Slow start for mobile commerce - Industry Trend or Event

CommunicationsWeek International, Oct 23, 2000 by Theresa Foley

With mobile commerce forecast to become the world's largest industry second only to healthcare, no wonder companies are chafing at the bit.

Mobile equipment manufacturers and operators are rushing to take advantage of the demand for mobile commerce systems.

According to consulting firm McKinsey & Company, mobile commerce could be the biggest growth industry of the decade. But manufacturers say that old-fashioned telephone equipment approval procedures could slow the introduction of new applications to users.

In the hunt

Speaking at the Personal communications Industry Association's Global Xchange exhibition in chicago last month, Ronald Smith, vice president and general manager of Intel's wireless computing and communications group, said: "If we have to go through a long-type approval process, the wireless Internet will fall behind the Internet and the whole buzz will dissipate."

Intel, of Santa Clara, California, wants to accelerate wireless access to the Internet so it can supply its chips and software. It is proposing a set of open interfaces between computing and communication stacks to be used in the new higher-performance. lower-power chips it has developed for wireless systems.

Handset and equipment maker Motorola is also in the hunt. Its strategy involves creating personal networks and developing partnerships with prospective competitors.

The Schaumburg. Illinois-based company is talking with Ericsson, Nokia and Samsung about what consumers want in mobile devices and services, said Webb.

Everybody wants everybody else's customers." said Janiece Webb. senior vice president and general manager for Motorola's personal networks group. "We're experiencing a collision of the Internet. computing, communications and entertainment.

"It's a hyper-innovative environment." said Kaj-Erik Relander, deputy chief executive of Sonera. "This conference is an enormous melting pot and everybody's trying to outsmart each other."

By 2010, mobile commerce will be the second largest industry in the world behind healthcare. according to Risto Perttunen, a McKinsey director in Helsinki and head of its global wireless group. Perttunen believes that by 2004, businesses will be using mobile technology to produce annual savings of $230 billion.

Like Intel, Motorola believes third-party partnerships are the key. Webb cited a joint venture with Cisco to set up wireless centers of excellence around the world. Motorola is also partnering wireless application developers such as AOL, Oracle and InfoSpace.

Webb predicts that the communications industry will adopt never-before-seen business models and find revenues from new sources, including software licenses, advertising revenue-sharing and digital film processing fees.

Mobile operator Sonera corp is also seeing mobile commerce draw in new players, such as Virgin, Barclays Bank and retailer carrefour. Sonera's strategy will be to find ways of integrating wireless applications so that end users get a more seamless service.

A related opportunity for operators is to be the "smart agent" who repackages the digital content for users, Relander said. Sonera and Motorola are among those establishing research and development centers to ensure their presence at the cutting edge.

Sun Microsystems provide gateways and middleware for the Internet, which it also wants to apply to the wireless Internet. According to John McFarlane, Sun's network service provider group president, networks have to provide real-time, continuous access to satisfy the new breed of wireless customer.

Once they do that and run at 128 kilobits per second, the bandwidth demand for streaming of games and audio will be potentially as large as voice, he said.

A wireless vision

San Francisco-based OracleMobile Inc.'s strategy involves keeping things simple and meeting customer needs by providing hosted services. According to chief executive Denise Lahey, as a wireless applications service provider it can deal with many types of gateways, networks, protocols and devices.

Meanwhile in Japan. NTT DoCoMo has become the world's top wireless Internet access provider in just over a year, through its i-mode offering. Out of 30 million mobile DoCoMo customers, 11 million had become i-mode subscribers as of August.

NTT senior vice president Yoshinori Uda presented a vision of wireless networking in which 360 million devices are ultimately deployed, enough to equip every person. PC and pet in the country.