Mobile commerce is a dream coming true, say the telcos. Well they
would, wouldn't they? Simon Quicke reports
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 widespread 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 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