Todays wireless investment, tomorrows bookings

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Todays wireless investment, tomorrows bookings?

• Conversations Create Transactions

Leon Benjamin, Principal Consultant, Remus
www.remus.com Jan 2003
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Objectives

• Provide an alternative insight into wireless
  activity in Europe and how it is reconfiguring
  traditional business models
• Describe the prevalent and emerging distribution
  and revenue models
• Describe how tourism providers can exploit the
  wireless space
• ..And why this can only be achieved by a
  profound shift in thinking

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Presentation Structure

• Profile the technology landscape
• Infrastructure trends key players
• Market profile
• Technology device trends
• Assess the business landscape
• Applications whos doing what
• Business models
• Revenue models
• Describe the key components of a wireless
  distribution strategy
• Community, Content then Commerce (cCommerce)
• Collaboration, partnering

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Technology Landscape (Stats)

• The mobile phone statistics make attractive
  reading
• Over 50 penetration of mobile phones in many
  European countries (average 40 penetration)
• As high as 75 in some countries (Italy
  Finland, Iceland now officially the highest with
  76)
• 76 mobile operators in Europe
• 10 major mobile operators with nearly 160 million
  subscribers
• 100 penetration in Western Europe by 2006
  (Pyramid Research) thats 350m people!
• 178 GSM countries worldwide
• Globally, 167m new subscribers in last 12 months
  (ending 2002)
• Strong uptake of GPRS (always on) services,
  currently 75 business users
• 40 million Western European wireless subscribers
  13 of all mobile phone users in the region -
  will be using GPRS mobile data services by the
  end of 2003 (Source Analysys)
• By the end of 2003, however, non-commercial users
  could outnumber enterprise users, accounting for
  80 of GPRS users

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Technology Landscape (Stats)

• SMS is still the dominant (data) revenue
  generator for operators
• 10 of total service revenues
• Billions of text messages every month Global Q1
  2002 75bn, projected total for 2002 360bn
• Guess what? In Europe, 90 of these messages are
  person-to-person with only 10 machine or
  application to person
• Instant Messaging (IM) is the next big thing
  and cannot be ignored.
• 1 in 6 mobile users in Europe currently using IM
• 50 million users worldwide
• Exploding into the corporate world (100,000
  IBMers sending over 1m messages a day)
• GPRS and a new standard called Session Initiation
  Protocol (SIP) will bring about SMS size
  revenue for operators
• SIP ties together email, voice, and messaging
• Enables SMS-IM and IM-SMS chat over wireless
  networks

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Technology Landscape (More Stats)

• Devices are converging and morphing into wireless
  and voice enabled Personal Digital Assistants
  (PDAs)
• Palm still dominant with 47 global market share
• Microsoft Pocket PC based devices second behind
  Palm in Europe.and gaining Compaq iPaq, HP
  Jornada
• eTForecasts in its report "Worldwide PDA
  Markets", expects explosive growth in the form of
  PDA-phones, a Web cell phone with PDA
  functionality or vice versa
• Worldwide PDA sales to jump from 12 million
  devices in 2000 to more than 61 million in 2007
• They will be multifunction devices with built-in
  Internet access, digital camera, music player,
  scanner and other functionality
• The hardware capabilities of a typical 2007 PDA
  will be similar to a 2001 low-end PC!

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Convergent Devices
Siemens Java PDA phone
Handspring Treo PDA phone Palm OS
MMO2 (Cellnet) XDA Pocket PC PDA phone
Personal Trusted Devices (PTD)
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Technology Landscape (Location)

• There is a massive focus on Location Based
  Services (LBS)
• Network operators (huge future revenue)
• Galileo GPS
• Webraska, Schlumberger
• A persons location sets the context for service
  delivery
• Online business directories are ineffective
  without geo-coded data (Scoot, Yell, DB)
• Geo-coding service providers
• Whereonearth.com (UK) can geo-code data to
  virtually every city in the world (including
  Jakarta)
• TerraSeek.com in the US

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Technology Landscape (Trends)

• Wi-Fi (Wide Fidelity) networks, or WLANs have
  literally exploded and emerged as the single most
  significant development in wireless technology
• Wi-Fi networks are short range (100m) wireless
  LANs running at 10mbps
• They enable laptops PDAs to connect to the
  internet by sharing a broadband connection
• Cost 300-500 Euros to implement
• Disruptive technology
• Cheap
• Effective, useful
• Out of control
• Could severely impede the European investment in
  3G
• Lets see why

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Technology Landscape (Wi-Fi)

• Retailers are creating Hotspots
• Most MacDonalds restaurants in the US by end 2002
• Starbucks deploying across Europe, 462 stores
  enabled in US
• BT to create hundreds of Hotspots in an around
  London
• In travel
• Hilton Group to deploy worldwide
• Most airports will be provide Wi-Fi access within
  next 12 months
• Internet access available via Hotspots anywhere
  in Cambridge (UK)
• First internet bench in small market town of
  Bury St Edmunds (UK)
• Available on Brighton beach this summer
• Individuals with broadband are sharing their
  connection with their neighbours
• BT are rolling out 5,000 broadband subscribers
  every week
• Selling Wi-Fi kits online even though the
  contract forbids broadband sharing

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Technology Landscape (Wi-Fi)

• Most of Hawaii is now wired with Wi-Fi
• Island of wireless guerrillas
• Individuals are (re)-charging their neighbours to
  share their broadband
• Companies like Joltage.com and Boingo.com are
  providing a payment and global publishing
  platform to enable the contractual elements
• Anyone can become an ISP serving small local
  communities
• Giving rise to Network Area Neighbourhoods (NANs)
  and Customer Owned Networks (CONs?)
• In the US the FCC will soon sanction next
  generation Wi-Fi that will operate at higher
  speeds and greater distances (miles)

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Technology Landscape (Wi-Fi)

• Sony built a virtual reality gaming facility off
  the coast of San Diego in 1999 - Norrath
• Can accommodate 1m visitors per year
• Gamers can participate using their PCs at home
  but need a broadband connection
• Many rural players are connecting via Wi-Fi
• Wi-Fi took this game from relative obscurity to
  100,000 online at any given moment in time
• Sony derives 3.6m revenue per month from this
  community
• A US economist has now published the first
  assessment of virtual worlds

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Technology Landscape (Wi-Fi)

• The average EverQuest player generates revenues
  of 2,266 a year
• Norraths per capita income is roughly between
  Russia and Bulgaria
• Put another way, the 77th richest country in the
  world
• Wi-Fi and broadband made this happen
• Market for equipment sales 969m in 2000
  estimated 4.5 billion in 2006
• Wi-Fi support added to Windows XP in 2001
• Will be integral component of PDA phones Tablet
  PC

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Technology Landscape - Conclusions

• There is massive liquidity in the wireless
  space
• Users, devices, services, coverage
• Location and context is everything
• Our entire surroundings are the interface to the
  network
• Where the TV turns itself down when our phone
  rings!
• The creation of a wireless Digital Canopy
  Wi-Fi, GSM, Internet, Bluetooth
• There is a steep learning curve for any tourism
  or travel provider and its changing all the
  time
• The ability to form deep partnerships with
  wireless services providers, both long term and
  ad-hoc will be the only way to exploit this
  technology as a distribution medium

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Business Landscape
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Business Landscape New Business Models

• A distinct system of suppliers, distributors,
  commerce service providers, infrastructure
  providers and customers that use the Internet for
  their primary business communication and
  transactions Digital Capital, page 4
• In b-webs internetworked, fluid sometimes
  highly structured, sometimes amorphous sets of
  contributors come together to create value for
  customers and wealth for their shareholders. In
  the most elegant of b-webs, each participant
  focuses on a limited set of core competencies,
  the things that it does best Digital Capital,
  page 17

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Business Landscape New Business Models
Organisational boundaries are becoming blurred
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Business Landscape New Business Models
Value Network multi-enterprise set of
relationships focused on integration to exploit
information and knowledge in network
Value is created in whatever way is appropriate,
no longer dictated by organisational relations
and boundaries
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Business Landscape

• Markets consist of conversations
• Voice, Email, SMS and now Instant Messaging
  (market value measured in billions)
• In Europe, 90 of SMS messages are
  person-to-person (Forrester)
• A powerful global conversation has begun.
  Through the Internet, people are discovering and
  inventing new ways to share relevant knowledge
  with blinding speed. As a direct result, markets
  are getting smarterand getting smarter faster
  than most companies
• Blogging
• Journalism 3.0
• Consumers have access to perfect information
• Perfect information shifts power to the consumer
• Networked markets are beginning to self-organise
  faster than the companies that have traditionally
  served them
• People in networked markets have figured out that
  they get far better information and support from
  one another than from vendors
• Companies that dont realise their markets are
  now networked person-to-person, getting smarter
  as a result and are deeply joined in conversation
  are missing an opportunity

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Business Landscape Market Activity

• The market in terms of solutions appears to fall
  into three areas
• Mobile technology platform providers
• Mobile portals network operators
• Point solutions deployed by large corporates and
  travel organisations

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Business Landscape Technology Providers

• This is a huge space and wont be covered in
  detail
• Infrastructure provided by the usual suspects
• Nokia, Ericsson, Motorola
• Gateway products that deliver content,
  applications, provisioning
• OpenWave, Phone.com, Aether Systems, Passcall,
  Airflash, Brience
• Air2Web platform used by Best Western
• Customer self-service solutions
• eCRM
• Autodesk Location Services has announced a
  location-enabled Short Messaging Service and MMS
  (Multi Media Messaging) solution
• Short command for retrieving hotel options based
  on location. With a suitable PDA/phone, a
  traveler would be able to view photographs of the
  hotel's facilities.

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Business Landscape Mobile Portals

• Every operator has one!
• Vizzavi (Vodafone Vivendi), O2 (BT Genie),
  Telia, Sonera, MobilStar, T-Plus, DT
• Every major web portal has one!
• MSN, AOL, Yahoo, Tiscali
• Lots of pure play portals and ASPs
• AvantGo, Breathe, Room33, Aspective
• The manufacturers are in on the act too
• Nokia Club a community portal
• Sony Ericsson

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Business Landscape Mobile Portals

• They have common features
• Content news, stocks, weather, music, etc
• Logos and ring tones
• These mobile portals are not really making money
• Content is largely free
• SMS is mostly person-to-person
• Cannot live by advertising, ring tones and logos
  alone
• Market for mobile ring tones in Western Europe
  was 445m in 2001 big number but still small
  potatoes
• Vizzavi has now invested around 1 billion,
  revenues from services are in the low millions
  (1-3m)
• The core revenue model is based around sharing
  traffic revenues generated by end user pull of
  content
• Very successful for NTT DoCoMo (iMode)

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Business Landscape Point Solutions

• Enabling type solutions being deployed
• Copenhagen Airport is opening its wireless local
  area network (WLAN) to the public this week.
  Named CPH-WIZ, Oct 2001
• Federal Aviation Administration (FAA) to provide
  secure, broadband wireless connectivity between
  FAA buildings at airports across the US
• VARIG Airlines email, web access on entire
  fleet, Nov 2001
• Corporate Solutions
• United Airlines EasyUpdate feature offers Mileage
  Plus passengers to give them the latest travel
  information via the Web, a wireless device, or
  telephone, at any point on their journey
• CabinLINK, an in-flight, e-mail and Internet
  browsing service for corporate and private
  airline passengers, Tenzing collaborating with
  Singapore Airlines and Air Canada
• BA check in services (WAP)
• Variety of wireless based eTicketing
• UK, Odeon WAP booking service
• UK, Hull City Council collaborating with Ericsson
  to deploy first mobile car parking payment scheme
• Smaller travel/tourism related service providers
• Kizoom for UK rail timetable
• 0800taxi.com UK taxi cab firm database
  (WAP/SMS)

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Business Landscape Payment Models

• Travel Tourism is a 4.7 trillion market
• According to the UN it will be worth 8 trillion
  by 2010
• A third of all eCommerce transactions are travel
  related (by value)
• Frost Sullivan prediction Electronic commerce
  conducted via mobile devices such as phones and
  PDAs will take off over the next few years to
  become a US25 billion market worldwide by 2006.
  M-commerce will account for 15 percent of the
  world's online commerce in sectors including
• automated point-of-sale payments (vending
  machines, parking meters and ticket machines)
• attended point-of-sale payments (shop counters,
  taxis)
• mobile-assisted Internet payments (fixed Internet
  sites using phone instead of credit card)
  Reverse Billing
• peer-to-peer payments between individuals

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Business Landscape Payment Models

• Micropayment applications are key and there is
  huge activity in this area
• Reverse billing. Jupiter predicts that by 2006
  consumers will spend 3.3bn Euros using mobiles as
  a content billing platform
• Nochex Payhound (email money)
• Paypal, Compaqs Millicent
• BT Microbilling services on your blue bill
• Vodafone mobile wallet (macropayment solution)
• Freedompay, Nokia MacDonalds in the US
  burgers by cell phone
• Egold.com, Goldmoney.com
• Pre-pay or post-pay? Subscription or pay-as-use?
• Provide all methods

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Business Landscape Checkpoint

• This is a big, complex, very fast moving space!
• It will be impossible to absorb and understand
  all of it and you dont need to!
• Far more important will be your ability to
  collaborate
• Internally in order to innovate
• Externally in order to get the most from partners
• Focus on making integration easy (read as,
  agility) with your current and future partners
• XML Web Services
• This will be about plug-and-play business
• Wireless is an important channel but not the
  only channel

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Wireless Distribution Strategy
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Wireless Distribution Strategy

• So how does a tourism provider exploit the
  wireless channel?
• How do you enrich the customer experience?
• What are the key steps to get there?
• How do you reduce transaction costs?
• How do you minimise the risk of failure?

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Wireless Distribution Strategy

• Three key areas
• Community
• Content
• Commerce

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Wireless Distribution Strategy Content
Community

• At the Lisbon Summit, in March 2000, the European
  Union has set an objective for the next decade
• To become the most competitive and dynamic
  knowledge-based economy in the world, capable of
  sustainable economic growth with more and better
  jobs and greater social cohesion
• Will be achieved through the eEurope initiative
  and 36 billion Euro spend 2002-6 on research into
  eServices (3.6bn on XML Web Services)

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Wireless Distribution Strategy - Content
Community

• Most advanced wireless infrastructure in the
  world
• Is promoting collaboration at all levels from
  education and schools to research and
  inter-government
• EU citizens know and understand the value of
  community European Research Area (ERA)
• It is a fertile ground for creating new
  electronic communities

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Wireless Distribution Strategy - Content
Community

• Why create these communities? They are being
  taken seriously outside travel
• Hallmark cards created a listening community to
  understand how its customers celebrate
  Valentines and discovered a chasm between the
  fantasy they sell in their cards and what people
  really do
• revolutionize our understanding of how people
  learn and how market research should be
  conducted
• Hallmark is reducing the risk of getting it wrong
  by asking its customers what they want this is
  helping it triple sales over the next 5 years
• Proctor Gamble with PG.com also created a
  listening platform
• Online communities have paid off by
• capturing better insights faster
• building advocates for their products
• Provide feedback that contains disproportionately
  rich ideas (Slime Mould)
• There are many thousands of these communities
  with a vast array of interests and subject areas
• Blogging is changing the world of journalism and
  conferences
• Sift with Travelmole.com Ebay.com
• Hermail.com
• Communities help to create content, foster
  openness, participation and sharing

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Wireless Distribution Strategy Content,
Community Blogging

• Weblogs (Blogs) are "Small Worlds" models of
  human connectivity
• The weblog world is populated with highly
  clustered but overlapping groups
• The average pair of users in a group of 250,000
  can be connected in four hops or less, and that
  this degree of connectivity relies on a small but
  fantastically connected core of users who serve
  as 'human routers (LiveJournal Study)
• Profound insights into how social networks
  operate

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Wireless Distribution Strategy - Content
Community

• Destinations are in the best position to create
  these communities
• Closest to the providers and the guests
• Local knowledge Relationship Capital
• But they lack the skills and knowledge to
  implement them
• A Destination based community should be a place
  where a guest can interact, before, during and
  after their trip
• Whats happening here? Cool events? Good deals?
• What have people said about this location and its
  services?
• Whos coming? Do they share my interests? Whats
  their IM address?
• Can I share my experiences (blog)
• What products services are you interested in?
  How much would you pay for them?
• Create the conditions for emergent behaviour
• You want us to pay? We want you to pay
  attention

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Wireless Distribution Strategy - Content
Community

• Once content and community are in place,
  eCommerce can follow
• The community will tell you what they want and
  even how much they will pay before you offer a
  service
• Early adopters will test and provide feedback and
  theyll tell their friends
• University of Singapore has developed an IM based
  advertising platform that works by giving credits
  (cheaper SMS etc) to users who forward IM adverts
  to their personal network
• Technically very cheap to build many open
  source (free) solutions available along with
  professional (expensive) solutions
• E.g. CommuniSpace (PG.com, Hallmark)

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Wireless Distribution Strategy Content,
Community, Commerce

• Internal organisation and ethos is crucial to
  success
• The ability to reconfigure itself
• Collaborative ethos
• Innovation as the norm, change as the norm
• Recognise the value of Relationship Capital
• Your people are your best assets, promote
• Life-long learning not a skill
• Entrepreneurs not managers
• Speed change not status quo

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Wireless Distribution Strategy - Commerce

• Pull Vs Push
• Now your customer is able
• to pull an experience toward him/her
• At the right time, location and context
• Enabled by an interconnected
• Digital Canopy
• Through Winning by Sharing

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Final Thoughts

• How do you compete in a world of perfect
  information?
• Not by price but by perceived value
• Through an obsession with the customer
• By focusing on core competencies
• Through collaboration Partnering
• By building trust reputation
• Todays wireless investment, tomorrows bookings?
• Yes, but its a journey not an event
• Conversations create transactions
• Focus on structuring your data (XML)
• Successful travel businesses will be those that
  hunt in packs
• If youre not fast, youll be last!

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Thank You
Leon Benjamin - Remus