BusinessWeek Oct . 18 Part III
Japan also stands to challenge Europe's lead in the mobile market. Long isolated from the rest of the cell-phone world by its unique standard, Japan has barely made a dent globally. Now, though, Japan is leading the drive into mobile data with a popular wireless Internet service introduced seven months ago by NTT Mobile Communications Network. And in 2001, Japan will be the first market to leap into the 'third generation' of mobile telephony. 3G, as it is known, is a high-speed data technology that will reach a blinding 2 megabits per second by 2003--40 times faster than an average dial-up modem. It will pave the way for videoconferencing, stereo Web surfing, and virtually any mobile service for which markets can be found.
3G will give Japan a headstart on global expansion in the mobile Net market. Even now, the Japanese are pouring R&D money into Europe to gain position. In a laboratory outside Paris, Matsushita Communication Industrial is teaming up with Nortel to experiment with cell phones that can offer videoconferencing, video-game playing, and music downloading. 'Japan is going to knock the pants off everyone when it comes to 3G,' boasts Seiji Sanda, founder and CEO of Japan Communications Inc., a cell-phone service reseller.
LOOKING GOOD. For now, the Europeans, Americans, and Japanese are racing to develop the right machines for today's more rudimentary mobile Internet services. Nokia's first offering is a bulb-headed phone called the 7110, priced at $500. It's fitted with a browser for WAP, or Wireless Application Protocol--a standard that converts Web pages to fit onto mobile phones. The phone features a rolling scroll key under the screen. Ericsson and Alcatel are coming out later this year with offerings featuring fold-down keyboards and larger screens.
The phones look good, but for now they offer ho-hum services. Mobile surfers can dial in to a server for Zurich stock quotes, Madrid weather forecasts, or schedules for the Frankfurt bus. But the service is slow. In Helsinki, it takes 10 seconds to get a stock quote via wireless Internet phone.
Far livelier services are coming soon. By next spring, phone companies around Europe will be testing transmission systems to keep smart phones online constantly. With data dispatched in packets, the way the Internet does it, users will no longer have to make calls to transmit. The phone, like a corporate Intranet terminal, will simply shuttle data all day and night, whenever it's on. This will force phone companies to come up with new ways to bill, while providing them with new advertising platforms. And it should turn the data phone from a gimmick into a tool. 'That's when smart phones will go mainstream,' predicts Kent Thexton, a marketing director at Britain's BT Cellnet.
The Europeans have settled on a step-by-step rollout of the mobile Internet. As phone companies upgrade their transmission stations to handle data, wireless Internet services will move to broadband video and stereo by 2003. That will provide a steady jumbo market for equipment suppliers, led by Ericsson, Nokia, Nortel, and Lucent. Analysts estimate that the demand for GSM transmission equipment will reach $15 billion this year. The market will likely double within five years.
SLOW MOVER. With each jump in sophistication, phonemakers aim to hawk pricey new handsets. Nokia, for example, plans to issue new, top-of-the-line phones every year. The company's latest data phones, the 7110s, won't allow the continuous Internet access that will be technically possible next year. For that, consumers will require another Web-surfing machine, probably costing $500 to $1,000. If that sounds outrageous, consider that European executives already change their phones about once a year as a matter of course.
In contrast to Europe and Japan, the U.S. is likely to move more slowly to set up a wireless Internet world. It may take five or six years for the Americans to catch up with their overseas rivals. That gives European companies half a decade--a lot of time at Net speed--to strengthen their global market position. Success could be just a few billion phone calls away.
By Stephen Baker in Paris, with Irene M. Kunii in Tokyo and Steven V. Brull in Los Angeles |
