Although INFO is not mentioned, this is an interesting article on wireless internet.
interactive.wsj.com
Failure to Connect
Mobile-Internet players hope WAP's well-publicized flop doesn't mean trouble for future technologies.
By KAREN CHAN
WSJ.COM
LONDON -- One of the most prominent events in the European technology arena in 2000 was the much-hyped launch of mobile phones that use the Wireless Application Protocol.
They promised the world in the form of "the mobile Internet." Such phones were supposed to allow users to pay bills, trade shares, check flight information on the go, and much more. But, as most consumers soon found out, what they delivered was painfully slow, expensive access to a few lines of difficult-to-navigate text, with few compelling services on offer. Handsets were initially hard to come by, and even when people had the phones, they often didn't use the services.
British Telecomunications PLC -- a big proponent of WAP -- said in October that a third of all new mobile customers were buying WAP phones, and said it now had 420,000 WAP customers -- out of 8.74 million mobile customers in total. But it had originally forecast it would have half a million new customers by the middle of the year, and by July was forced to admit it had sold only 200,000 WAP handsets.
Cyrille Railliet, co-founder and vice president of business development at independent French mobile portal Aladdino, estimates that out of 100 WAP phones that are being sold, just five to 10 buyers will use the WAP functionality.
The portal, which serves Palm Inc. and WAP users, had been expecting an equal split between the two types of users, but since its February launch, it has found instead that three-quarters of its 20,000 users access its services via Palm handheld computers.
Not Ready
What went wrong? WAP hit the market at the peak of investors' love affair with technology stocks, and the idea got widespread coverage in the media. Both investor and consumer expectations rocketed. Announcing a WAP deal in February had the power to send a company's shares sky-high.
But the industry wasn't ready to deliver the mobile Internet. Europe's "circuit switching" networks were only able to offer dial-up connections, and with bandwidth still narrow at 9.6 kilobits per second, merely getting connected could take as much as two or three minutes. The situation was compounded by the shortage of handsets experienced at the beginning of the WAP rollout. Not enough people could get WAP phones, so the number of subscribers signing up was less than expected, and some companies therefore held off developing WAP services.
Then the bad press started coming. Consumers decided against WAP phones in favor of some sleek new non-WAP models, and investors abruptly withdrew support for new WAP ventures. "Anyone who wanted to raise money on a WAP-only business case had until the end of April -- and in the U.K. probably only until mid-March, then just after that the hype was gone," says Aladdino's Mr. Railliet. "If they didn't raise money then, they won't."
Mr. Railliet said that when Aladdino began operations last year, "we thought everyone would very likely build a WAP portal. … We thought we would have 10 independent competitors [in France] by the end of the year, but on the independent side there's no one," he says.
Waiting for GPRS
Where does all that leave the mobile Internet?
No one believes it is dead, but it will take a lot longer to emerge as a potent force than initially expected.
Many in the industry are now pinning their hopes on general packet radio service, or GPRS -- an upgrade to current mobile networks that will bring greater bandwidth, allowing color and graphics and a`n "always on" connection. The rollout of such services has already begun, with business trials under way, but they won't be more generally available for some time, with consumers likely to get their first taste in the middle of next year.
"The big thing that will make this bounce back are the new technologies [such as GPRS] that offer an always-on service," says Carsten Schmidt, an analyst with research firm Forrester Research BV. Mr. Schmidt thinks consumers' bad experiences with WAP will fade into the past as GPRS and other new technologies -- and mobile-Internet usage will surge.
Vodafone Airtouch PLC hasn't done much advertising of its mobile-Internet services but plans to ratchet up marketing of its Vizzavi portal, which offers WAP services, once GPRS handsets are available. Vizzavi is a joint venture of Vodafone and France's Vivendi SA. Vodafone also doesn't feel that WAP's bad rap will put consumers off buying GPRS phones.
'Equally Conservative'
The rollout of third-generation networks, or 3G, beginning around 2002 will bring a further increase in bandwidth, opening the mobile Internet to video and audio broadcasts, among other things.
Still, Vodafone is cautious. "We are equally conservative on GPRS in terms of understanding its limitations, bearing in mind that it is a stepping stone to 3G," a Vodafone spokeswoman says.
"We are looking toward GPRS because of the strong improvement in speed and services," says Vivendi Chief Executive Jean-Marie Messier. Using GPRS means going from response times of "20 to 25 seconds [with WAP] to four or five seconds," he says. "GPRS is like the speed on your PC at home," he says, referring to current dial-up connection speeds.
The always-on capability that GPRS will offer will be a key improvement, says Forrester's Mr. Schmidt. "With that, I think we will see an uptake in usage, if not comparable, then close to the situation with i-mode."
I-mode, the proprietary mobile technology developed by Japan's NTT DoCoMo, has been a runaway success. In mid-November, NTT DoCoMo executives said they expect 20 million i-mode subscribers by March, upgrading an earlier forecast of 17 million. There were around 13 million i-mode subscribers at the end of September. In contrast, WAP arguably has been a bigger disappointment in Asia than in Europe.
In Europe, there has been growing interest in i-mode as a result of its Japanese track record. NTT DoCoMo has introduced it on the Continent in conjunction with KPN Mobile of the Netherlands. But i-mode might not be as big a threat to WAP as it seems. One of WAP's biggest problems has been the circuit-switching networks on which it currently runs; once these networks are upgraded to GPRS, WAP is likely to be competitive -- or even superior -- to i-mode.
'The Wrong Perception'
WAP hasn't been a hit in the U.S. either -- nor have other flavors of wireless-Internet technology. There, only 2% of AT&T Corp.'s 15 million wireless customers are connecting to the Internet via their mobile phones. Sprint Corp.'s PCS division says only 9% of its eight million wireless customers have attempted to access the Internet through their phones. VodafoneAirtouch says it has 400,000 active WAP phone users in the U.S., or less than 4% of its total U.S. mobile-phone customers.
"The idea that [WAP usage] would just explode, because it is possible, was the wrong perception," says Mr Schmidt. "It's like the Internet was in 1989. There was no graphic user interface, slow modems, then those things improved but there were no great services. Then suddenly, by mid-1999, there were great services," he says. "You will see the same thing here."
But some are concerned that both GPRS and 3G are being hyped in the same way WAP was. For one thing, it is possible that the same handset shortage that plagued WAP early on will occur with GPRS handsets in the first half of next year.
"There could be a chicken-and-egg problem: operators waiting for handsets, and handset makers waiting for the networks [to promote mobile Net services]," admits Mr. Schmidt. "That will slow down the process a little."
Another potential problem is that the data speeds being predicted -- up to 170 kilobits per second for GPRS and up to two megabits for 3G -- may never materialize. "While the bandwidth [for GPRS] is better, it's spread between users, so some users could still end up with the same bandwidth they had before," says Mr. Railliet at France's Aladdino. Operators are expecting rates of around 22 to 28 kilobits per second for GPRS, rising to around 50 kilobits per second in the second half of 2001. And with 3G networks (also know as UMTS for universal mobile telecommunications service), some people in the industry warn that these may be limited to 384 kilobits per second.
'One-Third Full'
Nigel Deighton, a research director with Gartner Europe, is even more cautious. He says GPRS likely will deliver 14 kilobits to 28 kilobits per second next year, rising to 28 to 36 kilobits per second in 2002. Third-generation networks will deliver around 128 kilobits per second, he estimates.
Still, that represents a significant improvement on today's offerings.
"You can't say the cup is two-thirds empty -- it's one-third full. The Internet became a global phenomenon with such speeds," said Mr. Deighton. "GPRS also offers operators the ability to offer what i-mode does -- flat-rate pricing," he adds.
"It may be less than what's promised," says Aladdino's Mr. Railliet, "but UMTS will be able to broadcast audio and video. From a user point of view it makes for a very different experience."
Forrester's Mr. Schmidt predicts that by the end of next year most new phones will come with a browser. "The numbers (of phones with browsers) will steadily increase, and come close to all mobile phones by 2005," he added.
Finnish mobile phone giant Nokia Corp. says the global market for Internet-enabled handsets is likely to reach 60 million units this year, of which about 40 million will beWAP phones. In 2001, Nokia predicts the global market for Web-enabled handsets will have grown to 200 million units, and around 180 million of those would be WAP handsets. And it now believes the number of Web-connected handsets in the world will exceed the number of personal computers by 2002, a year earlier than it had previously estimated.
WAP still has huge industry commitment, is now standard technology in Ericsson and Nokia handsets, and, as was the case with short message services, or SMS, there is every chance that usage will surge once consumers rediscover it when networks improve.
As for services, while venture capitalists may be wary, Mr. Schmidt says WAP projects are cheap compared to their fixed Internet equivalents. "The services will come -- a lot from traditional companies. It doesn't matter if the start-ups don't get funding," he says.
-- Jeanette Borzo in Paris contributed to this report.
Write to Karen Chan at karen.chan@wsj.com |
