Making money on mobile

In Europe the enormous amount of hype surrounding WAP services and the failure of service providers to deliver on consumer expectations has led to a backlash against the mobile Internet. Can the Middle East weather the storm and deliver profitable mobile commerce?

  • E-Mail
By  Published  November 28, 2000

In Europe the enormous amount of hype surrounding WAP services and the failure of service providers to deliver on consumer expectations has led to a backlash against the mobile Internet. Can the Middle East weather the storm and deliver profitable mobile commerce?

Among all of the technologies showcased at this year’s Gitex exhibition, none was more ubiquitous than mobile and wireless applications. Every exhibitor seemed to have at least one application for mobile of one sort or another, and with Etisalat’s official announcement that it will launch commercial WAP services by the end of the year, there is more than one company staking its future on wireless.

At the forefront of this predicted wave of wireless services is mobile commerce, and the Wireless Application Protocol (WAP). The reasoning goes that most people in the Middle East have at least one mobile phone — in the UAE there are 950,000 subscribers in a population of 3 million, and there are far more phone users than PC users. With WAP you can, theoretically, take the content that is available on the Internet and make it accessible to this huge audience — through a medium that lets you identify every single user and have access to them twenty four hours a day, seven days a week.

It is no surprise then that a lot of players seem to regard mobile commerce as the next big Internet gold rush. Mobile seems to present another chance to get in on the ground floor of the Internet bonanza.

But is the situation really that rosy? The US lags behind the rest of the world in mobile services — penetration of mobile phones is very low, and divergent standards mean that there is much less impetus for development.

For once America does not lead the way. In Europe, where European Union legislation forced standards to converge, the market has gone the other way — consumers have WAP-enabled phones, but a barrage of hype coupled with unreliable services has severely dented perception of mobile Internet services. So what is the future for mobile commerce?

One of the few examples of a straight port over of commercial services from the Internet to mobile is e-commerce giant Amazon. As part of its global ‘Amazon Anywhere’ initiative, Amazon UK launched its WAP site in February of this year. Although using a simplified interface, the site provides complete search facilities for the entire Amazon database of books, videos, CDs and DVDs. Users can register for accounts, order and pay for goods online. The service is recognisably Amazon, albeit on a much smaller screen.

Jeff Bezos, Amazon’s chief executive was bullish about mobile commerce at the time of launch, stating: “If you look five to ten years out, almost all of e-commerce will be on wireless devices. Today our revenues from wireless are minimal, but in a few years it will be mostly from wireless.”

Whether or not Bezos was caught up in the WAP hype remains to be seen. In the ten months since the launch Andy Stafford, PR manager for Amazon.co.uk says the site has seen great growth, with service expanded to include secure registration and payment which were not initially available.

There are other WAP commerce sites around, but generally mobile commerce along traditional lines has been less popular. The reasons for this have been fairly obvious. The interface is just too limited to allow traditional commerce sites to function.

There are handsets with larger screens, and GSM adaptors for Palm and Pocket PC are making large colour screens a reality, but the vast majority of handsets carry about three lines of text in glorious monochrome, with simple bitmap pictures at best. Similarly, the handful of touch-screen devices are far outnumbered by WAP browsers that can only be accessed using two or three buttons. Text input through a keypad is too fiddly to make text entry viable. Coupled with short battery life and high call charges, spending a long time browsing catalogue-style sites is simply not viable for mobile commerce. The platform is just too different to a PC interface to allow it to follow the same business rules as the Internet.

These are all immediate and recognisable limitations to the platform, which have driven the nature of services on mobile phones so far. As with the early days of cellular phones, it is the business user that has the greatest demand for information on the fly. Bashar Dahabra is CEO of info2cell.com, a Middle East mobile service provider.

The company provides content services to operators in Jordan, Egypt and Bahrain and has been selected as one of the content providers for the trial WAP service in the UAE. Dahabra says that financial applications have been the most popular offering so far: “In the Gulf states the focus tends to be on business and news items. In Jordan we discovered that our services were heavily utilised by businessmen who were looking at stocks, currencies and other financial information, we have an extensive business section and we are trying to enhance that.”

One of the other Etisalat content providers, Ducont.com, also sees most value in financial services: “The real benefit we provide is keeping in touch with the market without having to be in front of a PC or being in constant touch with your broker,” Ivan Fernandes, managing director, explained. “There is no other way I can be in touch with the market at the speed the market moves at. You need to be in complete control of your investments, by providing that information on the phone as changes in the market occur, you have a real killer application.”

Information-based services make up the bulk of the offerings from the likes of info2cell.com and Ducont.com. News, sport and entertainment news, weather, and travel information — any information that can be reduced to a few pertinent lines of text — are all being pushed onto the WAP platform. Although these sort of services are now quite well established on European and Middle East WAP portals, not everyone believes in the value of such services.

AMEinfo has been providing a WAP portal since May 1999, and attracts about 2,000 users per month, with a service aimed at business people in the region. However, Klaus Lovgreen, managing director still has doubts about the value of WAP services: “We have to look at the killer applications for mobile phones,” he said. “I don’t think a mobile is going to replace the PC. What is it you need on the road? Maybe stock quotes, but how many of the general public here have shares on the NASDAQ? News — I don’t believe it is going to be major. Sports, maybe. TV programmes? Are you really going to use the phone to look up what’s on TV? Who needs weather reports in the Middle East? We know what the weather is going to be like.

“I think the one thing that will work is directory information. It is the one thing that we all face: ‘I’m going to this meeting and I’m late, where was it again?’ Directory information should be a killer application if there is any sense.”

Regardless of who wins the ‘killer application’ race, actually making money from mobile services is another matter. At present WAP is not really suited to advertisements — small screens and lack of graphics exclude logos and messages from advertisers.

However Bashar Dahabra believes there may be some scope for some form of advertising: “We have seen some SMS advertising messages broadcast on behalf of some companies in Jordan and Egypt, but not in the Gulf,” he said. “We are not really sure how successful that sort of advertising really is, but we believe it is a very powerful model. I personally believe in sponsorship, where certain companies might sponsor certain channels or categories of information.”

Charges for content and connection are also undeveloped. Some of the service providers are charging operators licensing fees, others are providing services for free. Content providers are having trouble justifying charging networks for information that is readily available over the Internet; platform providers also have to justify being able to deliver that content at a premium.

Perhaps the most lucrative model for basic WAP service providers will be as application service providers (ASPs) pushing mobile office applications to corporate customers. Businesses with a mobile work force could benefit greatly from enabling staff to pick up email and check diaries via their mobile phones.

“Today it is very difficult to find an executive who does not use Microsoft Office and Outlook as his office productivity suite,” said Ivan Fernandes. “We can integrate our mobile component into a client’s Exchange server, we integrate it into Outlook, and then you can be notified when mail arrives. The mail can be forwarded by SMS or you can set up appointments on your Outlook and be alerted on your mobile when they occur, or view your diary or email as a page of WAP-based text. There is a lot of critical information that you can receive without having to synchronise devices.”

The overwhelming problem with WAP is that it is regarded mainly as a bridging technology from the Internet to the next generation of mobile services. Jinny Software is a mobile services provider that is working with Fastlink in Jordan, FTML in Lebanon and Batelco in Bahrain. The company provides platform, content and consulting for WAP services.

Brad Taylor, managing director for the UAE, explained Jinny’s position on the development of WAP services: “Nobody knows whether WAP will be ultimately successful, or whether it will be GPRS or 3G,” he said. “Last month I heard a GSM operator ask at a conference why, with slow connections and the largely non-essential information, why he should get into the WAP business. Well, when we get into 3G, we won’t be charging for connection, we will be charging per transaction. We will be clipping the ticket on theatre ticket sales, flower sales, all these personalised, localised commerce applications that will be available on the fly. At the moment we are learning how to manage content, and how to manage customers. We are in business because of what mobile commerce will be, not because of what it is at present.”

It is a common enough message. Personalised and localised are the buzzwords of the mobile future. Personalised services are already becoming a reality. Info2cell.com recently signed a deal with mobile operator Alcatel. The deal gives info2cell access to Alcatel’s mobile commerce platform, which includes the ability to customise the content of the WAP portal and to set SMS alerts for certain categories such as news headlines or specific stock alerts.

“The beauty of developing better quality content,” said Dahabra, “is that the user no longer has to navigate many screens to find the information he wants. The moment he goes to the WAP server he is presented with the information he wants. The usual WAP view is generic, but if you look at the personalised version it correlates with my preferences.”

It is when this level of personalisation is coupled with the next generation of mobile carrier technology that things really get interesting. For a start, with the introduction of General Packet Radio Service (GPRS) the next development in GSM mobile technology, bandwidth will be increased drastically. At present data transfer is only 9.6 kbits/s, with GPRS it will increase to up to 56 kbits/s. After GPRS comes the 3G technologies that will enable transmission speeds of up to 2 mbits/s, making mobile video a reality.

‘Always on’ GPRS will also mean that network providers will constantly be able to monitor the location of users, and to offer them services based on their location.

Dr Hellmuth Broda, chief technologist for Sun Microsystems EMEA, says that a boom in pervasive mobile technology is one of the three developments that Sun will be staking its business on in the near future. “With all the little devices that we are equipped with now, always on could mean some very interesting services that could be location dependent, profile dependent and situation dependent,” he commented. “If I come out of a theatre in the evening, what would I usually want then? Something to eat, maybe a drink – so maybe service providers could make value in the information that I am walking out of a certain theatre, if they had a deal with a restaurant nearby.”

Of course there are plenty of questions to be addressed before such services become a reality. Any sort of payment exchange will require improvements to security of mobile devices. Wireless encryption and certification (W-PKI) is under development already, and greater bandwidth will mean more encryption can be carried, but powerful devices may need biometric protection too. Standards for 3G will have to be decided upon, or devices may actually get bigger to accommodate a wide range of standards. Operators have paid out enormous sums of money for 3G licences as well, so services will be charged for at a premium rate while costs are recovered.

Perhaps most importantly of all, do users really want the sort of volumes of data that swamp the Internet to be delivered to their mobile phone? “Absolutely — there will be too much data,” says Broda. “It is very important that we learn to filter. If you are hungry you might want to hear about restaurants, but if you just came out of a restaurant then the last thing you want to hear about is the pizza place next door. The mobile is something you are going to have to turn on and turn off.”

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code