WAP, WAP, take that.
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Stocks: Tech Market: Moving at WAP Speed
Tech Market
Moving at WAP Speed
By Tiernan Ray
October 11, 2000
AH, THE dream.
If only you could devise a product that absolutely
everyone on planet Earth had to have at an
ever-higher price. Intel (INTC) has come close over
the past 30 years by selling billions of
microprocessors at margins topping 60%. Sony
(SNE) is dreaming, too, hoping it can sell another 60
million Playstations, only this time with richer
graphics and faster speeds.
But the dream of the new millennium — the one
with real buzz — is the wireless-telephone dream.
By 2004, the experts say, over one billion cellular
phones will be in use throughout the world. Next
year alone, according to several analysts, the
industry hopes to ship between 500 million and 600
million new handsets — as many phones as all the
computers currently in use around the world today.
One company, Nokia (NOK), is planning to sell 195
million units next year, more than the 126 million
microprocessors Intel will ship this year, for a haul
of $27 billion.
Wednesday's news, however, sent a wake-up call to
the wireless dreamers. Nokia rival Motorola (MOT)
crashed and burned after it warned that world-wide
handset sales growth will slow significantly next
year (see story). That, quite naturally, sent a shiver
through markets pumped up on the ephemera of
rosy growth forecasts. And it will undoubtedly cast
a brighter spotlight on the real potential of the
wireless-phone business.
Through the Periscope
I think the Street will find a few blemishes. The
problem with all those forecasts is that they're
partly based on the notion that the phone will
gradually replace the PC as the Internet device of
choice. It's a seductive thesis: At the moment,
Nokia sells phones for an average $134 apiece at
gross margins of about 40%. But suppose it could
sell its handsets for a little more money — say at
the $240 average price commanded by Palm
(PALM) for its hand-held organizer?
Cell phones have begun to acquire Web browsing
software and email capabilities, features destined,
perhaps, to boost the gross margin on those
phones. It's a vision some of the brightest minds in
tech think is absolutely right on the money. David
Peterschmidt, chief executive of software firm
Inktomi (INKT), remarked recently that by 2003,
there will be 700 million wired Internet computers,
but 750 million wireless Internet "devices," most of
them cell phones.
But despite the countless newspaper centerfolds of
Web-enabled phones, very little has been
accomplished in the U.S. market, and the outlook
isn't great. Many blame the chosen technology, a
thing called WAP, which stands for Wireless
Application Protocol. WAP is optimized for sending
data to phones, but a year into its rollout, consumer
have hardly glommed onto these services. In
telecom circles, WAP has been derided as, at best, a
flop, despite the heavy marketing efforts of
Phone.com (PHCM), the technology's originator
and prime advocate.
"WAP has certainly taken it on the chin," says
David Jackson, senior analyst for wireless data and
mobile Internet with researcher Cahners-Instat.
There's nothing wrong with WAP itself. I've worked
with it as a developer and as a user, and what I've
seen functions fine, technically speaking. But WAP
has been disastrously positioned as a medium for
browsing the World Wide Web, which it does very
poorly. WAP was supposed to be the quick payoff,
the sure seller, for Phone.com, the phone makers
and especially for the wireless operators, who
charge slotting fees of millions of dollars to list the
WAP Web sites you can get to. It isn't turning out
that way.
In case you haven't tried it, you can use a WAP
phone for a number of practical information tasks,
such as checking out restaurant listings on a little
WAP site run by Zagat's or buying books on
Amazon.com's (AMZN) WAP site. But the
experience, as I indicated a year ago, is pretty lame.
Getting data off of Zagat's on a gray, five-line
display is like reading the newspaper through a
periscope. With a tiny display, you have to go
through several screens of information, waiting for
each one to download, which is very tedious (see
sidebar).
WAP in Europe
WAP's champions, who've organized themselves as
the WAP Forum, like to talk about the success of
WAP in Europe, where seven million WAP phones
have sold and where people apparently use the
services a lot more than we do.
What are we missing? The WAP phones sold in the
U.S. aren't exactly the real deal because they're still
transitioning from an earlier, even clunkier version of the protocol introduced by
Phone.com. Although they can read WML, or wireless markup language, WAP's answer
to the Web's HTML, they cheat by translating WML into another language called
HDML. And phones like Ericsson's 280LX and Motorola's StarTac, both of which I've
been testing for several months now, use an older communications protocol known as
HDTP, the hand-held device transmission protocol, in place of the actual WAP
communications protocol.
WAPers point to these shortcomings and insist that the WAP phones popular in Europe
will soon hit these shores, causing a surge in WAP's fortunes. Half the phones shipped
this third quarter will be WAP-enabled, and some are dazzling. Nokia this month will ship
the 7100 series to VoiceStream Wireless (VSTR) and Verizon (VZ), among others. In
addition to having an honest-to-god WAP browser, the 7160 has a neato spring-loaded
cover, just like in the movie "The Matrix." It will also have a slightly larger display than,
say, the 280LX, making the browsing experience potentially richer.
Wishful Thinking
Well, it's hard to argue with the chipper theory that once "real" WAP is an automatic
option on every phone, consumers will just start using the stuff. But I think that's wishful
thinking. First of all, the difference between Euro-WAP and U.S.-WAP is insignificant.
Both are slow. And I would submit that the real appeal of WAP in Europe is that regular
Internet access on the Continent is incredibly expensive. For many Europeans, using a
WAP browser is a far more economical means of getting to the Internet.
It's even more so in Japan, where the much-lauded iMode service from Nippon Telephone
& Telegraph's (NTT) DoCoMo unit is the first experience some people have of the Net.
In a little over a year and a half the service has swelled to over one-third of DoCoMo's 30
million wireless subscribers, who use the service to check airline timetables and to play a
variety of games. Although Nippon is rushing to boost speeds to 56 kilobits per second
or more, most of this takes place at a mind-numbing 9.6 kilobits per second.
We're spoiled by Internet access here in America. I think most people would rather trade
in their SUV for a hatchback than surf in slow motion. There are a few technologies here
in the U.S. that could boost surfing speeds to 56 kbps or more, which I discussed earlier
this year. Even if we get there, I don't think we'll want to waste that bandwidth browsing
on a rinky-dink cell-phone screen.
So I think we'll see a division: What most people want in a phone is probably something
like Nokia's 8260, which just hit the stores. It's a cute little number that's ultralightweight,
gets great battery life and has pager capabilities.
Consumers who really want to browse will turn to devices like the Palm Pilot, which use
regular HTML. The screen size is much better for full-on browsing, as Motorola must
have recognized in signing a deal recently with Palm. In fact, alternative service providers
have popped up to provide wireless browsing on the Palm, such as OmniSky (OMNY)
and privately held Yada Yada.
I think Sprint (FON), AT&T (T) and their suppliers, Nokia and Ericsson (ERICY), ought
to give up on this nutty notion that they're going to be your portal to the Web. "Trying
to make it seem like you would get to the Web on these devices did a disservice to the
technology," says Roger Snyder, product-marketing manager for Phone.com. Instead, he
would argue, devices and content sites need to be optimized to deliver smaller bits of
information. Of course, the form that should take remains a mystery.
Or the phone companies could crib a page from Palm licensee Handspring (HAND),
which is about to release a product called VisorPhone. It turns your organizer into a
phone and browses the Web at speeds of 14.4 kbps. The important thing is that
Handspring has cleverly used software to make the device a better communicator. You
can dial numbers from the Palm address book, you can easily set up multiparty
conference calls, you can keep detailed call logs and, best of all, you can surf while you
talk, which you can't do with WAP. Most folks I've talked to who've used the device are
blown away by it.
I don't think people will stop buying those shiny little phones; we may buy hundreds of
millions more in coming years. And I think WAP as a technology will ultimately find its
place. But phones will likely continue to be used primarily to talk to people. And the
dream of a wireless browser in every pocket, at least here in America, glows dimly, very
dimly. Wall Street may eventually have to reconcile with that. |
