The M-Business Evolution
In this chapter, we cover the current state of the union within the mobile business community. This will provide a useful backdrop as we build from this starting point, the "as-is" situation, and explore enterprise strategies, case studies, and tactical action plans throughout the remainder of the book. It is important to note that the "as-is" situation has been driven in most part by the supply side of the equation: the wireless handset manufacturers, the wireless carriers, and the wireless infrastructure and software providersi.e., those who stand to benefit the most from the market creation and adoption. The demand side has picked up mostly in unexpected consumer application areas such as text messaging and gaming. Meanwhile, mainstream enterprise patiently observes in the wings.
Mainstream enterprise adoption is most likely to occur in areas that provide strong business benefits and return on investment. Enterprise success stories around M-Business are appearing more and more frequently. Several success stories from early adopters of M-Business are covered in the chapters on Applications and Process Models for M-Business Agility and Industry Examples. Typical enterprise applications of M-Business have been within wireless enablement of employees: sales force automation and field force automation being two of the most prominent areas with strong returns on investment coming to light.
Of course, the current "as-is" state within the mobile business community is continuously in flux and continuously redefining itself. Analyst predictions for the growth of the wireless Internet and for M-Commerce are merely just thatpredictions. They also vary widely between different analyst groups. But despite these variations in analyst predictions, we can still determine clear trends and plan our enterprise strategies accordingly.
Although markets can come and go, and in some cases never meet expectations in terms of potential size and ubiquity of products and services, the convergence of electronic business with telecommunications and other industries such as media, entertainment, and financial services will continue. The drivers toward adoption will become more powerful when compared to the barriers preventing adoption. As the market matures, innovative companies will create their own sub-markets within the industry; this will help to remove the current barriers to adoption for mobile business.
This chapter looks at some of the global trends behind wireless data adoption. In particular, the drivers and barriers to adoption, the telecom regulatory environment, the changes occurring within the telecommunications industry and within enterprise IT departments, the wireless Internet value chain, the wireless companies comprising the value chain, and finally some of the key applications of M-Business within the enterprise.
Many books have been written on the content of this single chapter alone. The aim here is to provide a high-level summary of some of these forces and then to move on to the strategy and implementation plans for leveraging M-Business within the enterprise for business advantage.
Much has been written about the global trends in the M-Business world. The United States is often cited as lagging behind the Asia-Pacific region and even further behind Europe in terms of its adoption of mobile businesssometimes cited up to two years behind. Much of this is owing to the fact that there are a number of competing wireless communications standards in the United States, versus the single standards in the rest of the world. This is actually just one of the factors that has led to Europe and the Asia-Pacific region becoming the early adopters. Other factors include cultural aspects, geographic aspects, political and regulatory aspects, pricing factors for Internet access, and the penetration rate of the wired Internet within these countries.
To understand the global trends in wireless communications and the growth of the wireless Internet, we need to start by understanding the growth of the Internet itself. Figure 21 shows the Internet penetration by region from a study by the ARC Group.
Figure 21 Internet User Penetration by Region. Source: ARC Group.
It is clear that the United States has dominated and will continue to dominate the statistics for the highest percentage penetration by region. Japan and Western Europe follow closely behind with the Asia-Pacific region and the rest of the world being further behind in penetration.
If we now turn to the penetration rates in terms of mobile data penetration (Figure 22), we see a different picture. The United States clearly lags behind Western Europe and Japan. Mobile data in this case includes access to data by cell phones, PDAs, and interactive pagers. At the current point in time, Western Europe is clearly the leader.
Figure 22 Mobile Data User Penetration by Region. Source: ARC Group.
Equipped with these predictions, the questions still remain as to what services will see the most demand and how often subscribers will use the wireless data features of their devices even if they are subscribed.
Beyond looking at penetration rates by region for the Internet and for mobile data, we also need to look at the number of mobile handsets being shipped, the number of users accessing various forms of mobile data, and the number of users conducting mobile commerce.
According to the research firm Jupiter, there will be 1 billion wireless Web devices in circulation by the year 2003. They also go on to say that companies must enable wireless extensions during the next 1218 months, or risk losing customers to competitors that do.
The wireless data market has really been ignited by consumers, but it is likely that the eventual winners will be enterprises that leverage the technology within their enterprise to create substantial returns on investment. Because of this consumer-based origin of the wireless data market it is important to look, at least briefly, at some of the consumer statistics before continuing our main enterprise focus throughout the course of the book.
Table 21 presents more data points in terms of predictions for the number of users and revenues generated via wireless devices and M-Commerce transactions.
Table 21 Predictions for Wireless Data and M-Commerce
Mobile Internet Devices (Worldwide)
1B mobile Internet access devices by 2003Yankee Group
Wireless Internet Users (Worldwide)
Growth from 46.3M in 1999 to 1.02B in 2005ARC Group
Enterprise Wireless Enablement
Enterprises will spend more than $400M by 2001 to wirelessly enable their businessAberdeen
M-Commerce Users (Worldwide)
Growth from fewer than a thousand users in 1999 to 29M in 2004IDC
M-Commerce Revenues (Worldwide)
$21B in revenues in 2004IDC
U.S. revenue generated through mobile devices by 2005: 32 billionMerrill Lynch
The analyst predictions provide some good quantitative data around the adoption of wireless data services and M-Commerce applications throughout the world. Consumers will gain access to Internet capable devices, will then begin to subscribe and use these services, and finally will become true M-Commerce users generating M-Commerce revenues.
Searching for the Killer Application
An often-asked question within the wireless Internet community regards the killer application. Is there a killer application, and if so, what is it? The answer is that killer applications for the wireless Internet vary by culture, by country, and by individual user. In Europe, the killer application has been Short Message Service (SMS) text messaging, in Japan interactive games and pictures via the NTT DoCoMo i-mode service, in North America e-mail via 2-way interactive pagers such as the RIM BlackBerry plus WAP-based wireless data portals providing news, stocks, and weather information.
Undoubtedly, these so-called killer applications will take on different forms as the wireless networks mature, devices morph into better form factors and capabilities, and wireless carriers experiment further and build upon their lessons learned. What is certain is that the amount of content and applications available via these devices will proliferate and M-Commerce services will evolve along with the non-transactional services.
Evolution to 3G Networks
In our discussion of the global trends within the M-Business environment, one topic we will hear a lot about is that of so-called 3G or Third Generation Networks. This is a term frequently used by the wireless carriers in order to describe their next generation wireless networks for voice and data communications. In this section, I'll provide a short definition of the characteristics of 3G networks when compared to older networks such as 1G, 2G, and 2.5G (Figure 23). This will equip us with some of the terminology that we need to understand when discussing trends in the telecom environment and how this will affect the enterprise moving forwards.
Figure 23 Comparison of 1G, 2G, 2.5G, and 3G Networks. Source: Nokia and 3G Newsroom.
The main advantages of the move toward 3G networks are the increased bandwidth and the worldwide standardization that 3G will bring to the global telecommunications industry. As such, increased bandwidth will enable the mainstream use of multimedia applications such as streaming audio and video and large file transfers.
Applications by Region
We'll now take a look at Europe, the Asia-Pacific, and the North American market to understand some of the wireless data applications that have obtained traction with subscribers. Since many enterprises have a business-to-consumer focus, it is useful to know what types of applications are experiencing uptake and which others are maturing.
European countries have had the advantage of a single digital mobile telecommunication standard in the Global System for Mobile communications, or GSM. GSM is a 2nd generation digital standard that accounts for over 64% of the world's wireless market. So-called 1st generation systems were the analog communications standards such as the Analog Mobile Phone System (AMPS).
GSM has international roaming capability and is supported in over 159 countries. It offers voice telephony services, including call waiting, call hold, call forwarding, and calling line identity (CLI), together with data services such as short messaging service (SMS), wireless application protocol (WAP), and general packet radio services (GPRS).
Short Message Service (SMS) has been the killer application in Europe, with over 50 billion global text messages sent within the first quarter of 2001 as reported by the GSM Association. In the UK, they report that customers generated 3.5 billion text messages in the first four months of 2001. The medium has proven popular not only for person-to-person messaging, but also as a response vehicle for television shows such as MTV that encourage audience participation. Additionally, brands such as Coca Cola and Budweiser have been leveraging the medium for targeted marketing campaigns.
The UK has also seen several M-Commerce trials and production deployments taking place. An example is the shopping service provided by the Safeway grocery chain that allows shoppers with Palm Pilot PDAs, provided by Safeway, to manage their shopping lists and submit orders to the store for picking and packing by store staff prior to customer collection. This program dates back to 1999, when Safeway offered their "Easi-Order" shopping service with Palm Pilots to 200 regular users of their "Collect & Go" home ordering service at a store near London. Safeway has since expanded the trial to more stores and customers and has plans for wireless access to the application functionality in addition to the current telephone dial-up access.
One of the biggest success stories for the wireless industry has come from the Asia Pacific region. The story and the success of the NTT DoCoMo i-mode service has been played back time and time again. NTT DoCoMo is Japan's largest mobile operator and has 24 million customers using the i-mode service. The i-mode service employs packet data transmission. Communications fees are charged by the amount of data transmitted/received rather than the amount of airtime.
Some of the services available include mobile banking, travel reservations, restaurant/town information, message services for news, I-mode compatible Web sites, e-mail, entertainment sites such as Disney and Universal Studios, and downloadable ring tones. DoCoMo provides certain content for free and provides premium content and applications for a monthly fee that ranges from 100 to 300 yen per month per offering.
One of the most interesting things about the I-mode service has been the speed with which consumers have adopted the service. The service started on February 22nd 1999, hit the 5M subscriber mark around the 1st year of service, and the 20M subscriber mark around the 2nd year of service. The adoption rate and revenues generated have been the envy of wireless carriers around the world.
The introductory phase of the company's "FOMA" 3G rollout was heavily over-subscribed with applications for nearly 150,000 mobile phones with 4,500 actually given out. Of these 4,500 mobile phones in trial, 1,200 were "visual" phones equipped with a video screen. FOMA is NTT DoMoCo's name used in Japan for their W-CDMA services and stands for "Freedom Of Mobile multimedia Access."
As 3G trials and rollouts move forward with the Asia Pacific region and within Europe, carriers within the United States are able to gain an early view into the adoption patterns for these types of services and adjust their strategies accordingly.
In North America, we have witnessed the popularity of the Sprint PCS wireless Web together with similar offerings from AT&T Wireless, Cingular Wireless, and Verizon Wireless among others. Sprint PCS passed the one million subscriber mark for wireless Web customers within the first year of its service.
In addition to access to the Internet via WAP-enabled cell phones, which is still a maturing application in the United States, one of the big trends in the U.S. has been the use of RIM wireless handhelds for receiving and sending corporate e-mail. The RIM 950 and 957 wireless handhelds manufactured by Research In Motion (RIM) provide an always-on service for wireless e-mail using the DataTAC and Mobitex wireless networks. Network operators for these services include Motient Corporation and Cingular Interactive in the United States and Bell Mobility and Rogers AT&T Wireless in Canada. Revenues for the operators of these services are attractive with monthly charges of $30 for 100,000 character service fairly typical.
Task-To-Device AffinityWAP Phone and RIM Pager Comparison
A personal anecdote may be useful in explaining what Forrester Research has termed the task-to-device affinity for wireless devices. This may help to explain why certain applications have been so successful with consumers and business users.
In addition to regularly using a laptop and PDA, I have a RIM pager and WAP-enabled cell phone. When comparing the usage levels of wireless Web against interactive messaging, I personally find myself spending more time with my RIM pager than with the data features of my WAP phone. One of the reasons, I believe, is due to the ease of use factor, or as Forrester terms it, the task-to-device affinity.
The RIMs' keyboard makes composition of e-mail messages very easy and much simpler than the equivalent process on a WAP phone. I tried sending e-mail over my WAP phone when I first obtained the phone and wanted to experiment. The process was so difficult that it took several minutes to compose a simple e-mail message and dispatch it. Conversely, I have found my WAP phone most useful for data access. Looking up stock quotes and news items and any tasks that do not require heavy text input. Even reading e-mail messages is acceptable on the WAP phonethe only limitation is really the data entry portion at present.
The task-to-device affinity issue is certainly a moving target. As cell phones and PDAs evolve into smartphones that combine the best of both worlds, the devices become more useable for a variety of functions including voice, e-mail, and Internet access. Today, WAP phones are good for data access, but not for all forms of data entry. Conversely, pagers are good for the single function of sending and receiving e-mail. The task-to-device affinity is an important topic especially for the enterprise since the ability to consolidate from three or four devices down to two or three can yield substantial cost savings in support costs.