Home Latin America II 2000 M-Commerce – E-Business on the Run

M-Commerce – E-Business on the Run

by david.nunes
Alan CoadIssue:Latin America II 2000
Article no.:1
Topic:M-Commerce – E-Business on the Run
Author:Alan Coad
Title:Regional Director
Organisation:South America,Logica
PDF size:20KB

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Article abstract

Well, we’re all agreed on this one – the people who own mobile phones are voracious consumers. Some are reliable, but all have an appetite for new services and will spend money. This realisation has now set in motion a rush which makes Yukon look insignificant and promises to be the momentum behind a dramatic, global power struggle over the next couple of years – Mobile or ‘m’ Commerce is here.

Full Article

No matter what your stance, the electronic age has had a massive impact on business. For many companies, implementing e-Commerce has meant a focus on the ‘back door’ where efficiencies in supply chain management can show dramatic cost savings, reduction in lead-times and ultimately improve both quality and choice for the consumer. The large supermarket chains particularly benefited from implementing ‘just in time’ methodologies through electronic trading with their suppliers – ‘Our customers like their fish wet!’ The emergence of the Internet has now shifted everyone’s attention to the ‘front door’. The customer is the focus and like never before, a ‘web shopper’ holds all the cards – no longer are they confined to a single retail store or geographical region. Today, 195 million of the world’s people are ‘connected.’ Last year alone, 53% of Internet users in the US bought something on-line. E-Commerce in this environment means attracting a large segment of this disparate, anonymous community and somehow getting them to spend money Despite this challenge, the race is on and the winners are emerging. While still unprofitable in many cases, the markets are convinced that ultimately he who claims to control access to the Internet customer will reap the reward – a promise that is being reflected by the extraordinary market capitalisation of many of the new Internet ‘portals’. Household names such as Amazon.com, e-Bay or YAHOO have appeared from the Internet in as little as a couple of years. Advertising has shifted to mainstream TV and business is being done – European e-Commerce revenues amounted to US$ 1.2 Billion in 1998. This year it will be US$ 21 Billion while in 2001, all forecasts are towards a threefold increase. M-Business: ‘getting unconnected’ Technology convergence has brought a new entrant to this race. The mobile phone has now evolved to the stage where it can offer its owner full e-Mail and browsing capability. Application ‘bearers’ such as SMS (Short Message Service), USSD (Unstructured Supple-mentary Service Data), WAP (Wireless Application Protocol) or CHTML, (the technology behind DoCoMo’s highly successful iMODE service in Japan) have effectively bridged the gap between the wireless network and the Internet. Suddenly all heads have turned – the Internet has come to the mobile phone, but equally, the wireless world has come to the Internet! “550 thousand new wireless subscriptions will be sold every day over the next 30 months – a figure which is more than 7 times the best estimates for the Personal Computer.” If ‘he who controls access to the Internet customer will win’ then maybe we are dramatically underestimating the positioning of the wireless operator? This year, AOL’s market valuation was between 50 and 60 times their revenue last year; for YAHOO, the multiplier was nearer to 250. Based on recent acquisitions in Europe, even the larger mobile operators are struggling to make a 10 times valuation, yet this newfound Internet opportunity could give them direct access to a much broader community of Web users than will ever be available to today’s portals. In March, the GSM Association estimated the global wireless community to be some 518 million subscribers. Nokia, the Finnish wireless phone company, estimates that one billion wireless phones will be in use by 2003. This means that on average, 550 thousand new wireless subscriptions will be sold every day over the next 30 months – a figure which is more than 7 times the best estimates for the Personal Computer. Latin America – well under way… In Latin America, Wireless subscriber growth is already well ahead of the global trend and even in Brasil, despite restrictive regulation on the use of Short Messaging, almost all the A and B-Band operators have launched an initial ‘Wireless Internet’ service based on SMS transport to/from the handset. From the Internet side, portals such as Terra Networks, Starmedia and Yahoo! have been equally busy positioning themselves to offer a range of personalised services / applications to attract the mobile phone user. The latter two have both launched a ‘Mobile’ brand and Starmedia is particularly active forming alliances with cellular operators in the region. Banks have also been interested in this space and while again, initial services have been designed to use an SMS bearer, latterly the scope has broadened to encompass the interactive capability of new WAP handsets when available. Will there be a winner? As a technology and system integration partner for more than three hundred e-Business and m-Business players across the globe, Logica has been in the centre of this power struggle since the start. If the service provider can succeed in controlling what their subscriber sees on their handset then they will certainly gain a clear advantage. Is this realistic however? Our experience is that the wireless ‘surfer’, being used to the freedom of the Internet will not accept this constraint for long. We believe that the best a mobile phone network can hope for, is a brief window of opportunity in which they must establish a portal that meets all their customer’s needs. “At the end of the day, the most valuable thing to reach and retain eyeballs is the unique content you have,” – Luis Frias, CEO of UOL, one of the more established Latin American Portals. So, no matter what the outcome, a battle over service must produce one winner, – the cellular subscriber. The customer – a clear winner today Whether pre-paid or postpaid, wealthy or not, the mobile phone owner in Latin America is already in command of a very powerful lifestyle tool. As wireless technology embraces the Internet, I think it is fair to say that for many Latin Americans, this might be their only encounter with the Internet. Nearly all of the wireless networks in the region support SMS and are in the process of building suites of services using this powerful ‘bearer’. Most initial SMS service offerings are based on ‘pushing’ text notifications to the handset – the number of voicemail messages waiting to be retrieved; confirmation of a pre-paid balance or airtime re-charge; a notification that your payment is overdue. In markets where consumers are not used to speaking with machines, a ‘virtual secretary’ service has occasionally been offered alongside voicemail. In this case, a paging operator answers the call if the subscriber is unavailable, reads a personalised greeting and forwards a text message to be delivered to the handset when it returns to coverage. A natural evolution from these ‘paging’ applications has been to offer the subscriber alternatives for the creation of messages – calling an IVR, dial-up from a PC, and of course, the Internet. The ability to send messages from a web page is now commonplace and quite a few operators are also offering their subscriber the ability to forward/or send e-Mails directly to a mail alias where it will be delivered, as a short message to the mobile phone. The launch of Mobile Originated (MO) SMS, a recent feature for ANSI-41 operators in South America, has moved us significantly closer to being able to transact business from the mobile phone. MO SMS enables the subscriber to compose and send a text message to another handset, an e-Mail address or in some cases an application. This has been the first solid step towards a two-way interaction between cell phones and the Internet, an Information source or indeed a vendor. What can we expect? While Wireless Internet service development Latin America is still somewhat behind Europe and the Far East, solid foundations have been laid and the direction is becoming clearer. The certainty of massive subscriber growth coupled with the race to be first has secured the shareholder investment. Really useful wireless Internet (and in parallel m-Commerce) applications will soon be in every subscriber’s hand. “Really useful wireless Internet … applications will soon be in every subscriber’s hand.” Personalisation – having built a wireless Internet portal to attract the web surfer (perhaps through free services such as Short Message origination), the subscriber will be encouraged to register with the site to check out some of the personal (and perhaps billable) services available to them. o Scheduled Information services – such as the soccer results twice a day. o Event change Information – the soccer goals as they happen or, indeed, a notification if there is a currency fluctuation of more than 1%. o E-mail services – the allocation of a free e-Mail account along with the ability to configure settings so that, say, only important mail is forwarded to the handset. o Billing information – whether pre or post paid, along with the ability to configure service plans and receive billing notifications on the handset. o Supplementary service control – perhaps the ability to divert your mobile phone to a new number; an excellent service if you left your cellular at home or had it stolen. o Multiple access routes – As well as having Web access to these applications, an essential component of effective wireless Internet service is that the applications be available using different access mechanisms. Subscribers should be able to search the Internet for the Italian restaurant nearest to their current location using a location based ‘yellow pages’ application. The same information should also be available by voice, at a call box or cell phone, using the same username and password or, indeed, interactively using a WAP/ iMODE phone or wireless personal organiser (PDA). Service on demand – the more menus or ‘mouse clicks’ involved in getting the result, the less likely the customer is to persist. Particularly when the application should result in a purchase, immediate presentation of the service will be the priority. Consumer temptation to spend – For certain, as the services mature, the wireless subscriber will be tempted to spend money on every keystroke. Even fun applications such as downloading the latest chart hits as a ring tone or perhaps a picture of their favourite soccer star to their phone will surely have an airtime cost. More directly, playing the Lotto or purchasing a cinema ticket will turn the handset into an electronic ‘purse’, reducing the subscribers need to carry cash. In over the last months, Logica, in partnership with a bank, phone manufacturer and mobile network has implemented a true m-Cash initiative allowing the consumer to pay for a vast range of products or services by ‘swiping’ their cellular phone. I look forward to the day that I will be able to do this at a tollgate in Brazil! Conclusion “It’s not about millions, it’s about billions…’ says Citigroup, the financial services giant. I can see us sending a message from Citi to your cell phone, saying ‘Good morning, your balance is US$ 1,750,’ and asking: ‘What do you want to do with us today?” Wireless Internet is here, m-Commerce is coming and no one is ignoring this one.

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