Sinking Your Teeth Into M-Commerce

Customer demand will soon drive your business to develop applications for multiple devices. Will you be ready?

Hank Simon                

You may have heard of I-commerce, or Internet commerce, the term used for buying goods and services across the Internet in the early days of the Web. Now, the more current term is e-commerce, or electronic commerce. But, “… no sooner is the letter ‘e’ fixed … as the key to e-commerce, e-mail, e-whatever then along comes … another letter to thrust it aside … m-commerce” (William Safire, “On Language,” New York Times Magazine, March 19, 2000) for mobile commerce.

In my last column, “Shaking Off the Wires” (July 17, 2000), I explained what IT managers should know about wireless application protocol (WAP). In this column, I’ll explain how managers and executives can exploit the synergy between WAP-enabled mobile Internet access and the current flurry of e-commerce activities, expanding on what I previously described.

M-Commerce Market

M-commerce is not a new technology; it is simply the natural convergence of wireless and Internet commerce. More important, m-commerce provides e-commerce with a new element in Web commerce. While e-commerce provides access to anyone at any time, m-commerce provides the next dimension, with access to anyone from anywhere — not just from a fixed desktop, but also from the highway, the restaurant, and the beach.

M-commerce is accelerating faster than Internet time. In 1999, there were roughly 200 million Internet users, compared to 400 million cell phone users. As cell phones become increasingly Web-ready, those 400 million cell phone users will add to the growing global base of e-commerce customers. And experts predict that the number of mobile phone users will grow to more than a billion by 2003. In the next few years, the majority of devices accessing the Web will be wireless, and most e-commerce will be m-commerce.

It took nearly four years for the Web to develop a base of 50 million users — the infrastructure was not really in place. Now, more people buy wireless devices than PCs, and all the technologies are in place. From a global perspective, there are already more Web-ready wireless phones than wired Internet connections. Companies in the United States will tap into a surprisingly large m-commerce market that was not easily accessible through the desktop. So development of a base of 500 million users over the next four years is probably a conservative estimate.

Preparing for M-Commerce

As I mentioned in my last column, an important aspect of m-commerce development is to design for multiple devices such as wireless and conventional Web pages. But you also need to anticipate additional devices, such as voice, TV, and Nippon Telegraph & Telephone (NTT) i-mode, which are promising technologies that are already in use. One approach to designing for multiple devices is to leverage the flexibility of XML, XML style sheet language (XSL), and XML style sheet language transformations (XSLT).

You can tag each type of information and repurpose it differently for each platform, but with XSL and XSLT, it will soon be possible to automatically transform data from one device format to another. The core foundation of XML is to provide a universal data transfer format that is device and application independent.

Business Implementations

Being able to surf the Web using your cell phone is cool, but the bottom line is, “How do we make money?” Currently, cell phone users are charged on a per-minute price basis in the United States, resulting in a significant consumer cost in using a cell phone to browse the Web. In contrast, the European and Asian pricing models use a flat-fee model. However, I believe that the m-commerce business model will soon replace these pricing schemes with free, unlimited access, using m-commerce service fees and advertising to offset the costs.

A variety of m-commerce services are feasible. A clue on how to make money with m-commerce can be taken from Europe and Asia. Overall, these areas are far ahead of the United States in leveraging this technology. In Japan and Finland — as shown by 60 Minutes — people already are using their wireless devices to access information and conduct financial transactions. Typically, businesspeople in these areas travel frequently and depend on wireless phones as a portal to the world. They check their calendars, stocks, bank balances, and airline reservations using wireless devices. Businesspeople who can check their schedules and access corporate information as-needed are much more efficient than their competitors who have to call into the office continually. Furthermore, salespeople have a competitive advantage with customers, especially if when pressed for more information, they don’t have to say, “I’ll get back to you.”

Other services are also possible. For example, a sports trivia team may compete together against other teams using their cell phones at the local pub. Or bicyclists can be notified when the latest carbon fiber Trek road bike is delivered to their local bike shop. Or your phone can notify you if a movie starring Sandra Bullock is out, where and when it will be playing, how to get there, how much it will cost, and then buy the tickets for you. The cost will be part of the resulting phone bill.

No one specific kind of company has emerged to dominate these notification services, as different service models have been implemented in different locations. In some places, the phone company is the service provider (both hardware and software) and serves as the middleman, just like the credit card company. Although I haven’t seen anything yet about credit limits and checks, I expect standards to be in place as soon as the first teenage boy tries to buy a Ferrari!

As I mentioned earlier, advertising will be a major revenue source. However, it will be much smarter than conventional Web advertising. For example, your phone may display advertisements for nearby restaurants at lunchtime, exploiting an internal GPS chip. Using your mini-browser, you choose a restaurant to display directions, perhaps also reserving a table and prepaying for an entrée to avoid typical lunchtime lines.

Competitive Advantage

The underlying premise to m-commerce is that people want access to services while mobile and away from their desks. This customer demand will drive businesses to deliver mobile services. All companies in all industries will need to adapt to maintain a competitive advantage.

In the future, a very realistic scenario resulting from m-commerce could find you walking into Best Buy and finding a VCR you want to buy. You take out your cell phone and discover on the Internet that you can buy the same model for 50 dollars less. So, you show the salesperson the competitor’s price and tell the salesperson that you will leave unless Best Buy matches the price. If the price is not matched, Best Buy becomes just a really nice showroom. After seeing how the wireless Web is driving business, Best Buy will begin to dynamically price its stock so that when potential customers access its online catalog, not only in its own store, but also from within a competitor’s store, Best Buy’s prices are competitive.

Two Enabling Technologies — WAP and Bluetooth

The two technologies at the core of m-commerce are WAP and Bluetooth. As I explained in more depth in my July 17, 2000 column, the WAP standard lets providers create information, services, and Web pages that wireless devices can access. According to Gartner Group, technologies such as WAP will create the foundation of the new m-commerce capabilities for wireless devices over the next three years.

Bluetooth is an enabling technology that allows wireless communications between cell phones and other devices, among different wireless devices, between cell phones and Bluetooth-enabled appliances, and among appliances. Bluetooth technology is simply a short-range radio on a single chip that can translate digital data from computers. This chip can be embedded in any device.

Another way of thinking about Bluetooth is to view it as a radio-based modem, rather than a telephone-based modem. The radio sends and receives voice and data signals generated by other Bluetooth radios that come within the broadcast range of 30 feet. Because radio waves pass through walls and other barriers, Bluetooth devices can communicate in situations that stop rival technologies, such as infrared. Therefore, you do not need to be in the line-of-sight of businesses, devices, or appliances, but only within their proximity. Bluetooth is the technology that enables the focused advertising, dynamic pricing, and local credit card functions I described previously in this article.

A Bluetooth-enabled cell phone becomes a portable phone as soon as you walk into your home or functions like a walkie-talkie when communicating with another Bluetooth cell phone or device. In fact, your cell phone can automatically unlock your car and set up your seat and stereo preferences as you are walking in the parking lot. In short, you do the walking. Your devices do the talking.

The cost model for Bluetooth is still emerging, but I believe that it, too, will embrace the m-commerce model of unlimited access offset by advertising and service fees. Bluetooth may be integrated with WAP-devices so that the change from WAP to Bluetooth is transparent, but it is not clear yet.

Enabling Your Web Site for M-Commerce

The emerging way to implement m-commerce is to focus on WAP and then explore Bluetooth after gaining a little experience. The WAP standard is more mature and better supported than the Bluetooth standard. Learning about wireless technology, commerce, and networking will be easier if you exploit WAP first. Then, you can apply the lessons you learn to Bluetooth. Plus, the Bluetooth technology and applications will have matured a bit more.

Businesses of all sizes will discover remarkable opportunities as they use m-commerce to tap into the global marketplace, providing both business-to-business (B2B) and business-to-consumer (B2C) services. For example, NTT’s i-mode is a local m-commerce model that provides a wide variety of services like news, stock prices, online banking, and even car navigation. I-mode has a user base that exceeds 4 million subscribers and a mission statement called Vision 2010, which strives to create “[a] world in which mobile communications are limited only by imagination and actions speak louder than words.” This goal used to sound like magic, or at least science fiction, but now it merely sounds like advanced technology. Perhaps the most important event in this decade will be the convergence of the Internet and mobile devices. The future will be mobile.