Talk about a no-brainer. Well over a year ago, it was crystal clear to Samir Shah, executive vice president of strategic planning and business development at National Discount Brokers Corp., that many customers would jump at a chance to use cell phones and handheld devices for wireless online trading.

For Shah, the real questions were how many, how soon and how much of his internal IT budget should he devote to making it happen? The 100-person IT staff at the company's NDB division was already overwhelmed with hundreds of projects, including just keeping the e-commerce site up and running. Getting up to speed on wireless Web technologiesâ€"and keeping up with the rapid changes in wireless protocols, devices and markup languagesâ€"would require a major investment. It was an investment that, without some wireless Web experience under its belt, NDB wasn't quite ready to make.

So late last year Shah opted to turn deployment of the first phase of NDB's wireless trading initiative over to Aether Systems Inc., one of a small but growing number of ASPs (application service providers) specializing in helping e-businesses go wireless. The result: NDB was able to get its first wireless Web offering off the ground quickly, gaining valuable knowledge about what wireless services brokerage customers want most.

"That's the beauty of outsourcing," Shah said. "You don't have to worry about the technology and testing [devices]."

A growing number of e-businesses are turning to wireless ASPs. Time- and cash-strapped companies such as NDB and CDNow Inc. see outsourcing as the best way to get wireless Web applications up quickly and to cut through complex and rapidly changing wireless technologies, all without needing to invest directly in new hardware, software or people.

Wireless ASPs, however, are not necessarily the answer for every e-business, experts said. E-businesses dealing with sensitive customer data, for example, will want to carefully investigate outsourcers' security technologies and processes before turning data over to one of them, they said.

At the same time, services from wireless ASPs aren't cheap. Many levy initial setup fees that can run from $100,000 to $200,000, said Charul Vyas, an analyst at International Data Corp., in Austin, Texas. And many charge monthly per-user fees on top of that.

Still, e-business strategists say, using a wireless ASP to get applications up quickly makes sense. "You need a lot of financial commitment to do wireless today if you do it yourself," Shah said. "What we do well is trading [technology]. We know what it costs to maintain [an online trading system] and for the initial investment. We never dreamed of replicating that with wireless."

A new market takes flight

Wireless providers such as Aether, of Owings Mills, Md., represent the latest wrinkle in the ASP model. While ASPs' offerings vary, most wireless ASP services revolve around hosted applications that transform Web and legacy system content and data into formats such as Wireless Markup Language and Handheld Device Markup Language that can be accessed by customers using a variety of wireless devices, everything from WAP (Wireless Application Protocol) phones, Palm Inc. PDAs (personal digital assistants) and Microsoft Corp.'s Pocket PCs to two-way pagers such as Research in Motion Ltd.'s BlackBerry.

Some, like Aether, also help e-businesses build and host wireless applications and even bundle those with wireless devices that can be sold by e-businesses to their online customers. They also offer support for wireless customers.

The field of wireless ASPs today is small but growing rapidly. It includes startups such as ViaFone.com Inc. and 2Roam Inc., both of Redwood City, Calif., and Air2Web Inc., of Atlanta. Some wireless ASPs, such as Aether, and competitors such as Toronto-based 724 Solutions Inc. and New York-based w-Technologies Inc. have targeted the financial services industry. Aether is also working in transportation, government and health care (see story, "Service providers ease the way to wireless for e-business"). All of those providers are chasing a market for wireless ASP services that is expected to grow rapidly over the next few years, from about US$14 million in 1999 to US$732 million by 2004, according to IDC.

In addition to the ASPs that have been launched to provide hosted wireless Web applications, some existing ASPs are beginning to add wireless capabilities on top of applications they were already hosting. They include UpShot Inc., of Mountain View, Calif., and Done.com Inc., of Belmont, Calif. (see story, "ASPs tie wireless into the package").

Using Aether so far has paid off for NDB. The broker was able to quickly dip its toe into the wireless market, launching its initial service targeted at its more affluent, high-net-worth customers in 10 months.

The service, called Mobility, was launched in September. For US$49.99 a month, customers get a Palm V handheld with an Omni Sky Corp. modem and access from the device to NDB stock quotes, news and trading, plus e-mail. Aether handles customer service and fulfills orders for the service and the devices along with hosting its middleware, which provides wireless access to NDB's Web applications and trading system.

Now that it has used Aether to get some wireless experience, NDB plans to expand its wireless Web offering. One thing the company has learned: Customers want to use a wide range of wireless devices, not just Palm handhelds. In the first quarter of next year, NDB plans to launch services for a full array of devices, including WAP phones, Pocket PCs and two-way pagers. The expanded service will be made available to NDB's overall customer base.

Shah, who selected Aether after reviewing bids from five wireless ASPs, declined to say how much he's paying for the Aether service.

No mess, no fuss

While e-businesses such as NDB see using ASPs as a good way to get into wireless quickly, others are motivated more by the opportunity to offload the hassle and expense of responding to lightning-quick changes taking place in wireless technologies.

"We're still in an era of competing standards, and who knows who the winner will be?" said D.R. Grimes, CEO of NetBank Inc., an Atlanta-based Internet bank that outsourced wireless Web services to Air2Web. NetBank, which launched its wireless offering in September, wanted to deploy the service to as many of its 135,000 account holders as possible and to support a wide array of devices, including PDAs, WAP phones and even non-WAP cell phones using Short Message Service.

Supporting that many wireless devices, however, meant that NetBank would need to be ready to respond quickly when, say, the still-young WAP standard changes. So NetBank, which had experience outsourcing other operations to ASPs, decided to use an ASP for wireless Web services.

So far, Grimes said, the Air2Web service has been safe, secure and reliable.

Not all enterprises will be willing to rely on relatively young ASPs to support critical wireless services or to protect sensitive customer data. Nor should they, say experts. Before signing on with a wireless ASP, said Steve Butman, chief technology officer at wireless consulting and integration company Mobilocity Inc., in New York, IT managers should be satisfied that the service provider has a strong business plan and that it won't go away. IT managers should also ensure that their wireless ASP has invested in creating a secure environment. Because they view wireless as a competitive advantage, Butman predicted, many larger enterprises in particular may choose to maintain control of their wireless initiatives.

"In wireless, we are where we were four years ago with the Internet, with technology changing weekly or monthly," Butman said. "It makes sense to let the dust settle on the technology before outsourcing."

One company that has decided to develop wireless Web systems and skills in-house is Excara Inc. The company, which runs industrial goods e-marketplace PurchasingCenter.com, recently decided to deploy NetMorf Inc.'s SiteMorf software to transform Web contentâ€"350,000 catalog itemsâ€"into a form accessible by buying agents using WAP phones. Officials at Excara expect that NetMorf will help the company keep up with changes in wireless technology standards by continuously upgrading the SiteMorf tool. Meanwhile, Excara gets to take direct responsibility for issues like security and reliability.

Not that e-business managers going the wireless outsourcing route aren't also concerned about controlling issues like security. NDB's Shah took pains to get his reliability and security questions answered before signing on with Aether. Shah, for example, demanded contract language prohibiting Aether from making any use of NDB's customer information. In addition, he made sure that Aether's wireless sessions are encrypted. Shah got NDB's IT department to approve Aether's security before the implementation.

And NDB, during its review of wireless ASPs, evaluated all providers' long-term viability, considering their financial backing and plan for growth.

It's got the beat

While a wireless ASP might not be right for everyone, it was a fit for music e-tailer CDNow. While other dot-coms have leapt into wireless by spending millions of dollars on development and bleeding-edge features, CDNow couldn't afford that. Like a growing number of dot-coms, CDNow was running low on cash before being acquired in September by Bertelsmann AG.

"We wanted to control the cost equation here and not repeat the mistake of companies overspending money," said Srdjan Loncar, team leader for wireless at CDNow, in Fort Washington, Pa. "I really don't think you need all the bells and whistles to learn the potential of the [wireless] application."

The wireless initiative started at the beginning of the year with Loncar pulling together a team from across the company that now numbers about four people focused on wireless and another 10 who help out when needed. Few of them had much experience, however, with wireless technology or strategy. So in May, CDNow signed on with wireless ASP ViaFone. The company was able to launch its first WAP application five months later, on Oct. 16. Loncar would not disclose pricing details.

The first iteration of CDNow's wireless offering is what Loncar himself calls "bare bones." Wireless browsers can search CDNow, browse the music charts of top sellers, get recommendations and order CDs. It doesn't yet allow consumers to purchase other products such as DVDs and videocassettes.

CDNow's plans call for adding access from Palm Vs and VIIs soon. Next will be two-way pagers and voice access.

Although its current wireless offering is minimal, the important thing is that, using ViaFone, CDNow was able to gain valuable wireless experience quickly. That's critical because Loncar expects wireless to bring CDNow a new link to customers and potential sales increases. And for struggling dot-coms such as CDNow, that's crucial.

"I wanted to make sure we lay the foundation from a technological perspective but also from a business perspective of making a wireless application work," Loncar said. "So when there's mass consumer acceptance, we are ready to rock 'n' roll."

ASP tie wireless into the package

In the market for hosted wireless services but nervous about signing on with a new, untested wireless ASP? Not to worry. Soon you may be able to get hosted wireless services from the application service provider you're already using to run your enterprise ap plications.

ASPs that are already offering hosted sales force automation, workflow and other applications are increasingly rolling out wireless versions. Two smaller ASPs that have done so in the last six months are Done.com Inc. and UpShot.com.

Done.com, of Belmont, Calif., focuses on workflow management, while UpShot.com, of Mountain View, Calif., has an SFA (sales force automation) application. For UpShot customers, adding wireless to SFA means salespeople on the road can get instant access to contacts and leads. For customers of Done.com, knowing when a co-worker or customer has made a change to a project, any time, anywhere, can make projects go more smoothly.

At startup Conduit Inc., for example, the wireless component of Done.com's workflow application has helped the company land some of its most important deals. CEO Sujay Jadhav, whose company helps building material suppliers set up private exchanges, said allowing salespeople to respond to customers quickly using wireless devices has been a critical factor in Conduit's winning at least two of its five customers.

Conduit, of South San Francisco, Calif., has been using Done.com for six months, first in managing recruitment. It added wireless on Wireless Application Protocol phones and Palm VIIs three months ago, and four salespeople are now using it to receive alerts when customers have sent e-mail messages about pending deals.

Using the wireless feature to help close even one deal would more than pay for the service, which costs Conduit $500 a month, Jadhav said. "The bottom line is, when you send an e-mail to someone and they respond back in 2 to 3 minutes, you increase the chances of getting the deal," he said.

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