Mobile commerce market is young, but growing says In-Stat

[August 6th 2001]

Having not yet been a financial success for most carriers around the world, mobile commerce is indeed a work in progress, according to Cahners In-Stat.

The high-tech market research firm estimates that, on a global basis, 9.2 million wireless subscribers were m-commerce users at the end of 2000, representing a total value of $264 million. Despite these disappointing figures, m-commerce has come a long way in its brief existence as a value-added WAP service.

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."

To improve the state of m-commerce, 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," said Diercks.

"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 has 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.

M-commerce, like wireless data, does not operate in a vacuum. Every new network improvement or technology upgrade may provide some benefit. There are three significant technologies ahead for the short term: GPRS, voice recognition and Bluetooth.

The report, "Mobile Commerce: A Work in Progress" (No. WP0104SV) outlines the major factors that can contribute to a successful m-commerce platform. It also profiles 13 carriers that are evolving their wireless data and m-commerce strategies toward becoming more user-friendly and popular, and more financially rewarding in the long term.

Links
Cahners In-Stat Group		http://www.instat.com