Mobile commerce applications that use third-generation (3G) wireless technology are likely to appear slowly, but they will grow steadily over the next five years, predicts analyst firm The Yankee Group. It estimates that by 2006, telecoms operators in western Europe will reap five percent of their turnover from mobile commerce, taking a share of transaction and advertising revenue.
Early high-profile services are likely to be aimed mainly at consumers. Worldzap, for example, is a firm set up last March to deliver premium sports and entertainment content to mobile devices. Its core business will be the delivery of near-live video clips of exclusive sports highlights to mobile phones.
Worldzap has not yet said when it will roll out the service. 'We have not yet proven we can scale up the offering and we will need to work with telecoms carriers and handset providers,' said Brad Kwong, chief executive of Worldzap. 'So currently we are focusing on 2G mobile systems and the delivery of text and audio services.'
Educating businesses and users about the possibilities of 3G mobile services will be vital to their success. Consumer applications like that offered by Worldzap will help this process by showing people how mobile commerce works, in the same way that early consumer e-commerce applications demonstrated the business potential of e-trade. 'There isn't a perceived need among people at the moment as to why they would need these services on their mobile,' said Jamie Pierre Bridel, senior principal for mobile services at American Management Systems, a business and technology consultancy.
Another key to success will be the management of user expectations. WAP-based services have suffered because they were promoted as the 'Internet on your mobile phone' . The reality cannot fulfil this promise and has left many users disappointed. Declan Lonergan, director of the wireless mobile group at Yankee, said, 'Expectations management is critical for the future of m-commerce because everyone is reminded of the way WAP was overhyped. For m-commerce to succeed, it is important not to launch new services until they are ready.'
Developers of m-commerce applications should focus on the key benefits of mobile technology, said Lonergan. 'Applications need to focus on mobility and not compete directly with [other types of] e-commerce,' he said. 'Don't focus on the sale of goods online. Focus on applications where the customer is mobile, such as mobile ticketing.'
Interoperability of computer systems will also be important if m-commerce applications are to grow. Klaus Elix, European chief technology officer at American Management Systems, said, 'Firms need to think about interoperability and integrating their partners into their own IT systems. With multiple parties involved, the value chain will become distributed and IT systems will need to be re-architected to support this.'
How firms will charge for m-commerce and how they will share revenues is still unclear. In the medium-term network operators are expected to take a share of transactions or of advertising revenues by forming partnerships with content providers.
'Mobile operators are going in the direction of a walled garden approach [so users have to use those operators' systems] to get revenue share,' said Bridel. 'That is the direction the market is going in and it is sustainable for the next five to six years.'
The success of Short Message Service (SMS) messaging may also offer some lessons and models for m-commerce firms, said Sherry Roberts, corporate development director at portal firm Lycos Europe. 'We need to understand existing revenue streams such as SMS and convert SMS users to GPRS services,' said Roberts.
