BusinessWeek Oct . 18: Smart Phones
businessweek.com
INTERNATIONAL -- EUROPEAN COVER STORY
Smart Phones (int'l edition)
They're the next phase in the tech revolution, and soon they may change your life
A 15-year-old girl strolls through London's Berkeley Square. Suddenly she hears a beep from her cell phone and looks at the screen. A message sponsored by Starbucks informs her that two friends from her 'buddy list' are walking nearby. Would she like to send them an instant message to meet for coffee at the nearest Starbucks around the corner? She merely has to click 'yes' on her smart phone to send the message. And she gets an electronic coupon worth $1 off a Frappuccino.
An e-commerce fantasy? Hardly. Such a scene could happen in London next year. That's because, from Tokyo to Stockholm to Silicon Valley, telephone companies, software designers, and phone-equipment suppliers are all revving up strategies for the next tech revolution: wireless access to the Internet. Already in Europe--and to a limited extent in the U.S.--customers can call to receive e-mail, weather reports, and other specialty packages via their cell phones. By next year, tens of millions of users in Europe should be linked to the Web all day long. All they have to do is keep their cell phones on. 'It will be the exception when you're not connected,' predicts Petri Poyhonen, a manager of radio access systems at Nokia Networks. In Japan, 3 million cell-phone users are already staying continuously connected to the Net (page 30).
Clearly, some tantalizing visions of the wireless Net may fizzle in the marketplace. Applications may be too unwieldy for a handheld machine. And while data costs should be moderate--a few cents for most downloads--many users may object to the likely blitz of advertising and keep their pocket browsers switched off. Still, a portable and constant link to the information world could change lifestyles--and offer business opportunities--just as much as the Web has up to now. The Japanese government predicts that its domestic wireless market, tied in to the Web, will be worth $130 billion in annual revenues by 2005. Europe's could be three times larger.
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From AT&T to Sony Corp., companies are staking out their claim to the mobile Net, fueled by fear that their competitors will get there first. It was Sprint Corp.'s coveted mobile network, and the prospect of turning it into an extension of the Internet, that led MCI WorldCom to buy Sprint on Oct. 5 in a $115 billion deal. Meanwhile, Nokia Corp., Motorola Inc., and others are rolling out Web-surfing smart phones this fall. Media heavies such as CNN, ESPN, and Reuters are marketing news nuggets. And software companies, from mighty Microsoft to startups in Stockholm and Milan, are devising pocket-size applications for the new mobile Net.
All these companies have their eyes on Europe. That's because the old world is quickly becoming the biggest laboratory for introducing leading-edge Internet services. It is just as likely to be a battleground for companies scrambling to get a piece of the action. Foreigners and locals alike are pouring research money into Europe. Lucent Technologies, Texas Instruments, Japan's NEC, and Canada's Nortel Networks are all beefing up mobile phone operations on the Continent.
For Europe, it's a rich opportunity. The race for the wireless Internet offers the Continent its best chance yet to launch its own tech-driven New Economy. In the 1970s and 1980s, Europe missed out on the personal-computer revolution as its protected national champions Bull, Nixdorf, and Olivetti got creamed by Americans. In the 1990s the Continent lagged in Internet development.
But when it comes to mobile phones, the positions are reversed: America trails, its market fractured by competing wireless standards. Europe, meanwhile, has steamed ahead, powered by its common standard for cellular communications, known as GSM. The standard has since spread to 120 countries, from China to South Africa.
To serve this fast-growing global market, a powerful industry has sprung up. Finland's Nokia has rocketed to world leadership in handsets. Britain's Vodafone has become the world's first global cell-phone provider since it outbid Bell Atlantic for San Francisco-based AirTouch early this year in a $65.9 billion deal.
Supplying these stars is a huge industry, ranging from French-Italian chipmaker STMicroelectronics to Symbian, the London-based software joint venture linking Ericsson, Nokia, Motorola, and Japan's NTT DoCoMo. Symbian's new operating system for wireless Internet phones is going head to head with Microsoft Corp.'s Windows CE. That challenge has spurred Microsoft to invest in wireless companies in Europe, including STNC, a Cambridge-based microbrowser company, and Sendit, a Stockholm company specializing in mobile phone e-mail.
Now the wireless Internet offers Europe new opportunities to expand its high-tech industrial base. By 2003, analysts expect much of the Continent to follow the example of Finland, where more than 6 out of 10 people own cell phones. If that happens, 248 million Europeans would own them, up from 141 million today. Most of these phones will be capable of tapping in to the Net. Add it all up, and the mobile Internet could soon have the old world swaying to a California beat: European companies and their foreign rivals could pour even more money into developing new products and services. And venture capital, already trickling into Europe, could start to gush into startups in software and Web appliances. |
