OXFORD, United Kingdom-The imminent explosion of the mobile data market has been like a constant companion for the past 12 years. The technology driving this supposed market expansion may have changed over time, but the predicted boom has always been present, always just about to happen.
It hasn’t happened yet. But the predictions are still in place, and suddenly there is a mood of renewed optimism. A consensus is emerging on the conditions necessary to trigger the long-awaited explosion in mobile data. Recent industry initiatives could satisfy those conditions. The fuse may well have been lit.
The original mobile data technology was based on dedicated, packet-switched wireless data networks. Two main systems fought over the European market-Mobitex from L.M. Ericsson and DataTAC from Motorola Inc.-but with limited success. Not many countries adopted dedicated mobile data technology, and very few of the installed networks attracted a significant subscriber base (see table below). The technology was dealt a fatal blow two years ago when a major German network and both French networks suddenly shut down.
Competition from data over cellular was one reason for the demise of the dedicated networks. But in its turn, the promise of data over analog cellular was never fulfilled. Cellular Digital Packet Data (CDPD), one of the most promising variants of data over cellular, has seen the investment of nearly US$300 million in infrastructure in the United States, according to the Strategis Group. But by the end of last year, there were only some 15,000 active subscribers across the whole country, with average subscriber revenues of just US$41 per month.
The take-up of data services provided by digital cellular networks such as GSM (Global System for Mobile communications) also has been disappointing. Despite the widespread availability of applications and data-enabled terminals, only 2 percent of GSM subscribers currently use mobile data, generating about 6 percent of wireless billings.
The Mobile Data Initiative, formed in 1996 to help European businesses deploy mobile data communications, claims 38 percent of GSM users actually want mobile data. GSM data capabilities already are impressive, and data rates will be enhanced significantly as High Speed Circuit Switched Data (HSCSD) and General Packet Radio Service (GPRS) networks are introduced during the next two years. Applications are available, and the Internet is providing the business drivers as well as information resources.
So why is take-up of mobile data languishing at a mere 2 percent?
“The industry has to create a self-fulfilling prophecy,” said Steen Thygesen, vice president of business development at U.K.-based Psion Software. Thygesen believes this requires further development in three areas: devices and distribution channels, network services (particularly Internet Protocol services), and content production and distribution.
The encouraging news is that manufacturers, operators, software suppliers, content owners and distributors now are working together in a variety of alliances and cross-industry initiatives to address these areas. Thygesen believes the combination of four initiatives has now created a technology platform on which a viable mobile data industry can be constructed.
Microsoft Corp.’s Microsoft Office and Sun Microsystems’ Java already are in place. The Wireless Application Protocol (WAP) from the WAP Forum-founded by Ericsson, Motorola, Nokia, and Unwired Planet-provides the ability to access Internet content through the limited display capabilities of handheld devices. The final member of the portfolio is the recently announced Bluetooth technology from Ericsson, IBM Corp., Intel Corp., Nokia and Toshiba Corp. Bluetooth is a short-range radio link that enables wireless connectivity between multiple devices, eliminating the need for interconnecting cables or proprietary links.
“The technology is ready; now we need the correct market conditions,” said Thygesen. “We must avoid what happened with notebook computers.” There is no real differentiation in the notebook market, argues Thygesen. The only available options are processor speed, keyboard layout and screen size. As a result, notebooks address only one limited-sized, market.
Psion’s determination to avoid the lack of choice inherent in the notebook market took on a fresh dimension at the end of June with the announcement of its Symbian joint venture with L.M. Ericsson and Nokia, soon to be joined by Motorola. The joint venture will license Psion’s EPOC operating system for use in communicators and smart phones, providing a strongly-backed alternative to the Windows CE operating system from Microsoft.
Symbian is being widely reported as the communications industry’s challenge to Microsoft, an attempt to avoid the domination of Windows that has occurred in the computing industry.
But the operating systems are, in fact, optimized for different market segments. The likely result will be the emergence of two de facto standards for mobile data terminal operating systems: EPOC for devices with keyboards and Windows CE for screen-driven terminals.
A proliferation of devices designed for different segments is necessary to cover the potential mobile data market. There is demand for devices with keyboards and for devices without keyboards. There is actually very little overlap between the market segments addressed by smart phones, communicators, organizers, PDAs, mobile network computers, clip-on smart phones and palmtops.
Kevin Duffey, director of electronic commerce at U.K. systems integrator Logica and chairman of the Global Mobile Commerce Forum, agrees with Thygesen. “Segmenting the market is key,” said Duffey. “Handsets until recently haven’t had much to differentiate them.” Duffey believes that the traditional mobile model of segmenting the market between business users and consumers is simply not detailed enough.
The approach of other industry sectors supports Duffey’s viewpoint. The cosmetics industry, for example, segments by gender, the fashion industry by socio-economic status, the camera industry by profession, consumer electronics by age and the motorbike industry by lifestyle.
“Network operators need to work together with content providers,” stated Duffey, noting that at last this is beginning to happen on a wide scale. “The trend now is that operators are looking at which third-party applications devices can support.” And many device manufacturers are encouraging this perspective. “Nokia is a good example,” reported Duffey. “They consider there is no profit margin on dumb phones anymore.”
The killer applications are mobile Internet and mobile commerce, followed by information services and location services, Duffey believes. He is particularly enthusiastic about mobile commerce. “Many industries are getting really excited about the prospect of having a retail outlet in every consumers’ hand.”
There is, however, one final piece of the jigsaw that needs to be put in place. The cost of network access can be a major inhibitor to the widespread use of mobile data services. Traditional airtime charging is prohibitive and inappropriate for many data applications. Tariffing by bit transferred rather than by connect time is required. Although this can be done today in some applications such as GSM’s short message service, its widespread adoption will only come with the introduction of packet-switched networks such as GPRS.
So there could be another couple of years to wait before mobile data really explodes. By then the combination of enchanting devices and relevant and compelling content should have matured into a attractive package. The mobile data explosion could be a really big bang when it finally arrives.
