By Dr.Mitul Mehta

[ Article done for Electronic Business Europe - JUNE 2001 http://www.eb-mag.com ]

The Promises of m-commerce

I-mode, the mobile commerce (m-commerce) service from the Japanese operator NTT DoCoMo boasts over 12 million subscribers and is a remarkable service. It leads the world into the new m-commerce services and is well ahead of those in Europe and America. Similar 3G services are also being tested in Singapore. This begs the question of why has Europe fallen behind in such offerings when, initially, we were ahead of the game in GSM?

A great deal of talk has revolved around the high prices European operators paid for the new wireless licences and how quickly they would be able to recoup their investments. The time frames most mentioned are of three to four years, which is very optimistic. But does anyone remember history? Wasn’t this said about GSM, cable communications, WAP and others? I think we can forget the optimistic timescales as history indicates at least six to eight years for any sort of decent payback on the licences.

Another question that begs asking is who is developing these new multimedia converged services of data, voice and video? And, if this is not multimedia already then isn’t it just a different version of existing services migrated to a more personalised mobile-on-demand environment? I believe that m-commerce will gain critical mass when totally new, converged applications are introduced, ones that will manage to impact end-user lifestyles. But to achieve this, we need companies to start developing such services. We are not going to see this for at least 24 months, as we haven’t yet even reached the first generation services seen in Japan from which migration will take place to these new, killer applications. Don’t get fooled by the number of people using messaging services, some form of videoconferencing, on-line gambling and other similar offerings. If you remember, these were promised on cable as interactive services and, on the whole, they are not quite the New Nirvana of converged multimedia on mobile appliances.

So why did I mention i-mode and what is its significance? Well, i-mode is an ‘always-on’ network connection that allows customers to pay only for the services they use. NTT DoCoMo also lets the content provider to make money on the usage, which holds incentives for the content developers to offer other, attractive services. It has also created subscriber loyalty, an issue of interest in Europe.

But what is Europe going to do about it? In Europe, WAP is an ‘always-off’ service that takes time to dial in. The promised hype on what services it could offer has not materialised and there is a growing perception that WAP is the mobile-Internet that isn’t. This is bound to create a lot of end user disappointments.

Will GPRS (2.5G) and UMTS (3G) deliver in Europe quickly and attractively, as in the location-based services currently talked about? Well, with the European Union setting deadlines on the start of commercial services, there is huge pressure on operators and their vendors to deliver but it is too hopeful to believe that these will be the kind of converged services we would want. They will more likely be the migration of existing services with a massive packaging exercise. It will take quite some time for operators to work out the complexity and range of services, the pricing of these services, the branding and advertising, and the development of resources, skills and knowledge of end-user segmentations.

This means that a number of things will happen in Europe. First, it will take time to build and integrate the infrastructure and make it fully functional. Second, only limited services will be available and the migration to novel new services will take time. Third, the pricing will become a big issue as operators get their sums wrong and new technologies start to compete with 3G. Fourth, the Europeans operators will have to learn, or even partner with the Asian operators, to understand the new services and strategic issues involved. And fifth, there will be a backlash from disappointed subscribers, which will harm the uptake of richer services.

Dr Mitul Mehta is managing director of business transformation and strategic direction consultancy firm TekPlus Limited. He can be reached at mitul@tekplus.com

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