Mobile commerce
1) As we discussed briefly in Chapter 1, mobile commerce (m-commerce,) relies on the use of wireless devices, such as personal digital assistants, cell phones, and smart phones, to place orders and conduct business. Handset manufacturers such as Ericsson, Motorola, Nokia, and Qualcomm are working with communications carriers such as AT&T Wireless and Sprint to develop such wireless devices and their related technology.
Mobile Commerce in Perspective
2) Jeff Bezos, CEO of Amazon.com, has called m-commerce “the most fantastic thing that a time-starved world has ever seen. Adam Zawel, an analyst at high-powered consulting firm The Yankee Group, predicts that wireless purchases will reach $4.5 billion annually by 2006. Despite this optimism, m-commerce purchases have not yet taken off.
3) To ensure user-friendliness, the interface between the wireless device and its user must improve to the point that it is nearly as easy to purchase an item on a wireless device as it is to purchase it on a PC. In addition, network speed must improve so that users do not become frustrated. Security is also a major concern, with two major issues: the security of the transmission itself and the trust that the transaction is being made with the intended party. Encryption can be employed to provide secure transmission. Digital certificates, discussed later in this chapter, can be employed to ensure that transactions are made between the intended parties.
4) In geographic areas with nearly ubiquitous network coverage, such as major metropolitan areas, adoption of m-commerce is much more likely than in areas with spotty service. Similarly, regions with newer, high-speed wireless networks have a faster response time, making mobile transactions faster and more convenient. As a result, the acceptance of m-commerce is currently geographically dependent.
The market for m-commerce in North America is expected to mature much later than in Western Europe and Japan for several reasons. In North America, responsibility for network infrastructure is fragmented among many providers, consumer payments are usually done by credit card, and most Americans are unfamiliar with mobile data services. In most Western European countries, communicating via wireless devices is common, and consumers are much more willing to use m-commerce. Japanese consumers are generally enthusiastic about new technology and are much more likely to use mobile technologies for making purchases.
Technology Needed for Mobile Commerce
5) The handheld devices used for m-commerce do have limitations that complicate their use. Their screens are small, perhaps no more than a few square inches, and may be capable of displaying only a few lines of text. Their input capabilities are limited to a few buttons, so entering data can be tedious and error prone. They also have less processing power and less bandwidth than desktop computers, which are usually hardwired to a high-speed LAN. For these reasons it is currently impossible to directly access most Web sites with a handheld device. Web developers must rewrite Web applications so that users with handheld devices can access them.
6) To address the limitations of wireless devices, the industry has undertaken a standardization effort for their Internet communications. The wireless application protocol (WAP), as mentioned in Chapter 7, is a standard set of specifications for Internet applications that run on handheld, wireless devices. WAP is a key underlying technology of m-commerce. WAP was conceived by four companies: Ericsson, Motorola, Nokia, and Unwired Planer (now Phone.com). It is now supported by an entire industry association of over 200 vendors of wireless devices, services, and tools. In the future, devices and service systems based on WAP will be able to interoperate. WAP has made for greater strides in Europe, where mobile devices equipped with Web-ready microbrowsers are much more common than in the United States.
Anywhere, Anytime Applications of Mobile Commerce
7) Because m-commerce devices usually have a single user, they are ideal for accessing personal information and receiving targeted messages for a particular consumer. Through m-commerce, companies can reach individual consumers to establish one-to-one marketing relationships and permit communication to occur whenever it is convenient — in short, anytime and anywhere. Here are just a few examples of potential m-commerce applications:
Banking customers can use their wireless, handheld devices to access their accounts and pay their bills.
Clients of brokerage firms can view stock prices and company research as well as conduct trades to fit their schedules.
Information services such as financial news, sports information, and traffic updates can be delivered to individuals whenever they want.
On-the-move retail consumers can place and pay for orders instantaneously.
Telecommunications service users can view service changes, pay bills, and customize their services.
Retailers and service providers can send potential customers advertising, promotions, or coupons to entice them to try their services as they move past their place of business.
8) The most successful m-commerce applications suit local conditions and people’s habits and preferences. For example, gamblers in Hong Kong now place bets with their mobile phones, and drivers in London can pay tolls. Albertson’s, the $36 billion food and drug wailer, is using m-commerce technology to improve customer service. Shoppers at some of the retailer’s stores can scan the bar codes of their items with handheld devices to record purchases, tally costs, receive special offers, and check out and pay. The handheld devices run off in-store wireless networks. At checkout time, customers can elect to use an “Express Pay Station”, where they scan an “end-of-trip” bar code at the station and then automatically download the contents on the scanner into the register.
9) As with any new technology, m-commerce will only succeed if it provides users with real benefits. Companies involved in m-commerce must think through their strategies carefully and ensure that they provide services that truly meet customers needs.