The hype surrounding the possibilities of wireless Internet services has reached an all-time high following Wireless 2000 in New Orleans last month.
But in the wake of this fevered pitch has come a backlash from analysts determined to draw a firm distinction between hype and reality. Few are dismissing the market altogether. In fact, most feel wireless data acceptance will be significant. But many caution that despite the lightning speed at which the Internet world travels, its technology has yet to catch up to the ideas of the human mind.
“We believe data is the next great future for wireless,” said. J. Michael Gallipo, vice president and portfolio manager for Monument Funds Group’s Telecommunications Fund A. “The greatest risk is that the hype outruns the reality.”
IDC echoed these comments in a teleconference comparing the U.S. and Western European mobile data markets. Perhaps the greatest hype-related misconception is that the mobile data market is booming, the company said, contending mobile data remains very much a niche market. The talk about the dramatic rate at which it is growing is due to the fact that since it is starting from such a small base, any growth would be considered huge.
For the hype to meet reality, several advancements must be made, analyst say. They point to shortcomings in both networks and devices. Specifically, Gallipo mentioned low transmission speeds and difficult user entry systems as factors he feels are hindering the market’s full potential.
On the network side, analysts have long faulted network operators for not increasing the speed of data transmission. Data rates are not very fast and will require a huge investment in time and money to get networks to speeds where the real lucrative applications can be run, they say.
Current data rates are “great for getting a stock quote, for getting a very short e-mail message, but are certainly not a replacement for the desktop model,” Gallipo said. “You’re not going to be doing heavy duty e-mail reading or Web browsing on cell phones with data rates of 9.6 kbps, especially given the screen size,” he said.
Ovum, an independent research and consulting company based out of England, went beyond speed and called for greater wireless data roaming and landline integration.
“The mobile IP market is evolving, but requires technology enhancements and increased roaming capabilities before full integration with the fixed IP network can be achieved,” the company said in a report titled “Mobile IP.”
“Over the past two years, significant advances have been made to the `next-generation network,’ however interoperation barriers between fixed IP and cellular IP networks are creating major obstacles for providing mobile IP services,” said Dr. Iain Stevenson, lead author of the Ovum report.
As such, early wireless applications will continue to be limited to basic transactions and limited information services, they say. Certain types of e-commerce transactions have the potential to use the convenience of mobility to overcome these limitations, Gallipo said, citing an example of a concert spectator deciding suddenly to buy the CD of the artist performing while still at the show.
The immediacy of wireless e-commerce allows users to act more quickly on their urges, rather than wait until visiting a brick-and-mortar store, at which time the desire and/or details may fade.
“There’s a real impulsive component to that,” Gallipo said. “It’s a pretty powerful impetus for merchants.”
Also at issue is the network protocol for Internet delivery. The most prevalent today is the Wireless Application Protocol. But IDC said a major misconception is that WAP brings the Internet, as most know it now, to phones. The reality is that it only brings Internet content written to the WAP specification to similarly enabled phones. This has paved the way for Internet services on wireless phones, but the verdict is still out on whether WAP will remain the only road, or just an on-ramp to a future highway.
“For the near-term, WAP will remain an important protocol,” Gallipo said.
Moving on to devices, screen size and input methods dominate analyst concerns. Gallipo threw his hat behind the voice user interface model as the means to solve input limitations.
“As powerful as some of these data applications are, where I think they become really, really powerful is when you can combine that kind of data access with some kind of voice recognition or text-to-speech technology,” he said. “For wireless Web to really take off, it’s got to be easier to use. As it is now, Web browsing still is not an inherently intuitive process. Currently, the input choices are not that great. But nothing is more intuitive or easy to use than some kind of natural voice system.”
Looking beyond technology, the wireless industry also must meet business challenges, analysts said.
“As well as needing these technical advances, without the correct balance between user demand, the commercial goals of the operators and political focus, the market will be stifled,” said Ovum’s Stevenson.
While this includes a range of issues, one in particular is the pricing structure for these new services. Models range from per-minute, per-packet or flat rate.
“I think you’ll see carriers come out with a variety of pricing schemes,” Gallipo said. “I think you’ll see carriers try all of them.”
No matter how well the wireless industry meets these device, network and business concerns, analysts remain firm in their belief that users will continue to use the Internet on a variety of devices, wireless and otherwise.
“Everything is not going to be wireless,” Gallipo said. “There will still be applications that make more sense to do at home.”
As such, companies offering Internet applications and content must make them device independent so they can be used on any network and any device. All platforms and devices will be winners, Gallipo said, each with their own specific focus and user group based on their respective strengths and weaknesses.
“In a real broad sense, this is an area where everyone wins … All devices will find their place in the market.”
For at least the near-term, though, voice will continue to drive wireless usage, not data, said both IDC and Gallipo.
“Any discussion of handheld Web access starts with the overall growth in worldwide cellular,” Gallipo said, pointing to the 450 million phones in use worldwide today with expectations of that number growing to 1 billion by 2002. “We’re talking about a fairly large installed base.”
