in to a service that would track their location.

"The privacy issue clearly looms large over the wireless sector,
particularly [the] question surrounding location information," says James
X. Dempsey, senior staff cousel for the Washington, D.C.-based Center for
Democracy and Technology (www.cdt.org), a
public interest advocacy group.

For instance, the public advocacy spokesman says, there is no clear standard
in law that prohibits government agencies from requiring service providers to
release location-based information.

While there is a "huge potential for services of value to consumers,
users are going to insist upon trusting that their location information will not
be used to profile them and track them without their knowledge and expressed
prior consent," Dempsey says.

Operators also must address other privacy issues, such as the confidentiality
of financial information. Allowing subscribers to pay for services in advance
could save carriers money and mitigate fraud claims, according to Carla
Schneiderman, vice president of marketing and business development at Corsair
Communications Inc. (www.corsair.com), a
company that provides carriers real-time billing and mobile systems.

"Most of the rest of the world does telecom through prepaid," in
contrast to U.S. residents relying heavily on the credit system, says
Schneiderman, who explains that operators must dispel consumer myths in North
America that prepaid is only for people who cannot qualify for credit.

While Americans may be hesitant to make a purchase over the wireless web,
their security concerns will be assuaged given time, sources say.

"Not a single one of us thinks twice of putting a card in [an ATM],
typing a number and pulling cash out," Schneiderman says.

Josh Long is news editor for PHONE+ magazine.

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