Businesses Will Lead Wireless Net Adoption

The number of wireless Internet subscribers in the United States will increase from approximately 5 million in 2000 to more than 84 million in 2005, according to International Data Corp. (IDC).

While consumer and business users both make up roughly equal pieces of the wireless Internet user base, business usage is expected to be higher in the near future.

“Business users will lead the way in wireless adoption as they are usually the early adopters and are willing to pay for services and applications they see valuable,” said Charul Vyas, senior research analyst with IDC’s Wireless and Mobile Communications program. “Businesses tend to introduce new services and devices to their employees first, and mobile employees have a need for highly functional devices with higher-speed wireless Internet capabilities.”

IDC expects the number of business-related wireless Internet users to grow from 2.6 million in 2000 to more than 49 million in 2005. IDC research also found that consumers are interested in accessing Internet information from their phones or PDAs, which, in turn, should cause consumer adoption to take off.

Beginning in 2003, IDC expects the U.S. market will see significant uptake in wireless Internet services. This will result in wireless data rates that will be faster than landline dial-up rates as carriers roll out their 2.5G and 3G networks. More functional end-user equipment designed for wireless Internet usage will also become available in mass-market quantities around 2003 and 2004; and the always-on capabilities and stickier applications will drive usage in the coming years.

According to the report “The U.S. Wireless Data Market: Here and Beyond” from Cahners In-Stat, the largest markets for wireless data services over the next five years will be the consumer and large business markets. In-Stat also projects the number of wireless data subscribers in small businesses to grow from 765,000 in 2000, to more than 7.3 million in 2005.

Interest in mobile Internet access is one thing, but mobile Internet access and the type of PC-based Internet access that people have been accustomed to are two different things. This begs the question: What types of applications are people going to use with their mobile Internet access?

According to a report from Strategy Analytics, m-commerce and step-by-step directions are at the top of wireless consumers’ wish lists. In Western Europe, SMS, voicemail and the downloading of ringtones and icons have achieved 73 percent, 69 percent and 24 percent penetration, respectively. In the United States, voicemail remains the most dominant value added service with a penetration of more than 60 percent. Sending SMS and accessing WAP services both registered below 10 percent penetration in the United States.

Step-by-step directions were by far the most popular service in the United States, with more than 30 percent of respondents showing an overall interest. In Western Europe, 20 percent of business users indicated an interest for wireless video conferencing, but on average those answering the question would not be prepared to pay more than $10 per month for the service.

There also seems to be a disconnect between services that are now offered to wireless Internet subscribers and the services that wireless Internet subscribers want and need. For example, Strategy Analytics found the demand for audio and video applications will have to be created with compelling content, seamless distribution and effective pricing, as most customer segments do not see an immediate need. The youth segment leads interest in these applications, but struggles to pay for them. Unified messaging, on the other hand, appeals to almost 40 percent of European and U.S. business cellular users and continues to be an unmet need in the marketplace.

“Cellular users in the United States still view their cell phone primarily as a voice tool, rather than a device for wider data communications or content consumption, while Western European users are generally more receptive towards receiving content on their phones,” said Nitesh Patel, senior industry analyst with Strategy Analytics.

Among wireless Internet providers, the difficulty for wireless providers lies in introducing applications that customers need.

“The critical challenge facing the wireless industry is to move beyond messaging with an advanced suite of productivity and security applications as a precursor to next generation rich media applications,” said David Kerr, vice president of the Strategy Analytics global wireless practice.

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