Mobile commerce is a dream coming true, say the telcos. Well they
would, wouldn't they? Simon Quicke reports
Over the next 18 months, you'll be hearing a lot about the need
for your business to have a mobile commerce strategy. The telcos
that have spent billions on securing 3G licences want to get their
money back. For that to happen, they need businesses to develop,
deploy and make use of m-commerce services.
At first sight, the prospects for m-commerce look good. The huge
number of mobile phone users offers a potentially vast audience for
3G services. Datamonitor predicts there will be 260 million mobile
phones owners in Europe by 2003, while PC ownership lags far
behind.
Another potentially big advantage for m-commerce is that mobile
phones cost very little compared with a PC or interactive
television. Even with full WAP capabilities, a mobile phone is
still far cheaper than a PC.
But while many people would find it difficult to live without a
mobile phone, many IT directors see no sound business reason for
investing in services for mobile phones. Even companies that rely
on the Internet to push information to users are holding back on
investing large amounts in m-commerce.
It's not only the poverty of applications and dire bandwidth of
the current technology that is a problem for m-commerce. The
demographics are all wrong. The ownership of mobile phones and the
usage of text messaging services are largely associated with young
people. But the sort of m-commerce services that are being tipped
as money makers involve offering highly personalised
business-critical information - hardly the sort of service younger
users will be queuing up for.
But the biggest obstacle of all to the take-up of m-commerce is
that users have come to expect that information on the Internet
should be free. As a result, many organisations do not feel they
can make a success of charging for mobile phone services.
Take Thomascook.com, where ventures and futures
director Bill James has been given £30m to spend on developing
interactive content. The information the travel giant has
started to make available on the Web includes currency
conversions, weather reports and details from its travel guides
along with the company's bread-and-butter business of helping
people choose and then book holidays. James is planning to
improve what the site offers to keep pace with start-up rivals.
He accepts m-commerce merits investigating but sees it as no
more important than other emerging sales channels such as
interactive TV. "M-commerce has to be part of a multi-channel
approach," he says.
Thomas Cook believes its customers go through three phases:
dreaming, choosing/purchasing and holidaying. James sees TV as good
for the dreaming and selection stage, and the PC/Internet for
choosing and increasingly purchasing. The only stage m-commerce
currently fits is when a user is on holiday. "We could fill those
bits of a customer's journey with a mobile device. They could find
late departure information or details of bargain prices and
offerings once they arrived at their destination," he says.
But instead of charging users for receiving this sort of
information, Thomas Cook gives it away. Snow reports will be made
available this year to skiers with WAP (Wireless Application
Protocol) phones - also free of charge. James says that at one
point the company considered handing out Thomas Cook WAP phones but
drew back because it would have been a move away from its core
business, which is branded holidays not phones.
For the phone operators, hoping that m-commerce will lead to
personalised services that users will be prepared to pay for, this
sort of user strategy is a blow. With firms like Thomas Cook giving
it away for free right from the start, they fear future attempts to
introduce charges are being undermined.
Other IT directors share James' doubts about investing too
narrowly in just m-commerce. Shawn Cohen, CTO at Bigsave.com, says
users aren't bothering to take advantage of the current, limited
technology. "We never expected a single WAP order from our
customers," he reveals.
Although Cohen believes the technology will improve to support
the widepread buying and selling of goods and services, he also
thinks there will be a shift to interactive TV that will leave
m-commerce fighting to stand out against other methods of buying
goods.
Many businesses think phones are best just for talking through.
Nigel Mockford, IT director at City Truck Group, says his company
has already bought equipment for communicating with its drivers
remotely and tracking them through satellite messaging technology.
"If you're talking about using mobile phones to access the
Internet, then that's not really something we'd be interested in,"
he says.
Although few IT directors are prepared to invest in WAP as it
currently stands, better m-commerce technologies are on the way.
Graham Tolhurst, interactive media director of Scoot, urges IT
directors to look at the larger picture and see beyond the current
limitations of the technology. He says that 3G devices (see box)
will be able to handle video and sound clips and greater bandwidth,
offering a productive business information platform. "We're only
scratching the surface of what's possible," he says. "Handheld
m-commerce will overtake the Internet and dwarf the volume of
business currently done online."
So will 3G be the saviour of m-commerce? Possibly, but the
packet-based technology could also act as a deterrent. With
charging for packet-based information having to be done on a
micro-billing basis, considerable investment would be required to
set up systems that could charge for information.
In two and half years' time when 3G is a reality, the greater
bandwidth should make m-commerce a more viable route for
communicating and buying goods and services. Until that happens,
though, IT directors will be understandably resistant to signing up
for a dream that is being promoted by phone operators who have laid
out £100bn across Europe in 3G licence auctions.
Not surprisingly, the average IT director might struggle to get
funds from the board to invest in an m-commerce strategy. "I can
see IT directors having problems when they go into a board meeting
and say m-commerce is something they now need to consider so soon
after spending so much on e-commerce," says Paul McCarthy, UK
managing director at Brokat.
Generation Game
Current mobile phones are based on GSM circuit-switched
technology, which offers a relatively low 9.6Kbps bandwidth.
In the next year the move to bigger bandwidth will gain momentum
with packet-switched technology. This will involve getting used to
the acronyms HSCD, GPRS and Edge. All three are stepping-stones to
third-generation (3G) UMTS devices, offering bandwidths of 57Kbps,
171Kbps and 384Kbps respectively and are collectively described as
2.5G.
The third stage is what the phone operators were all bidding
madly for, the 3G or UMTS level. This offers a leap in bandwidth
capacity to 2Mbps. UMTS's packet-switched technology means it will
always be on, leading to a new form of billing.
The 3G Funding Gap
The telcos that have ploughed so much money into 3G licences
have only three possible sources of revenue for retrieving their
investment: the suppliers, the users or the portal operators.
Advertising
E-commerce's attempt to make money from adverts has largely been
a flop so there are doubts over whether m-commerce will have any
greater success. However, as m-commerce is much more individually
tailored, advertisers might be prepared to spend money knowing they
will reach target customers
Shared Revenue
An example of this would be if a phone company teamed up with a
product supplier and marketed its products and services. The costs
would not be passed on to the user but shared by the suppliers.
Subscription
An option likely to be taken up by the business community that
does not want to be sent a barrage of targeted advertising. The
more money you're prepared to pay, the less spam you will get. The
user bears the cost burden.
M-commerce in Action
Webraska Mobile Technologies provides users with real-time
travel information including worldwide navigation, traffic
information and maps Aspiro has developed a wireless transport
management system allowing managers to communicate with drivers in
real-time, sharing customer data, billing details and collection
addresses
Distractions Mobile Entertainment offers DistractionsLive, a
service designed for fans of music, sports, fashion and current
affairs Soneras offers consumers the Pointer Guide, a service
allowing travellers to log in and find accommodation, local
activities, events, maps and city guides
InteliData and Noblestar plan to offer financial institutions
integrated solutions for wired and wireless Internet banking,
enabling wireless banking for PDAs, WAP-enabled telephones and
SMS-based pagers