The M-Business Evolution
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02Evans.F 11/16/01 4:50 PM Page 27 chapter 2 The M-Business Evolution n this chapter, we cover the current state of the union within the mobile business community. This will provide a useful backdrop as Iwe build from this starting point, the “as-is” situation, and explore enterprise strategies, case studies, and tactical action plans throughout the remainder of the book. It is important to note that the “as-is” sit- uation has been driven in most part by the supply side of the equation: the wireless handset manufacturers, the wireless carriers, and the wireless infrastructure and software providers—i.e., those who stand to benefit the most from the market creation and adoption. The demand side has picked up mostly in unexpected consumer applica- tion areas such as text messaging and gaming. Meanwhile, main- stream enterprise patiently observes in the wings. Mainstream enterprise adoption is most likely to occur in areas that provide strong business benefits and return on investment. Enter- prise success stories around M-Business are appearing more and more 27 02Evans.F 11/16/01 4:50 PM Page 28 28 >> Business Agility frequently. Several success stories from early adopters of M-Business are covered in the chapters on Applications and Process Models for M-Business Agility and Industry Examples. Typical enterprise appli- cations of M-Business have been within wireless enablement of employees: sales force automation and field force automation being two of the most prominent areas with strong returns on investment coming to light. Of course, the current “as-is” state within the mobile business community is continuously in flux and continuously redefining itself. Analyst predictions for the growth of the wireless Internet and for M-Commerce are merely just that—predictions. They also vary widely between different analyst groups. But despite these variations in analyst predictions, we can still determine clear trends and plan our enterprise strategies accordingly. Although markets can come and go, and in some cases never meet expectations in terms of potential size and ubiquity of products and services, the convergence of electronic business with telecommunica- tions and other industries such as media, entertainment, and financial services will continue. The drivers toward adoption will become more powerful when compared to the barriers preventing adoption. As the market matures, innovative companies will create their own sub-mar- kets within the industry; this will help to remove the current barriers to adoption for mobile business. This chapter looks at some of the global trends behind wireless data adoption. In particular, the drivers and barriers to adoption, the telecom regulatory environment, the changes occurring within the telecommunications industry and within enterprise IT departments, the wireless Internet value chain, the wireless companies comprising the value chain, and finally some of the key applications of M-Business within the enterprise. Many books have been written on the content of this single chap- ter alone. The aim here is to provide a high-level summary of some of these forces and then to move on to the strategy and implementation plans for leveraging M-Business within the enterprise for business advantage. 02Evans.F 11/16/01 4:50 PM Page 29 Chapter 2 • The M-Business Evolution >> 29 Global Trends Much has been written about the global trends in the M-Business world. The United States is often cited as lagging behind the Asia- Pacific region and even further behind Europe in terms of its adop- tion of mobile business—sometimes cited up to two years behind. Much of this is owing to the fact that there are a number of compet- ing wireless communications standards in the United States, versus the single standards in the rest of the world. This is actually just one of the factors that has led to Europe and the Asia-Pacific region becoming the early adopters. Other factors include cultural aspects, geographic aspects, political and regulatory aspects, pricing factors for Internet access, and the penetration rate of the wired Internet within these countries. To understand the global trends in wireless communications and the growth of the wireless Internet, we need to start by understanding the growth of the Internet itself. Figure 2–1 shows the Internet pene- tration by region from a study by the ARC Group. Figure 2–1 Internet User Penetration by Region. Source: ARC Group. Internet Penetration by Region 70 60 50 40 30 Percentage 20 10 0 1999 2000 2001 2002 2003 2004 2005 Date USA Rest of World Japan Asia/Pacific W. Europe Total 02Evans.F 11/16/01 4:50 PM Page 30 30 >> Business Agility It is clear that the United States has dominated and will continue to dominate the statistics for the highest percentage penetration by region. Japan and Western Europe follow closely behind with the Asia-Pacific region and the rest of the world being further behind in penetration. If we now turn to the penetration rates in terms of mobile data pen- etration (Figure 2–2), we see a different picture. The United States clearly lags behind Western Europe and Japan. Mobile data in this case includes access to data by cell phones, PDAs, and interactive pagers. At the current point in time, Western Europe is clearly the leader. Equipped with these predictions, the questions still remain as to what services will see the most demand and how often subscribers will use the wireless data features of their devices even if they are subscribed. Beyond looking at penetration rates by region for the Internet and for mobile data, we also need to look at the number of mobile hand- sets being shipped, the number of users accessing various forms of mobile data, and the number of users conducting mobile commerce. Figure 2–2 Mobile Data User Penetration by Region. Source: ARC Group. Mobile Data User Penetration by Region 100 90 80 70 60 50 Percentage 40 30 20 10 0 1999 2000 2001 2002 2003 2004 2005 Date USA Rest of World Japan Asia/Pacific W. Europe Total 02Evans.F 11/16/01 4:50 PM Page 31 Chapter 2 • The M-Business Evolution >> 31 According to the research firm Jupiter, there will be 1 billion wire- less Web devices in circulation by the year 2003. They also go on to say that companies must enable wireless extensions during the next 12–18 months, or risk losing customers to competitors that do. The wireless data market has really been ignited by consumers, but it is likely that the eventual winners will be enterprises that lever- age the technology within their enterprise to create substantial returns on investment. Because of this consumer-based origin of the wireless data market it is important to look, at least briefly, at some of the con- sumer statistics before continuing our main enterprise focus through- out the course of the book. Table 2–1 presents more data points in terms of predictions for the number of users and revenues generated via wireless devices and M-Commerce transactions. The analyst predictions provide some good quantitative data around the adoption of wireless data services and M-Commerce applications throughout the world. Consumers will gain access to Internet capable Table 2–1 Predictions for Wireless Data and M-Commerce Category Analyst Projection Mobile Internet Devices (Worldwide) >> 1B mobile Internet access devices by 2003—Yankee Group Wireless Internet Users (Worldwide) >> Growth from 46.3M in 1999 to 1.02B in 2005—ARC Group Enterprise Wireless Enablement >> Enterprises will spend more than $400M by 2001 to wirelessly enable their business—Aberdeen M-Commerce Users (Worldwide) >> Growth from fewer than a thousand users in 1999 to 29M in 2004—IDC M-Commerce Revenues (Worldwide) >> $21B in revenues in 2004—IDC >> U.S. revenue generated through mobile devices by 2005: 32 billion—Merrill Lynch 02Evans.F 11/16/01 4:50 PM Page 32 32 >> Business Agility devices, will then begin to subscribe and use these services, and finally will become true M-Commerce users generating M-Commerce revenues. Searching for the Killer Application An often-asked question within the wireless Internet community regards the killer application. Is there a killer application, and if so, what is it? The answer is that killer applications for the wireless Internet vary by culture, by country, and by individual user. In Europe, the killer applica- tion has been Short Message Service (SMS) text messaging, in Japan interactive games and pictures via the NTT DoCoMo i-mode service, in North America e-mail via 2-way interactive pagers such as the RIM BlackBerry plus WAP-based wireless data portals providing news, stocks, and weather information. Undoubtedly, these so-called killer applications will take on dif- ferent forms as the wireless networks mature, devices morph into bet- ter form factors and capabilities, and wireless carriers experiment further and build upon their lessons learned. What is certain is that the amount of content and applications available via these devices will proliferate and M-Commerce services will evolve along with the non- transactional services. Evolution to 3G Networks In our discussion of the global trends within the M-Business environment, one topic we will hear a lot about is that of so-called 3G or Third Generation Networks. This is a term frequently used by the wireless carriers in order to describe their next generation wire- less networks for voice and data communications. In this section, I’ll provide a short definition of the characteristics of 3G networks when compared to older networks such as 1G, 2G, and 2.5G (Fig- ure 2–3). This will equip us with some of the terminology that we need to understand when discussing trends in the telecom environ- ment and how this will affect the enterprise moving forwards.