Questions Remain for M-Commerce; It's Time for Answers

Mobile commerce remains a work in progress, having not yet been a financial success for most carriers around the world, according to a report by Cahners In-Stat Group, which estimates that 9.2 million wireless subscribers globally were m-commerce users at the end of 2000.

The report, “Mobile Commerce: A Work in Progress,” found that the 9.2 million m-commerce users represented a total value of $264 million. Although these figures are for carriers, m-commerce has come a long way in its brief existence as a value-added WAP service. In-Stat predicts that the valuable lessons learned by carriers, content providers wireless application service providers and others in the value chain will help m-commerce transactions to grow slowly during the next five years, except in Japan, where $2.3 billion in transactions are forecast by 2005.

“The main reason for the slow uptake of m-commerce is that services launched before they were ready,” said Becky Diercks, director of In-Stat’s Wireless Service. “Carrier networks were inadequate to handle the e-commerce-like shopping experience that was promised to subscribers.”

In order to improve the state of m-commerce, In-Stat says it will be necessary to avoid repeating the mistakes that have already been made. Packet switched services such as GPRS promise to make the m-commerce experience much more pleasurable and mobile advertising may become an important revenue-generating opportunity during the next few years. However, until user preference and privacy issues are addressed, advertising may not have a sizable impact. In addition, location-based services may be a windfall for m-commerce as soon as cost-effective, real-time platforms are deployed.

“As an m-commerce strategy, it will also be important for carriers to target services to members of the so-called Generation Y. They tend to be quicker adopters and faster learners of new technology than other non-business niches,” Diercks said. “In the end, carrier success will be determined by the capabilities of networks and handsets, the quantity and quality of content and applications, and the ancillary services required to enable users to make purchases.”

In-Stat also found that SMS (Short Message Service) is frequently overlooked as a key enabler of m-commerce, both as a method to initiate transactions and as a trigger for wireless data use. SMS is widely used throughout the world (51 billion messages were sent in the first three months of this year alone), and carriers must leverage this usage to spur m-commerce adoption.

SMS is just one of the technologies (along with GPRS, Bluetooth and others) that could be used to help spur the adoption of m-commerce in the United States. The U.S. market trails Europe and Japan in wireless data use, and eMarketer’s “North American Wireless Report” provides a pretty good example of the far-ranging projections for m-commerce in the United States.

eMarketer examined data from more than 100 research organizations and consultancies, and found that forecasts for the year 2004 range from between $700 million and $27 billion.

“Until a technological standard is defined for m-commerce is adopted, you will continue to see massive differences between the projections from different firms,” said eMarketer analyst Ben Macklin. “Currently, it’s difficult enough to forecast the next six months, let alone to the year 2004.”

eMarketer conservatively forecasts that by 2004 approximately 30 million m-commerce users, spending $50 each, will purchase $1.5 billion dollars worth of goods, services and applications on mobile devices. But the report, also said that the North American wireless market is at a crossroads. M-commerce will either “kick-on” over the next 18 months with carriers driving new wireless data and internet services, or it will fall further behind Europe and Asia and wallow in a mire of competing technological platforms.