Wireless data and electronic applications should become increa-singly
popular in the future, with users trading stocks, doing comparison-shopping
and making travel arrangements, all via wireless devices. The wireless
Internet is following the same development pattern as wired Internet:
although it is a step behind the wired Internet in pursuing e-commerce
opportunities, the wireless industry is moving toward more widespread
e-commerce applications. The Internet is increasingly seen as just a
stepping stone to M-Commerce.
A slew of companies have already rushed into the market, hoping to
be the first ones to find the gold mine. Banks, stock trading companies,
brand name stores, portals, etc. - everybody wants to be global. The
pace of investment in wireless data services is quickening. Accelerated
investment has also been observed from global wireless/technology leaders'
(Sprint PCS, AT&T Wireless, Nokia, Ericsson, Microsoft) intent to
secure a major role in wireless data solutions. We have also witnessed
leading Internet firms, including Amazon.com and Dell computer, forming
strategic alliances to position themselves for the evolution of M-Commerce.
Why is M-Commerce such a hotissue today?
Because advances in wireless communication technologies are basically
extending the Net to a variety of portable devices and appliances such
as cellular phones and pagers and palmtop computers. In addition, because
the content that can be delivered to the handset, laptop, or palmtop
computers is restricted for low bandwidth, low battery life, and high
latency issues, network operators have more incentive to provide end-users
with personalized and location dependent content.
Moreover, competition has resulted in the wireless infrastructure becoming
cheaper. It is becoming faster than wire for a lot of things and easier
to use as well. There are about 70 million cellular phones in the U.S.
alone. Because of heavy business use, it is difficult to relate that
raw number to the usual measures of household penetration in the consumer
market. But as a rough benchmark the cell phone total is in the same
range as television subscribers, as well as personal computers.
Per-minute pricing has declined considerably over recent years. The
average cost per minute has been estimated to range from US$0.12 to
US$0.15, down from prices of more than US$0.20 two years ago. Strong
price elasticity compelled network operators such as AT&T Wireless
and Sprint PCS to offer value oriented one-rate plans during the last
two to three years. Since then, those plans have paid off, contributing
heavily to record subscriber additions. For example, Sprint PCS added
new subscribers in the September quarter-one of the largest single-quarter
gains in the wireless industry.
With that in mind, it should be inferred that cellular telephony is
on its way to becoming a commodity. Portals and content providers as
well as phone operators are taking advantage of a potentially huge market.
Most of all, Frost & Sullivan believes that the wireless revolution
will be driven in the short term by the "anytime anywhere access."
In the initial phases of development - and until the new technology
becomes a necessity just like the Internet is nowadays to North America
(which has the highest penetration rate worldwide) - three principles
will push people to conduct transactions on the Internet.
Existing operator relationships
Mobile operators are ideally positioned to lead the M-Commerce market
revolution, as they possess comprehensive customer data, such as demographics,
customer patterns, and a detailed profile as well as an existing billing
relationship. Moreover, mobile operators possess information about the
geographical position of the end-user, which greatly facilitates the
offerings of location-based services. This position gives them great
bargaining powers, and will radically change as the technology becomes
more of a necessity or commodity. Indeed, considering the different
business models for serving the increasing mass market demand for mobile
phones and for building mobile portals, a split up of network operator
organizations into mobile voice and mobile portal is likely in the medium
and long terms.
Personalization
Most and for all, M-Commerce is all about personalization - creating
services that are tailored to the end-user experience for the individual
subscriber. It is based on the concept of one-on-one marketing. The
idea is that the platform must be able to learn from both user preferences
and past behavior in order to track a pattern. The application must
be personalized enough to optimize the interaction path, enabling users
to reach the services they want with as few clicks as possible, and
presenting the information in a compact form optimized for the smart
phone (or communicator). It is our view that personalization will drive
the growth of M-Commerce, and will enable wireless portals to provide
additional value-added services compared to traditional portal offerings.
Location sensitivity
As far as the location aspect, there are currently several technologies
competing in this space. Location sensitivity is a crucial factor in
M-commerce: knowing the location of the user drives the service and
application offering to a level that creates additional value to the
end user. Users need local information about their normal local environment,
and the added feature becomes even more valuable to the user when travelling.
End user education critical
However, the horizon is not perfectly clear. Just like wired Internet
services, the wireless world is grappling with transaction security
issues. Because M-Commerce is relatively new, wireless operators must
combat negative perceptions of the wireless link. Typically, the user
has less confidence than in the wired world. Indeed, wireless users
have heard about or fallen victim to cloning in the past. They believe
that if someone could listen in on their conversation, at least in the
analog world, those same eavesdroppers could certainly tamper with their
data.
Moreover, the multiplicity of technical standards, the difficulty and
expense of roaming outside a given carrier's territory, and the limits
to how much information can be displayed attractively on tiny screens,
are regarded as obstacles to anything but simple inquiries and response.
Thus, educating the end users about the implications of doing M-Commerce
on a cell phone or PDA will be a crucial factor for the technology to
become adopted on a large basis.