Mobile Commerce Is Revving Up - Ready For Take-Off

Imagine ordering a concert ticket, checking your investments, reading the news, gaining access to work files, and obtaining sale information from your favorite sports store-all through your mobile device. What may have been a figment of your imagination is now entirely possible. The advent of mobile commerce is on the horizon, poised for substantial growth, to give consumers reliable, flexible, personalized, and immediate information and communication applications.

Mobile commerce (mCommerce) is the conduct of business, either business-to-business or business-to-consumer, over a mobile telecommunications network, through the use of an Internet-enabled device. The advantages of this application are enormous as it provides new ways for buyers and sellers to engage in electronic exchange of goods and services, and gives accessibility to services and applications beyond the PC or traditional retail environment.

Of course, such outstanding possibilities do come with their share of overzealous expectations, which often lead to disappointment and doubt, particularly when adoption rates are less exceptional than anticipated. It is this hype and then disappointing outcomes that have led consumers and businesses to question where mobile commerce is headed. However, if we focus less on adoption rates, and focus more on growth potential, it is clear there are huge opportunities for mobile commerce. Perhaps it is growing at a slower pace than we expected, but it is revving up - just about ready for take-off.

The sheer size of opportunities in mobile commerce is enormous given the growth of mobile devices in the market place. According to CyberAtlas, in 2001, there were close to 500 million mobile users worldwide. Gartner Group predicts mobile usage to exceed 1 billion between 2003 and 2005. In fact, research organizations like IDC, Forrester and Gartner believe that the number of Internet-enabled mobile devices will exceed the number of PCs accessing the Web. According to IDC, “With Internet-ready mobile phones shipping at a ratio of three mobile phones for every PC, the number of mobile Internet access points is growing rapidly.”

However, despite high growth predictions for mobile devices, researchers of mobile commerce point out that this does not necessarily mean consumers will access the Internet though their mobile device. According to a Cahner In-Stat report, there are approximately 110 million mobile users in the United States and of this number only about one-half of one percent will buy something using their wireless Internet device. Similarly, Jupiter Media Metrix also states “by 2006, sales from mobile Web buyers will be about $3.6 billion – a mere 2 percent of total U.S. E-commerce revenues.”

The Challenge…

Industry analysts have blamed the slow uptake of mobile commerce on a number of factors. One limitation is usability and interface problems. Mobile devices are relatively small with dimly lit screens. Can you imagine browsing through a catalogue of items on your mobile telephone? Chances are you would be holding the device so close to your face that you would see more of your reflection than the products.

Current mobile devices are not conducive to catalogue shopping. Nor are they appropriate for large amounts of text. Obviously, web sites as we know them on our desktops will not be available on our mobile devices. This is a confusing concept to consumers who tend to think that mobile Internet access involves downloading web pages on to their phone. In reality, mobile commerce will involve providing customized information to consumers, such as news reports, e-mails and special store promotions. As a result, the job of organizing and managing Web content for delivery to wireless devices has become a challenge. This challenge becomes even more difficult when we consider that consumers demand very targeted content that will personalize their mobile experience. Add language and cultural obstacles to the mix, and it is possible mobile commerce will be slow moving forward.

Another impediment to mobile commerce growth is lack of infrastructure and technology standards - in particular, bandwidth limitations, multiple service platforms and numerous competing service providers. Consumers are also concerned about security. According to Forrester Research, credit card security concerns is the main obstacle to mobile commerce growth, followed by fear of ‘clunky’ user experience and lack of understanding on how mobile commerce works.

It is clear this new environment has its share of challenges. While these challenges may have an impact on the adoption rate of mobile commerce, there are substantial opportunities in the market that will ensure its continued growth.

The Opportunity…

Two market forces have converged to form the foundation for mobile commerce growth. One, the Internet, has opened the door for information-hungry consumers seeking interactive data access. Two, the growing use of mobile telephones has fueled consumers’ need for anytime, anywhere communications access. Together, these two forces have the potential to produce a large base of consumers who will use their mobile devices to gain immediate access to information, communication and transactional services, no matter where they are. The low cost, ease of use and convenience of mobile phones, in addition to their strong built-in authentication features that make them ideal for electronic payment, will also encourage the adoption of mobile commerce.

In addition to immediate information and communication access for consumers, mobile commerce presents a substantial opportunity for businesses to develop solid business models and strategies that foster customer loyalty and enable them to promote products and services through targeted and personalized marketing campaigns.

Growth of the Internet has seen the pure transaction-based model turn into one that concentrates on customer relationship management to gain a competitive edge. The value of mobile commerce is at its greatest when businesses can directly interact with the consumer. For example, make an offer or promote a product or service at a time when the customer is most likely to act on them. Done right, mobile commerce enables businesses to gain efficiencies, establish new forms of revenue and ensure customer allegiance bringing valuable end results to the business and consumer who is on the move.

Of course, none of this would be possible without the right technology. Enabling the breakthrough of mobile commerce is WAP, Wireless Application Protocol, which has been embraced by industry leaders as the worldwide standard for wireless device communications. Designed with particular emphasis on limited bandwidth, usability challenges, and the user interface requirements of small screens, WAP defines programming and scripting languages that are optimized for small displays and low bandwidth found on mobile devices. With use of WAP, content can be created to adapt to the capabilities of any mobile device.

Opportunities in mobile commerce combined with supporting technology like WAP has encouraged the development of new and existing applications, and will provide strong advantages for various industries.

Applications…

Mobile commerce will provide greater advantages to some industries over others. In particular, the financial industry is a prime candidate since it can capitalize on use of mobile customer relationship management applications. Since they tend to already enjoy high levels of consumer trust, banks and other financial institutions have a unique and significant advantage to provide mobile commerce services.

Of course the retail industry will also benefit from mobile commerce, particularly for advertising and promotional opportunities. Imagine walking by your favorite clothing store and being alerted of sales that may be interest to you. With the development of targeted and effective content retail stores can meet consumers’ needs for highly personalized services that improve customer retention and encourage wireless purchases. The retail industry will become more successful in the mobile space when consumers are more trusting of mobile commerce and gain a better understanding of its various applications.

Businesses that are service-driven will benefit significantly from mobile commerce. For instance, courier services can use mobile devices to track delivery orders and identify the best road routes. As well, manufacturing companies can integrate mobile commerce into their supply chains by connecting their mobile devices to back-end databases that provide immediate and up-to-date information for making business decisions on the go.

Some technology applications will resolve many constraints for mobile commerce use. For example, advanced speech recognition (ASR) will alleviate problems associated with data input and navigation through text-based channels. According to a report by The Pelorus Group, “the merger of wireless services and speech recognition will soon erupt into a multi-billion dollar juggernaut. Speech-enabled wireless Web subscriptions will increase from 5 percent of the market today, to close to 50 percent by 2005, generating more than $3 billion in revenues at that time.” Mobile device users will be able to 'dictate' e-mail messages and speak commands to locate personalized information or gain access to news reports, travel directions or weather reports. ASR creates a more interactive medium for the mobile user and opens the door to a much simpler and user-friendly interface.

Since e-mail is the most common application for wired Internet, it is likely that it will continue to remain popular with mobile commerce users. The irony is that mobile device interfaces do not lend themselves to easy message composition. Rather, it is much easier to receive e-mail. As a result, SMS (Short Messaging Service), which provides the ability to send and receive text messages to and from cellular telephones, has significant growth potential. SMS messaging is cheaper than voice conversations and since messages are typically brief, manual text entry is less of a deterrent. SMS is also being used for mobile information services such as news, stock prices, and e-mail notification.

Applications like speech recognition, e-mail, and SMS, will be attractive to mobile commerce users because they enable them to integrate mobile information and communications into their lives in ways that the wired Internet cannot accomplish. These applications are also familiar, simple to use, flexible - and offer high value at low cost.

Where to now?

There is no doubt that mobile commerce is poised for significant growth. While there are some challenges that will create barriers, improved technology, new applications and above all, customers’ need for customized information and communications access, will propel this industry forward. Its growth will be facilitated by the development of partnerships between industry players such as telecommunications companies and content providers who can focus on creating solid mobile commerce standards to make entry into the market easier. It is also important that industry set more realistic expectations for mobile commerce. Particularly since we now know it is less a question of ‘if’, and more a question of ‘when’.