2/19/00 - Eye Catching -- The Eyes Have It-Eye-Catching Applications To Lure Customers To Wireless Data, Along With
Eye-Popping Expectations For Success.
Feb. 18, 2000 (LTH - CMP via COMTEX) -- Let's throw out some numbers. For example, 200 million-that's how many Europeans will
use mobile devices to access the Internet by 2003. Or how about 50 percent? That's the amount of mobile revenue that will come from
data within five years. Or 2001-that's the last year anyone will be shipping mobile phones without Internet browsers.
These projections seem astonishing. Today, there's hardly a drop of mobile data revenue in the bucket. And yet figures like these are
everywhere. How can they be so high? Some might say they're pulled from the same thin air that's supposed to carry all those wireless
messages. For one thing, pundits agree that they can't project the market's development based on past mobile data experiences. (And
a good thing, too, since most of those were flops.) At the same time, they say it's hard to extrapolate from present trends on the
"wired" Internet.
It's all in the future, and proponents of massive mobile data deployments already have to manage customers' expectations of what that
future will bring.
The world's first taste of a mobile Internet involves crude images moving at a snail's pace. Not to worry, say the mobile evangelists.
What's important is convenience, not speed. That's what they're trying to tell the type A business executives and other early mobile
adopters: Maybe you can't wait till you're back in the office to check those stock prices, but you'll happily wait as long as it takes to
get them up on your mobile phone.
You almost can't blame the technology companies and network operators for feeling they have enough to go on, as they plow billions of
dollars into wireless Internet development. After all, these are the same big spenders who can't live without their low-quality mobile
phones, who have learned to incorporate dropped calls and incomprehensible robotic voices into their precious work hours. Poor quality
hasn't discouraged more than 384 million mobile telephone users worldwide. And some service providers claim that 5 percent of their
revenue is already generated from wireless data applications.
So the industry's optimism seems justifiable, except for one other thing: No one knows what the mobile data applications will be. Even
the evangelists know that if the applications don't click, they may have to take another whack at those lofty market projections.
After all, the mobile communications industry has been chastened before. Experience has not been particularly kind to those service
providers that introduced Mobitex messaging and then cellular digital packet data (CDPD) services in the last 10 years. CDPD,
introduced in 1994, counts barely 50,000 customers, according to The Strategis Group (Washington, D.C.). More tellingly, 1999 CDPD
revenue was a scant $33 million, a fraction of the $50 billion U.S. wireless services pie. While no one disagrees that Mobiltex and
CDPD are technically sound, operators and their vendors acknowledge they fumbled their introduction.
Yet carriers are once again poised to introduce a new generation of wireless data applications, with the Wireless Application Protocol
(WAP) helping to lead the marketing charge. Carriers from around the globe-including Singapore Telecom Mobile Pte. Ltd. (SingTel
Mobile), Sprint PCS (Kansas City, Mo.), Telia Mobile AB (Stockholm) and Telstra Corp. Ltd. (Melbourne, Australia)-are using it as a
basis for their data services.
WAP is a communications protocol and application environment that can be built on top of any operating system, including PalmOS,
EPOC and Windows CE, among others. It provides Internet communication and advanced telephony services on digital mobile phones,
pagers, personal digital assistants (PDAs) and other wireless terminal devices.
WAP and terminals with a Phone.com Inc. (Redwood City, Calif.) microbrowser are already delivering text-intensive information
services, including stock quotes, weather reports, sports scores and headline news. By championing WAP's definition and usage as
early as 1996, Phone.com, formerly Unwired Planet, positioned itself as the leading vendor of microbrowser and server products for the
wireless market.
Consequently, wireless service providers around the world are trying to forecast demand and build their networks accordingly. Many are
leapfrogging circuit-switched narrowband data services and going right to general packet radio service (GPRS), a second-generation
service that promises 115 kbit/s of wireless throughput. That, in turn, is expected to lead to so-called third-generation (3G) wireless
broadband to accommodate faster transmission speeds and new portals for a specialized menu of services reserved for wireless users.
It's currently unclear whether the best wireless interfaces will be a data-only unit or a combined voice/data wireless terminal. Operators
will also pressure vendors to keep retail prices down on these new terminals, given that new microbrowsers or additional silicon could
make them too expensive for the mass market.
Finally, just about any desired activity or application can be ported to a wireless network. But will the wireless services-some of them
frivolous-fall victim to the short shelf life (and curtailed revenue stream) of the usual consumer novelty? Entrepreneurs in Japan are far
more active in experimenting than developers or service providers in other parts of the world. Some of the fad-driven, novelty services of
Japan's "i-mode" network, for example, may not keep users over the long run, but they should get users accustomed to the wireless
data environment and the terminal. Regardless, the competitive tension between novelty and practicality is guaranteed to endure (see
"Weird and Wacky World of Wireless").
New Environment, New Rules
One thing is certain: The desktop environment is very different from its palmtop equivalent, says Craig Mathias, principal of the Farpoint
Group consultancy (Ashland, Mass.). "To develop a mass market, operators need to market a service that is significantly different from
the desktop experience," he says. "Is the user going to be able to appreciate and be able to deal with differences between the two?
That's the core question facing the industry today."
Operators' experience with other mobile data services isn't particularly useful in trying to answer that question. The commercial,
mass-market Internet didn't really exist during the lean launch years of Mobitex or CDPD. E-mail wasn't ubiquitous. And even as late as
1994, when CDPD first became commercially available, the customers that did buy the service were willing to tolerate transmission
speeds of 9.6 kbit/s.
Still, at least a few lessons were learned from CDPD. "We didn't roll it out fast enough," says Richard Lynch, executive vice president
and chief technology officer at Bell Atlantic Mobile (Bedminster, N.J.). "We rolled it out in major markets and then stopped to see what
would happen. When we did that, we sent a signal that it was a specialized service for special people willing to pay for it in a certain
area." No one rushed to buy it, even though the underlying technology was sound; in fact, Bell Atlantic, AT&T Wireless Services Inc.
(Kirkland, Wash.) and others continue to sell CDPD.
And despite the 100-kbit/s+ transmission speeds being talked about with GPRS, users have to be educated that speed helps them
only to a certain point. If users compare a 9.6-, 28.8- or 56-kbit/s connection with a T1/E1, they won't see much of a difference once
they get above 28.8 for applications like POP3 e-mail, says Lynch. "We have to get customers who want to buy mobility to see that's
the case.
"With CDPD, we learned that speed isn't everything. In the PC industry or modem world, faster is better. But if I'm doing e-mail or a
database lookup, I don't need faster-I've already got fast enough," Lynch says. "That's a dilemma in the wireless world. Where we're
bandwidth constrained, as we are with radio spectrum, we're not going to be giving megabit service, and we have to convince customers
they don't need it."
In Demand
The number of users wired to the Internet worldwide hovers around 248 million, according to Nua Internet Surveys (Dublin). Ordering a
book from Amazon.com has become as routine as calling for a taxi. E-mail, a business staple in just about every industry, is providing
a new way for the masses to communicate.
While all that is true for the dial-up data users and desktop denizens, operators agree that the wired demand for Internet applications is
no harbinger or guarantor of how wireless users will tap the Net.
"You can't look at usage on a 19-inch monitor with a T1 connection and map that experience to the mobile handset. That is not where
this is going," says John Yuzdepski, vice president of product management and development for Sprint PCS. He sees a whole new
class of applications emerging, where information is more time-sensitive or convenience-oriented-the sort of information that becomes
moot if one has to wait for access to a wired connection. "The wireless Web is a brand new space. The growth of the Internet is a good
proxy, but it's not the same market," he says.
Still, most carriers and industry analysts project sizable demand for wireless data applications and are optimistic about the revenue
potential.
"We expect wireless data services to contribute 20 percent of our total revenue in two years, compared to the current 5 percent," says
a spokesperson for MobileOne Pte. Ltd. (M1, Singapore), a competitive wireless provider. "Data services revenue could reach 50
percent in about five years." M1 is a joint venture of The Keppel Group (Singapore), Singapore Press Holdings, Cable & Wireless PLC
(C&W, London) and Cable & Wireless HKT Ltd. (Hong Kong). Formed in 1994, it doesn't report annual revenue.
Forecasters say wireless data revenue will overtake that of voice in the foreseeable future. Among the notoriously high-mobility
Europeans, more than 200 million subscribers will access information from the Internet with a mobile device by 2003, according to
Durlacher Corp. (London). Consultancy Ovum Ltd. (London) projects that data could overtake voice worldwide as early as 2004, while
Farpoint's Mathias believes a 2006-2007 timeframe is more likely, if only because it will take carriers around the world that long to get
their 3G networks built, tested and operational.
Let's Interface
Operators and vendors agree that no single type of terminal will emerge for wireless-enabled Web applications. Phones with built-in
browsers are in their infancy but could rival palm computers in uptake in the next several years, analysts predict. At present, handset
manufacturers are only WAP-enabling the high end of their product lines. Peoples Telephone Co. Ltd. (Hong Kong) launched a WAP
service late last year using the Nokia 7110, but the $3,700 price tag is a bit steep for the mass market.
According to The Yankee Group (Boston), Motorola will equip all its digital phones with browsers by the end of the year, and
Qualcomm Inc. (San Diego) is currently shipping all phones with WAP browsers. Ericsson Mobile Communications (Stockholm), Nokia
Mobile Phones Inc. (Espoo, Finland) and Samsung Electronics Co. Ltd. (Seoul) have all announced their intention of increasing
shipments of phones with browsers. The Yankee Group estimates that 31 percent of all phones shipped in North America next year will
be Web-enabled with WAP or other microbrowsers. Durlacher even ventures that after 2001 no more phones will be shipped that aren't
Internet-enabled via a microbrowser. But it's far less certain whether prices will begin to align with the $100 average of most mobile
handsets during that time frame.
Recent development agreements may help accelerate progress on wireless applications. Among them:
- L.M. Ericsson AB (Stockholm) and Microsoft will develop WAP applications.
- Motorola Corp. and Cisco Systems Inc. (San Jose, Calif.) will cooperate on wireless Internet protocol (IP) client-server systems for
carriers.
- The Palm unit of 3Com Corp. (Santa Clara, Calif.) is working on applications development with Alcatel N.V., Nokia and Qualcomm.
- Symbian Ltd. (London) is an alliance of Ericsson, Matsushita Communication Industrial Co. (Tokyo), Motorola, Nokia and Psion PLC
(London) that uses the EPOC operating system to enable wireless devices to support Java applications, e-mail, fax, infrared exchange
and data synchronization with PCs.
But while vendors fight the battles over operating systems and tussle over specs and intellectual property, carriers are dealing with
more immediate issues-for example, how easily customers can surf the Web on radio waves, whether cellular, infrared or microwave.
"I think we need larger screens on a smaller device, and-I'll be honest-I think we need color screens. LCDs are nice, but have you ever
tried to use them at night?" says Bell Atlantic's Lynch. "The current devices aren't the future. They are an interim step, not unlike the
first PCs or the early analog mobile phones that fit in the trunk of your car. Ultimate consumer success depends on better devices and
applications that the consumer can relate to."
Nature of the App
Clearly, the Internet is proving a huge variable in the wireless application equation. "Mobile e-commerce has yet to take off in a big way
in the Asian economies," says Chye Hoon Pin, director of mobile consumer products for SingTel Mobile. "Everyone in the industry
seems to agree that this is a profitable venture with a huge market potential, but they are not in agreement when it comes to which
business model can work and how much their investments should be" (see "Asia's Immobile E-Commerce").
And while service providers are making room for all kinds of different wireless applications, they are also being careful not to count too
heavily on the long-term appeal or revenue stream of WAP-delivered horoscopes, interactive games or serialized cartoons downloaded
daily to a terminal. Such trendy applications may generate buzz, but they seldom create any sustainable revenue gains. Practicality
and usefulness are thought to be better guarantors of long-term success.
What carriers around the world are doing is creating portals for wireless applications. Essentially, they are trying to create communities
of interest within their subscriber base for banking, messaging or timely consumer information on sales, specials or discounts. Again,
while portals have proven popular and successful in the wired world, the concept is still unproven in the wireless realm.
The bottom line for one carrier? Delivery of information that is usable and relevant. "It can't have a novelty value; it's got to be stuff you
live with, like checking flight status and seeing when the next plane leaves," says Sprint's Yuzdepski. "The user experience has to be
good, or they won't use it and tell their friends about it."
teledotcom.com
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