Wireless Ecommerce mcommerce

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Wireless E-commerce (m-commerce)
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Todays Class

• Wireless the next frontier?
• Additional benefits and challenges
• Technologies and standards
• Immaturity and complexity
• The players and value creation
• Network providers, businesses, and consumers
• Lessons from the wired world

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Wireless E-Commerce

• Wireless technologies promise to be the next
  major development in e-commerce both for business
  and consumer markets (B2B and B2C)
• So far, the results have been disappointing,
  especially in consumer markets
• Several reasons account for the large potential
  of wireless e-commerce (or m-commerce)
• Wireless devices are widely utilized, both in
  developed and developing countries (2.8 billion
  mobile phones)
• There are also a large number of barriers that
  have proven difficult to overcome
• Consumers have not flocked to new technologies in
  their millions as envisaged
• Relatively low tech and low cost services like
  SMS are more popular than expected

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Wireless Telephony Use by Technology
Source GSM World
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Additional Benefits of Wireless

• Convenience and flexibility
• Portability of devices gives unrestricted usage
• Ability to communicate is still most important
  benefit (voice)
• Mobile devices are more personal and more
  affordable
• PCs are often shared devices (especially among
  households)
• Potential for a wide range of value-added
  services
• Examples such as location-based services,
  real-time notification and information delivery,
  etc.
• Relatively inexpensive to deploy compared to
  wired solutions
• This is especially relevant for developing
  countries
• For businesses, there are clear productivity and
  collaborative benefits

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Additional Challenges of Wireless

• Greater number of technologies
• Technologies are also immature
• Lack of standards on a global basis (even within
  countries)
• More difficult to secure and additional concerns
  about privacy
• Transport medium is air, not wires
• Physical limitation of devices
• Smaller to be portable and dependent on battery
  technology
• Incumbents are trying to control the value chain
  and protect existing infrastructure (and revenue
  models)
• Proprietary nature of networks
• Lack of applications and appropriate content
• Business applications have evolved dramatically,
  but consumer apps lag significantly

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Wireless Technologies

• Technology plays a more important role in
  wireless e-commerce than fixed-line e-commerce
  (or PC-based e-commerce)
• PC-based e-commerce technologies are mature while
  wireless techs still are under development
• Immaturity in the technologies has led to several
  problem areas
• Lack of standards
• Large variety of devices and requirement for
  multiple devices
• Limitations of size and capabilities
• Gaps between network capabilities and
  availability of services

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Most Common Wireless Technologies

• Mobile telephony
• 2GGSM, CDMA, TDMA, etc.
• Transition techsGPRS (2.5G) and EDGE (2.75G)
• 3GWCDMA and CDMA200
• Wireless LANWiFi and WiMax (UWB)
• Broadband wirelessLMDS and MMDS
• Bluetooth
• RFID
• Contactless smart cards

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Lack of Standards (Competing Standards)

• One of the lessons from our previous discussions
  has been the importance of standards in the
  growth of e-commerce
• Internet standards have reduced the cost and
  increased the benefits of using the network
• All of the companies we have discussed in our
  cases have made extensive use of standards
• Unfortunately, there are no global standards for
  mobile telephony (and especially for newer 3G
  networks)
• This lack of standards has severely impeded the
  development of broadband wireless
• Established standards for wireless communications
  like WiFi have been broadly adopted

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Other Technology Issues

• Theoretical versus actual data transfer rates
• Always-on access
• Geographical coverage urban versus rural
• Reasons for additional bandwidth
• Mobile devices

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Theoretical versus Actual Data Rates
Source Dresdner
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Circuit versus Packet Switched
Source Nokia
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3G and Geographical Coverage
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Required Bandwidth
Source Nokia
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Mobile Devices

• The last piece of the technology puzzle are the
  mobile devices used to access the networks
• Traditional devices such as mobile phones and
  PDAs still dominate
• Newer devices posses attributes that make them
  better suited for m-commerce such as larger
  screens, more memory, longer battery life, better
  interface, integrated digital video cameras, etc.
• There will always be a trade-off between
  portability and functionality

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The Players and Value Creation

• From a business point of view, there are 3 major
  groups of players
• Network operators
• Primarily the Telcos that are deploying the
  networks
• Need to generate revenues from network operations
  (data and voice traffic)
• Businesses
• Will use wireless technologies and m-commerce to
  create value for their customers and shareholders
• Consumers
• Will use wireless technologies and m-commerce for
  communications, entertainment, shopping, etc.
• The original focus was on customer applications
• Massive overestimation of consumer markets
• Lack of focus on value-added services

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Lessons from Dot-com Crash

• The dot-com crash and the failure of many B2C and
  B2B ventures supply a number of important lessons
  for the development of m-commerce
• Internet user does not translate easily into
  Internet buyer
• The build it and they will come approach
• Advertising revenues are not sufficient to
  survive as a business
• Diversity of revenue streams and a sound
  financial model make a big difference
• Security and privacy are critical
• Ease of use, stability, and dependability are
  important
• Recent report suggests that Australians are not
  happy with wireless service quality
• Its all about value creationall participants
  must benefit

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The Network Providers

• Network providers are facing a daunting challenge
• Massive investments in spectrum allocation
  (especially in Europe)
• Massive investments in network deployment
  (started 8 years ago and will continue for
  several years)
• The nature of mobile communications is changing
  dramatically
• Emergence of data traffic, which has overtaken
  voice traffic (packet switching)
• The old model, charging based on time of use, no
  longer applies (data and always-on)
• Value-added services that include content,
  entertainment, commerce, and numerous others are,
  and will continue to be, critical sources of
  revenue
• A progression to more bandwidth-intensive services

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3G SubscribersFinally Picking-up
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Data versus VoiceDiversification of Revenues
Source Nokia
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Revenues from Wireless Services
Source Dresdner
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BusinessesB2B Opportunities

• B2B (or business applications) have led the way
• Businesses have a lot to gain by developing
  wireless applications (strong economic
  motivators)
• Businesses tend to be creative in their use of IT
  and have the resources to develop value-adding
  applications
• Several success stories
• The massive growth of Blackberries for wireless
  e-mail access
• The emergence of RFID
• The ubiquity of WiFi in urban areas (and in
  businesses)

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Types of B2B Apps and Benefits

• Communications for both voice and data should
  become less expensive (due to higher efficiencies
  of 3G networks)
• Fast and reliable wireless data access can
  improve worker productivity in several areas
  (e.g., mobile workforce, transportation and
  logistics, etc.)
• High speed wireless applications can improve
  quality of service (e.g., healthcare, insurance,
  construction, etc.)
• Wireless devices can be used for advertising
  purposes (e.g., retailing, restaurants, etc.)
• A large number of M2M possibilities
  (machine-machine)

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Efficiency Gains from Mobile Generations
Source Dresdner
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Efficiency Gains and User Cost
Source Dresdner
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Data Segments and M2M
Source Nokia
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B2C Opportunities

• B2C will probably succeed, but in a different way
  than first suggested
• It will take a lot more time and investment than
  first anticipated (remember WAP)
• Services will focus on the improved ability to
  communicate and interact
• Person-to-person servicesdata exchange SMS
  popularity and the move to multimedia SMS
• Location-based services (e.g., advertising)
• Content and information (real-time)
• Small transactions through mobile service billing
• M2M (man-machine or machine-man) vending machines

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Wireless Vending Machines
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Wireless Internet Access
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What People Do
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SMS by Age Group
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Mobile and Lifestyles
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Importance of Mobiles
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Social Impacts!
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Location-Based Services
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Paying for Content
Source Nokia
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Weaknesses and Challenges

• Mobile devices are limited by size and thus
  cannot be used for surfing or PC-based e-commerce
  type of transactions (especially problematic in
  B2C markets)
• Companies have spent enormous amounts of money
  for 3G licenses and hence have limited resources
  to spend on the development of services and
  content
• Revenue models are emerging, but unproven
• Need content providers and application developers
  involved and need to share revenues
• Need stronger security, especially for B2B
  applications

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Success Factors

• Focus on end-user needs and experience
• Providing new services
• Enhancing existing user experience
• Technologies and data speeds are only relevant
  when they create additional value for the user
  (both businesses and consumers)
• Learn lessons from WAP and the Internet
• Sustainable revenue models (packet data services
  rather than time-based models)

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