US Trails Asia, Europe In Consumer Wireless Services, But Has Strengths In Wireless Enterprise Computing, Telematics
Madanmohan Rao reports from the Internet World Wireless 2002 summit in New York
Though the U.S. market led the world in the PC race and the wired Internet after that, Asia and Europe are clearly ahead in consumer adoption and acceptance of cellphones. Indeed, the patchwork of varying standards and lack of interoperability of data services between cellular circles in the U.S. is holding back widespread diffusion of wireless innovations.
But there are some key areas where the U.S. market certainly has formidable strengths: the enterprise markets, city-specific location services, and telematics.
Exhibitors, speakers and delegates from around the world gathered in New York city for the recent Internet World Wireless 2002 summit, hosted by Penton Media, at the Jacob Javits Convention Centre. The events of September 11 and the general economic slowdown still cast their shadow on the technology industry in the U.S.; in fact, the Javits Centre was one of the sites of rescue operations coordination in the aftermath of the terror attacks on the World Trade Centres.
"The mobile screen has now become the 'third screen' in consumer lives after the TV and PC screens. Mobile phones can become mobile companions when they are able to leverage the full power of the Internet, and not just voice," said keynote speaker Jay Highley, senior VP at Sprint.
Thanks to wireless technologies, e-commerce has now come to mean 'everywhere-commerce' and m-commerce has come to mean 'my-commerce,' according to Jeffrey Sass, CEO of BarPoint.
There will be close to a billion cellphone users worldwide this year, and more investments were poured into wireless infrastructure last year (US$50 billion) than wireline infrastructure, according to Mark Lowenstein, managing director of Mobile Ecosystems.
By 2004, more people will have cellphones than TV sets. This year alone, wireless handset sales are set to top 469 million, according to Strategy Analytics.
The growth of SMS in Europe, iMode in Japan, and Blackberry in the US hint at the potential of data services for mobile communication. Frost&Sullivan predict that mobile data will account for 45 per cent of wireless revenues by 2005.
The embedded operating systems market will reach US$2.2 billion by 2004, according to IDC. By 2004, the number of mobile professionals and mobile data collectors in the US will be 27 million, with another 18 million in Western Europe.
By 2005, the number of U.S. corporate mobile Internet users will be about 32 million, and the number of U.S. corporate PC users will be 105 million, according to Goldman Sachs and Dataquest. By 2004, Gartner predicts that corporations will need to provide support for at least three devices per knowledge worker.
The wireless advertising market will be worth US$3.9 billion by 2004, according to the Kelsey group.
By December 2002, SMS message volumes are expected to reach 27 billion in Europe, 10 billion in Asia, 7 billion in Latin America, and 7 billion in North America.
"Wireless adoption is not just happening in Europe and Asia - it has gone ahead and gained widespread acceptance," observed Kimo Kong, CEO of Avisair.
The US networks represent a patchwork of different standards: CDMA (Verizon, Sprint PCS), GSM (VoiceStream, Cingular), TDMA (AT&T Wireless), and Mobitex (Cingular Interactive).
Sales of Palm-powered PDAs are forecast to reach about 10 million devices this year. There are 2 prevailing operating systems for the US PDA market -- Microsoft and Palm. Blackberry-type devices send and receive e-mails.
M-commerce at the carrier and consumer levels is widely occurring overseas, but not as much in the US due to problems like less interoperability between carriers, said Josh Cobb, wireless manager at Sprint. "The US response to using wireless has been timid as compared to Europe and Asia since wireline communications and PC-based e-commerce dominate here," he observed.
The first inter-carrier agreements for exchanging SMS messages in the US are expected at best in the middle of 2002. SMS advertising campaigns have only recently been launched by AT&T Wireless and Sprint PCS.
"The lack of interoperability is a sad reflection of the narrow-mindedness and stupidity of US carriers," said Jack Powers, director of the International Institute of Informatics (www.in3.org).
"Asia has gone for the consumer marketplace, but the US short-term battleground is in enterprise computing. By 2004, mobile enterprise computing will account for over US$82 billion," said John Chapman, strategy director at HP, which is very active in developers' programs for the buildout of mobile operators' 3G systems.
Numerous wireless applications are emerging in industries like transportation (shipment tracking), utilities (meter reading), financial services (m-trading), healthcare (patient monitoring), pharmaceutical (tracking medical samples), and law enforcement (ticketing and fines).
Sysco, a food services products company, uses wireless technologies for warehouse automation. Sprint leverages its own wireless network for m-enabling its two thousand sales reps.
GEsupply.com is using wireless clipboards in supply chain management as mobile proof of delivery. Stryker Corporation uses PDAs for support staff in hospitals who fit its hip-replacement kits. Sun Microsystems uses wireless handhelds for its customer service reps in over 40 countries, and reports more accuracy and more sales as a result. Palm devices are used by the police department in Flint, Michigan, for license checks, stolen vehicle tracking, and gun monitoring.
"Wireless technology is making a significant impact on safety, profitability and productivity of US organizations, ranging from corporations to governments," said David Rosi, VP of Aether Systems.
But companies must also keep an eye on RoI, which could be measured in the form of productivity boosts (Fidelity Investments, Fujitsu), cost cutting (3M, Maersk, National Institute of Health), and building competitive advantage (Pfizer, Nintendo).
"The mobile and/or remote worker category in the US - of which salespeople form the largest segment - is expected to grow more than 40 per cent by 2004, to more than 50 million. Sales force automation (SFA) will be a killer app for wireless," said Michael Doyle, CEO of SalesNet.com.
Remote data hosting is now a requirement in the US after the September 11 terror attacks, and the ASP (application service provider) model for mobile SFA will become prevalent, he said.
Cellphones and PDAs can help sales employees coordinate strategy, answer unexpected questions, and launch the next steps in real time after sales meetings.
The wireless Internet can help knowledge mobilization for both blue collar (trucking, logistics) as well as white collar workers (knowledge workers, analysts), said Minerva Hobbs, technology director at Answerthink, a mobile services company which has developed B2B2E mobile solutions for IBM consultants and integrators with technology newsclips, product information, and partner transactions delivered to PDAs.
Employee and partner relationship management seem to be more important than B2C customer relationship management in the U.S. wireless market today whereas Asia has more of consumer usage, observed Hobbs.
Still, there are unique opportunities emerging in direct and permission marketing, especially via location-based services (LBS). "Marketers can not get any more directly to their valuable customers than via cellphones and PDAs," said Hobbs. Opt-in and opt-out features need to be easy to use, she advised.
CONSUMER MARKET: CONTENT AND DESIGN
Entertainment constituents a major application for the mobile consumer. "We are forming numerous partnerships to become the Wal-Mart of downloadable applications," said Paul Palmieri, director of business development at Verizon Wireless, whose recent alliance partners include Qualcomm for its Binary Runtime Environment for Wireless (BREW) services.
Cellphones represent the "brand in the hand" in terms of marketing channels, said Perry Allison, VP of SkyGo.
Notable m-marketing campaigns according to Allison include McDonald's m-coupons and store locator services, promotion of MTV's Music Video awards, sports sponsorship by ESPN and General Motors on AT&T Wireless, promotion of the movie "Planet of the Apes" in Europe (by Vodafone, Fox, and 12snap), and even a viral marketing "SMS kissing" campaign in Germany.
"We are trying out new ideas for m-advertising in Europe, Japan and Korea, and learning from them to see what may be applicable in the US," said Zain Raj, president of advertising agency FCB Interactive (www.fcb.com).
Wireless computing can help take CRM beyond the first two levels of resource management and basic customer information management to the third level of event-based notifications to proactively interact with customers, said Steve Zirkel, director of business development at PAR3 Communications, whose clients include Alaska Airlines.
"As the wireless Internet matures, content will become increasingly important for the future of wireless Internet models. But today, operators are still struggling to find the right billing model," said Brion Feinburg, product management director at Apogee Networks. Billing by data volumes may be acceptable - but it should be in easily understood categories like text, songs, videoclips and postcards, and not by kilobytes as some operators are doing.
"Another challenge for content developers is deciding which set of devices to design for," said Scott Weiss, principal of Usable Products and author of the forthcoming book "Handheld Usability." Key parameters for design of successful m-services will include content, context, clarity, coordination and cost.
One area where mobile content and services have proven to be a clear winner is the financial sector. "We are very bullish on wireless, especially to deepen relationships with our most valuable customers. The synergy between mobile channels and financial services is strong, and will continue to improve as bandwidth and device technology get better," said Jonathan Craig, VP for global wireless solutions at leading financial services company Charles Schwab.
Over 125,000 users subscribe to Schwab's PocketBroker wireless service today. "We created a separate organization to incubate the mobile business, just as we did with the Internet business some years ago," Craig said.
79 per cent of Schwab PocketBroker customers feel more in control of their investments and 75 per cent are able to use their time more effectively via mobile trading, he reported. "The key to success with mobile services is actionable content, time-sensitive information, compact packaging, personalization, security, and integration across multiple channels," Craig advised.
LOCATION-BASED SERVICES (LBS)
"Fine-grained location information raises the effectiveness of personalized and localized content. By automatically determining user location, LBS simplifies the navigation necessary to find content in proximity," said Atmanand Thakur, senior manager for emerging technology solutions at KPMG Consulting.
According to research firm Ovum, location based services will deliver $19.5 billion of revenue by 2006.
LBS applications include workforce tracking, fleet monitoring, equipment accounting in hospitals, emergency services, city navigation, traffic alerts, and basic information queries.
One of the best success stories of location-specific information services for mobile users in the U.S. is Vindigo, which offers city guides and location information services via PDAs for over 20 major cities in the U.S. and has close to a million registered users.
The two-year-old company's advertising clients include Sprint, NBC, Dreamworks SKG, Finlandia Vodka, American Express, and Absolut.
Vindigo's content partners include The New York Times and The Boston Globe, which provide dining and nightlife content and encourage users to submit their own ratings
and reviews. Other partners include Zagat Survey, Washington Post-Newsweek Interactive, Cox Interactive, and Tribune Interactive.
Vindigo is also cleverly leveraging viral marketing -- its software can be shared by handheld users "beaming" it to friends' devices through a "Give" button; an estimated 30 per cent of the users who get beamed samples convert later to full downloads, and 15 per cent of Vindigo users had the software beamed to them first.
Technologies like A-GPS (assisted GPS) can help overcome the roadblocks associated with LBS deployment, said Michel Freund, VP of LocatioNet, which provides billing solutions for location-based content services.
LBS adoption is quite high in Japan as exemplified by J-Phone's J-Navi, KDD's Cell-ID, and DoCoMo's iArea services. LBS is also quite popular in Latin America, for location-specific chatting (eg during concerts) and coordination (of meetings).
The need to leverage geocoding technology for location-aware content has sparked off a wave of middleware startups creating location-smart services - and also growing concern over user privacy safeguards.
Europe has the most stringent laws about online privacy; Asia is more lax, and the U.S. lies in between, observed Micah Kotch of GameLoft.com. The Mobile Marketing Association (http://www.mmaglobal.org/) was formed in January this year by the merger of the Wireless Advertising Association (WAA) and the Wireless Marketing Association (WMA) to consolidate efforts and resources to foster the mobile marketing industry and protect the interests of both the consumer and industry players.
The U.S. Federal Communications
Commission's Enhanced 911 (E911) mandate, passed in 1996, required that
wireless carriers be able to locate emergency 911 callers within meters
December 2002 to meet these guidelines.
The increasing use of mobile devices - especially in cars - has also spurred development in automated speech recognition (ASR) and text-to-speech technology (TTS) for voice portals.
The acceptance of standards like Voice-XML and SALT (Speech Application Language Tags) has made the building of new applications much easier, said Carmen Andia, product management director at Glenayre Technologies. This in turn will spur "v-commerce" (voice-enabled commerce) and unified messaging.
Other emerging standards include SyncML (an open industry standard for data synchronization across multiple platforms) and WSDL (Web Services Description Language).
These developments also bode well for the growth of applications like audio-conferencing in the U.S., driven in part by increasing user demands for flexibility and affordability of group collaborative services especially in the wake of the September 11 terror attacks.
"Wireless conferencing can be more convenient than wireline conferencing. Audio conferencing revenues for this year are expected to cross US$2 billion; the main sector is the business segment, followed by family and youth callers," said James Brennan, product manager at Voyant.
Other speech recognition and generation companies targeting the mobile chain include Nuance, Evoxis, i3Mobile, and Audible.com, with offerings ranging from tour guide voice prompts to audiobooks delivered wirelessly as MP3 files.
Speech services have achieved real momentum; carriers are now beginning to see themselves as "media-casters," according to David Simpson, business development manager at Morristown Three.
Telematics - the delivery of wireless content and services to automobiles - is a hot growth segment in the U.S., the largest car market in the world. Telematics includes GPS-based navigation, locational listings, traffic-information, corporate email, carlock security, and even engine diagnostic services.
IDC predicts that the majority of US cars will have wireless connectivity by 2010, accounting for a market worth more than $40 billion. This year - 2002 - is expected to be pivotal in the market acceptance of telematics services in the U.S. and perceptions of its safety.
OnStar, a telematics subsidiary of General Motors operating since 1996, currently has two million subscribers and is averaging more than 5,000 new subscribers per day.
OnStar customers can use their service in hands-free mode through a voice portal, and can ask for emergency assistance, driving directions, information about local ATMs and gas stations, and news and weather from CNN, Wall Street Journal and Tele Atlas.
"We are progressing from the clicks and bricks of the Internet Economy to the flips and lips of the mobile data and voice economy," said Balaji Prasad, CTO of OnStar services at EDS.
Other promising areas for mobile data markets include in-flight Internet connectivity in airplanes. "Regulatory issues and appropriate access tariffs need to be worked out carefully by airborne service providers," said Peter Lemme, CTO at Tenzing Communications, which provides cached Internet services for Air Canada, Cathay Pacific, Singapore Airlines, and Varig.
The mobile ecosystem is also being targeted by numerous interesting startups: such as Ecrio and BarPoint (for shopping service coupons based on barcodes), MySimon (for shopping bots), iMedica (touchscreen tablets for healthcare professionals), Digital Angel (wearable bio-sensors for elderly patients), and ArcStream (mobile workbench for professionals).
Companies like Microsoft, Nokia, Ericsson, IBM, Intel and HP are aggressively attacking the entire developer value chain for the various wireless networking markets: WAN, LAN and PAN.
"The key for success is to infuse the Internet world with scalable content and multiple access points. The reality is that network connectivity will continue to remain spotty, and software will play a major role in developing smart devices to tackle these uncertainties," said Brian Shafer, mobility group manager at Microsoft.
All this flurry of development on the m-front is good news for companies in countries like India, to which software development from elsewhere is being increasingly outsourced.
"We plan to increase our offshore support in India from a hundred to a thousand employees," said Justin Hart, director of emerging markets for UK-headquartered Xansa, whose clients include mobile telcos in Europe and the US. Other companies with India operations include Alopa Networks and AnswerThink.
In sum, it would be worthwhile to conclude with the words of Barry Diller, CEO of USA Networks: "Media and communications are in the early stages of a radical transformation and no faltering economy will stop it. Companies entering this wireless space must be willing to subordinate their expertise long enough to greet this medium on its own terms."
The writer can be reached at email@example.com
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