Let's face it, mobile commerce never delivered on the hype that surrounded it over the last few years. But that doesn't mean mobile commerce is dead, thanks to a new use of an old technology.
In the halcyon days of the late 1990s no-one believed e-commerce could fail. With Amazon.com's mighty morphing business model showing the way, pundits predicted that no-one would ever shop again without having compared prices from 100 online retailers, before buying from a B2B exchange at a group discount after a reverse auction. Commerce, we were assured, would be almost completely re-engineered. The reality has been less spectacular. Most of us shop in the same ways we used to, conservatism that has seen start-ups fall by the wayside and even retail giants like David Jones fail (twice) with e-tail ventures. Yet despite high profile failures, most of the e-commerce ideas that came to prominence during the times of dotcom optimism have persisted. Online price comparisons are plentiful; B2B exchanges exist and trade profitably, while reverse auctions have found their way into enterprise applications to become a useful weapon in the corporate procurer's arsenal.
Yet few similar innovations have made the leap to mobile commerce. Nor is the market abuzz with ideas of how mobile commerce might change the way we shop or trade: the few vending machines and parking meters which accept payment via mobile phone appeared interesting upon their debuts, but have not proven to be harbingers of change.
The little mobile commerce there is centres on applications designed to suit occupations like field service or field sales where point-of-activity data collection or data reference improve customer service significantly, or relieve irritating data integrity issues.
Many of these applications run on intermittently-connected laptop computers and take a substantial subset of an enterprise application out of the office into the field. These applications need the processing power of a laptop, if only to operate the database they require, and offer limited integration with enterprise applications through database synchronisation. Other mobile solutions go a step further and use always-connected devices.
Yet even this second class of application has limited appeal--a fraction of most business' workforces require omnipresent data services. And from a technical point of view, neither arrangement represents a sea change that suggests new mobile commerce business models: there's nothing fundamentally new about deploying applications to a homogenous fleet of clients, even if they are mobile devices.
While business has continued to rely on client/server writ large for its mobile solutions, consumers have had to wait for applications sufficiently exciting to part them from their hard-earned cash. A few masochists have been prepared to wade through WAP, perhaps even paying to receive content 30 words at a time or perform basic banking transactions. Early adopters have acquired connected PDAs to ensure that e-mail intrudes into every moment of their lives. But mass-market mobile commerce is yet to arrive.
Yet it's hard to suppress the optimism, as few argue that corporate mobility solutions are mere playthings, even if they cannot concoct convincing business cases for new mobile applications. The Japanese experience also tantalises, leading entrepreneurs to ponder what kind of services will excite local consumers, dragging mobile commerce out of its current ghetto in the process.
Gartner's Research Director for mobile and wireless Robin Simpson believes that for mobile applications to succeed they must deliver a quantum improvement in convenience and ease of use, which most applications have so far failed to deliver.
The reasons for this failure, he says, start with the mentality business brings to the mobile development process. "The big mistake the industry has made over the last few years is thinking you can adapt an existing portal or application to mobile devices," he says. "The worst thing you can do is let a Visual Basic programmer loose with a handheld device. The interaction experience with a mobile device is much more just in time, more transaction based. It needs to be action-oriented with a limited user interface. Expectations of applications are completely different with a small mobile device compared to the type of interaction you have with a PC."
Compounding the problem of bad application design is instability on the client. Developers have long been wary of creating applications for multiple clients as the complexity of this effort is high and the returns can be low--witness the frequent lag of weeks or months for the release of Mac OS applications. With mobile commerce in its infancy, few developers are willing to punt on consumer uptake of an application where the rewards are not obvious, crimping mobile commerce models along the way.
Even where standards should be obvious, there are pitfalls: the Web browser shipping with Handspring's Treo, for example, cannot run Java or Javascript, staples for many coders.
In any case, business users are scared off by the hefty price tag of mobile devices, according to Michael Smith, group marketing manager for small business from Optus Mobile.
"You can do wireless applications using a PDA or a sophisticated phone but that requires the user to buy a new device," Smith says. "The reality is that small business people don't want to own a second device with the complexity needed to run applications."
Can this flock of issues be overcome? Optus believes SMS may be the key. The company has teamed with Telpay to offer a service offering wireless credit card payments via SMS, taking advantage of the ubiquity and familiarity of the mobile phone.
Gartner's Simpson believes SMS is a likely way out of mobile commerce's current dilemma. "The lowest common denominator for mobile communications is a GSM mobile phone, which has SMS capability installed by default."
Consumers agree and are more than willing to use their mobiles for mobile commerce applications, a trend already evident in the vast numbers of people entering online competitions.
Matthew Talbot, CEO of Mobile Internet Group (MIG), the company which operates the SMS voting facility for Big Brother, says SMS voting has added a whole new audience, increasing the overall numbers of votes by 400 to 500 percent without reducing the "traditional" 1900 fixed-line constituency. Warren Billington, CEO of SMS consultancy 5th Finger has also run numerous online competitions and says that in the past families would see an advertisement for a competition that could be entered using a fixed-line phone and make a joint decision about the family's single entry. The intimacy and immediacy of a mobile, he says, means each member of a family now places their own individual entry.
Developers are also enthusiastic about SMS. Telpay's CEO Mark Goulding says that from a programming point of view, linking SMS equipment to applications like a bank's credit card systems is not a particularly difficult technical feat. "Because you are receiving characters in a pre-defined configuration, you know what you are going to receive and can program your applications to process it." Developers also recognise that while SMS is crude, newer technologies like MMS or Java-enabled phones are yet to penetrate the market in sufficient numbers to make them an attractive target for mobile commerce applications.
New Premium Charging regimes are also adding momentum to the SMS mobile commerce bandwagon. Premium Charging makes it possible to charge up to $3.00 for each SMS vote in a competition under conditions very similar to 1900 charging schemes. To make SMS even more attractive and easy to use for interactive services, Australia's mobile carriers have banded together to offer seven-digit SMS numbers starting with the prefix 188. SMS wholesalers are even emerging, cutting the cost of sending messages and stepping in with service level guarantees for text messages--a service most carriers do not yet provide.
With this improvement in revenue potential and reliability, SMS has emerged as the most likely vehicle for mobile commerce, and the business models and applications are following. Some print and broadcast advertising has already appeared featuring multiple SMS numbers, each offering a different interactive response. Phone manufacturers are planning new handsets with multiple levels of games that can only be unlocked via SMS, to create a revenue stream for carriers.
Other models are more speculative. Damon Gorrie, Managing Director of Sydney company Communicator, has conceived of a "reverse queuing" application. "No-one likes being put on hold by a call centre," he says. "But imagine sending an SMS to the call centre. Because your mobile number rides along with the SMS, they can call you back. You don't wait. They serve you."
Gorrie has also developed an SMS-based application for a radio station. Listeners text the station to receive a return message listing recently-played songs. Today this application is a useful novelty, but Gorrie believes the technology will soon evolve to the extent that the transaction will expand to allow purchase of the song as an MP3, sent to either the phone or the customer's e-mail address.
Gartner's Simpson believes this kind of hybrid application is another likely manifestation of mobile commerce. Citing the massive success of Apple's iTunes, he says much mobile commerce will come to be about delivering content for use by mobile devices, even if the transaction is not conducted using a mobile device.
"Being able to buy songs from anywhere isn't necessarily an advance," he says. "In the case of iTunes, it's the iPod which delivers the greater convenience, but its still a mobile commerce application."
Whether these ideas turn out to be killer applications, mere plumbing or commercial roadkill remains to be seen. Yet the mere fact that SMS is the best bet for mobile commerce success is a lesson that surely should have been learned by anyone involved in that optimistic first wave of e-commerce: the best or most exciting technology doesn't win. The best use of the most prosaic technology does.
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