Study: Consumers to Wait for Mobile E-Commerce

BOSTON (03/22/2000) - Itching to shop from the convenience of your mobile phone? Can't wait for the day when you can select toppings from an on-screen menu on your phone and have the pizza delivered to your location -- wherever that may be? You may have to keep waiting, according to a new study from Ovum Ltd., a U.K.-based independent research and consulting company.

Titled "Mobile E-commerce: Market Strategies," the study says that right now average consumers globally aren't demanding mobile e-commerce services, which hardware suppliers are pushing because they sense a money-making opportunity.

Instead, mobile e-commerce vendors should provide unique, compelling services rather than overhyping the "cool new technology," Ovum said in a statement today about the study.

What with the onslaught of operator marketing and media coverage of technologies such as WAP (wireless application protocol), consumers are expecting to shop via their cell phones within the year. Not so, according to Duncan Brown, principal analyst at Ovum. That timetable is off because "no one is going to buy anything on a mobile phone unless it's secure," Brown said in a telephone interview today.

Vendors "need to have a dose of realism with regards to the time frame," Brown said.

"The mechanism (for wireless communications) is most likely to be based on WAP, which does not have end-to-end security," Brown said. "As long as consumers are concerned about security, they're not going to spend money on mobile e-commerce," he said, adding that neither will prospective developers of mobile software applications.

In addition to security, the young mobile e-commerce industry needs content, compelling applications and a top-notch network. "The apps are very simple," Brown said. "The terminals and networks are not up to the fancy things that are being touted."

But consumers shouldn't give up hope for WAP in the near future, at least not in Europe, where the mobile market is "much more mature and stable," Brown said. "The European market is, in terms of networks, a GSM (global systems for mobile communications) market that has enabled operators and terminal manufacturers to forget about competing in terms of technology."

The unique services that the Ovum study suggests are needed for mobile e-commerce to take off will emerge first in Europe, with that market moving forward by 2002, Brown said.

In the U.S., however, there are "three competing digital cellular technologies, and the fragmentation will hold back American mobile e-commerce," Brown said.

"Fixed Internet (access) is much more prevalent in the U.S.," so there is "less of a tendency for the U.S. population to migrate to another platform."

There is less fixed-Internet penetration in Europe, Brown said.

The other aspect of the maturity of mobile networks is that "full fruition will only be coming with third-generation technology," Brown said. "The U.S. has just moved to the second generation in the last year or two." He doesn't expect to see a migration to third-generation technology in the U.S. until 2006.

Overall, the mobile e-commerce market has "great potential," and market forecasts support that prediction, Brown said. The number of mobile devices will exceed 1 billion by 2003, with a great number of them capable of e-commerce, while end-user spending will rise to more than US$200 billion in 2005, the Ovum study found.

Ovum, with offices in London, Boston and Melbourne, can be reached at +1-800-642-6886 or on the Web at http://www.ovum.com/.

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