Wanted: One Wireless App Users Simply Cannot Live Without

Mobile Internet use has been a technology in search of an application, but if it doesn’t find one relatively soon, it may be looking for something else — an audience.

The 12th annual PricewaterhouseCoopers Technology Forecast echoed the findings of almost all of the previous research on the mobile Internet when it concluded that widespread mobile Internet usage has unlimited potential to change the face of business, but its success depends on new applications designed for the mobile environment.

“To be successful, the mobile Internet will need to find its own ‘killer applications’ — it won’t just be the conventional Internet delivered on a handheld device. This is particularly true in regions where business professionals and consumers already have widespread access to PCs,” said Eric Berg, a director at PricewaterhouseCoopers’ Technology Centre and editor-in-chief of the Technology Forecast: 2001-2003. “There is a tremendous amount of innovation occurring around the mobile Internet, a technology that strives to provide both consumers and businesses with untethered access to information and applications.”

One of the problems with the mobile Internet remains the fact that the current generation of mobile handheld devices, such as mobile phones and PDAs, have only small displays and limited storage. They lack a keyboard and operate at speeds no faster than the dial-up modems of the late 1980s. According to Berg, the success stories from the initial generation of mobile Internet applications will be those that can offer compelling benefits in spite of these limitations.

The mobile Internet’s “killer apps” will have to take advantage of location-based services and limited displays, which means m-commerce may have a difficult road ahead and likely will not be the application that saves the day.

A survey of consumers in eight countries by A.T. Kearney found they are significantly less likely to use mobile devices today to make purchases than they were last year. Only 12 percent of nearly 1,600 mobile phone users surveyed in Finland, France, Germany, Italy, Japan, Spain, Britain and the United States said they intend to use Internet-enabled mobile phones for purchasing, according to A.T. Kearney’s Mobinet Index.

“The study shows that most consumers are not yet ready to make Internet purchases with their mobile phones,” said Charles Coates, vice president in A.T. Kearney’s Consumer Industries and Retail Products practice. “While significant investment is being made throughout the world to bring mobile-data services to the marketplace, consumer acceptance is lagging dramatically. To date, the promise of mobile commerce has not been embedded in the buying habits of consumers. In this regard the lure of the digital economy has yet to take hold.”

The decline in consumer intent to purchase was particularly evident in the United States, where it fell from 34 percent in the June 2000 Mobinet Index to a mere 3 percent in the most recent study. Fewer than 1 percent of respondents actually made purchases using Internet-enabled, mobile devices, with consumers in only three countries reporting a purchase: Japan, Finland and the United Kingdom.

While plans for purchasing via Internet-enabled devices have declined since last June, the number of uses for mobile devices is increasing, particularly among users with Internet capabilities on wireless devices. Seventy-five percent of European respondents and 57 percent of Japanese respondents use instant messaging through their mobile phones, compared to 27 percent in the United States. Nearly three in four Japanese participants access email via their mobile phones, far greater than the approximately one-in-four Americans and Europeans doing so.

“The good news for infrastructure and service providers, as well as retailers, is increased use of mobile-based data services and applications beyond purchasing activity among mobile device users,” said L.C. Mitchell, A.T. Kearney vice president and Communications Industry Practice leader. “The intent to purchase may be low today, but people are using Internet-enabled technology in other ways. As consumers gain additional experience and familiarity with Internet-enabled mobile services, their comfort and confidence in mobile-commerce transactions will explode.”

The study found that rapid growth of Internet-enabled purchasing through wireless devices is slow because consumers have not been convinced of the advantages that the technology offers versus traditional channels. Twenty-six percent of consumers in the eight countries studied cited lack of interest or perceived need as the single largest reason for not intending to purchase products and services via their mobile devices. Concerns about comfort and ease of use (19 percent), data security (16 percent) and lack of time (16 percent) were among the other reasons given.

Another large challenge that potentially looms for mobile service providers and applications is the stagnating growth that is being reported among the early adopters of mobile devices. Last year, ResearchPortal.com reported that the worldwide mobile user forecast had topped 400 million and would eclipse 1 billion by 2005. That forecast has now been revised due to slow growth among Mobile Professionals (defined as individuals over age 17 who are employed full time as professionals and spend 20 percent or more of their working time away from their desk) due, in large part, to the economic slowdown.

The number of Mobile Consumers (defined as individuals over age 15 who use or plan to acquire mobile products or services within 12 months for personal use) has yet to experience a slowdown, according to ResearchPortal, because they do not have the budgetary restrictions of professionals. ResearchPortal.com defines mobile devices and services as mobile phones, PCS, wireless data devices, messaging devices (e.g., pagers), notebook PCs and voice- and data-centric small form factor devices.

2001 Worldwide Mobile Users
Region	Mobile Users	Mobile Professionals	Mobile Consumers
Africa	4,900,001	3,250,000	1,650,000
Asia-Pacific	206,500,000	74,750,000	131,750,000
Europe	68,850,000	29,500,000	39,350,000
Central/South America	18,250,000	6,400,000	11,850,000
North America	133,290,000	46,500,000	86,790,000
Australia	5,250,000	2,150,000	3,100,000
Former USSR	11,191,500	3,000,000	8,191,500
World	448,231,500	165,550,000	282,681,500
Source: ResearchPortal.com