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Mobile Integration Is Alive and Well…
Mobile Integration Is Alive and Well…

Mobile convergence will remain "the engineer's dream and the businessman's failure" until companies learn and master the four fundamentals that are currently shaping the market landscape. Here the president and CEO of PCIA, Jay Kitchen, examines all four of them.

Do you remember the television commercials from a few years back that showed how a refrigerator (in the near future) would call your cellphone to let you know that you were out of milk?

Not surprisingly, all the world isn't yet being given a grocery list by major kitchen appliances. But while magazine columnists, investment gurus, and TV pundits have spent the past year giddily proclaiming the death of wide-scale thoroughly integrated mobile systems, an interesting market dynamic has taken shape. Mobile technologies are slowly but surely integrating themselves into every sector of the economy.

The newness and undefined nature of the current generation of wireless devices and services presents a great opportunity for a variety of companies that previously had nothing to do with mobile telecommunications. Some backbone industries, such as infrastructure and hardware providers, though still vitally important to the success of mobile convergence, are being deemphasized. New entrants, such as General Motors' OnStar division, retailers hoping to exploit location-based promotional opportunities, and high-end appliance-makers all are banking on success in the mobile convergence marketplace.

There are four major issues that will have important implications for the success of mobile integration: knowledge of the marketplace; personalization/customization; interoperability; and privacy/security.

Issue #1: Know Your Marketplace
Mobile convergence has been called "the engineer's dream and the businessman's failure." This sentiment is understandable, but inaccurate. The globalization of the mobile convergence marketplace is putting new pressures on companies to know the customer - customers to whom they've never marketed before and know little of their buying patterns and cultural norms.

This new environment requires cross-industry cooperation and a full understanding of consumer attitudes and preferences, marketplace characteristics, technological issues, and regulatory environments. Industry forums and communities are being formed to provide dynamic, living communities for mobile convergence players.

PCIA launched the PCIA Global Initiative for key companies in the mobile convergence sphere as a neutral venue to further mobile convergence, address associated issues and obstacles, provide the right networking atmosphere to meet global partners, and to bring solutions to market more quickly.

One component of the Global Initiative is PCIA's landmark "PCIA/Yankelovich Global M-Consumer Research," the first ever primary research study of mobile consumer predilections in different markets. This comprehensive, multicountry study examined mobile user attitudes, inclinations, and purchasing triggers. The results were surprising: while each market has its differences, defined user segments displayed strikingly similar interests and habits across national borders, though their incidence within those countries varied tremendously.

PalmPilot inventor and Handspring chairman Jeff Hawkins, speaking at the PCIA GlobalXChange mobile convergence trade show, stressed the importance of giving consumers what they want, disdaining the tendency of wireless companies to pack their products with the latest technological marvels even if they are of dubious consumer value. Hawkins's business philosophy is the critical difference between the stunning success of the PalmPilot and the crashing failure of its forerunner, Apple's Newton handheld computer.

For example, a U.S. company knows the value of graphically intense, highly visual Web sites designed to be accessed by PCs and viewed on large monitors - the preferred method of accessing the Internet used by the vast majority of Americans. But if this same company attempted to market a similar product in China or Japan, countries in which most people access the Internet on mobile devices with screens the size of a playing card, they're almost certain to fail. This is a very simplistic scenario, but the importance of understanding and meeting consumer needs cannot be overstated.

Unlike the mobile voice markets where services are basically the same for all users, 3G data and video applications are extremely specialized and resonate differently among different user groups. The PCIA/Yankelovich results bear out that users view advanced mobile services as the best available method for personalizing the way they receive and access information, different forms of communication, and entertainment.

This study, conducted in six of the top seven mobile markets in the world - UK, Germany, Italy, Japan, South Korea, and the U.S. - revealed several critical insights essential for any mobile company looking to offer services in multiple markets.

Italy Stands Out
The Italian love affair with mobile devices extends beyond the mellifluous sounds of the language of romance. Advanced services within PCIA's categories of Information, Transaction, and Entertainment resonate strongly with Italian users. Consider that Italy ranks number one relative to the other five in the research study according to:

  • Number of mobile devices per household
  • Length of time using mobile phones
  • Preponderance of using mobile phones while on vacation
In addition, Italians rank second in minutes used per month behind only Japan, the global leader. And while these interesting market indicators reveal a great deal about market readiness, the merit of this market as a leader in advanced mobile services comes from their usage, interest, and willingness to pay. Tables 1 and 2 identify the usage of mobile services as well as the interest in future mobile services.

Key to this unprecedented study is the method by which PCIA and Yankelovich assess mobile services. During the face-to-face and phone interviews with users in each of the six countries, we evaluate specific mobile services, not simply interest in m-commerce in general. The following is just a sample of the detailed services we evaluated based on level of interest in utilizing these services through a mobile device:

  • Locating movie theaters and purchasing tickets
  • Paying for retail store purchases
  • Accessing video cameras in your home
  • Viewing news or sports
  • Storing video clips
  • Playing interactive games
The future for advanced mobile services is bright. Mobile users are excited about the potential for new applications. Many demonstrate an extremely low drop-off rate when a price point is attached to the most sought-after services, and as wireless voice becomes increasingly pervasive, consumers will become even more comfortable with the devices themselves.

As Figure 1 demonstrates (in very simplistic terms), the wants of businesspeople in London and Tokyo - and Frankfurt and New York - overlap to some extent. At the same time, the Tokyo businessman and the Osaka teenager, by dint of their shared nationality and cultural mores, also share certain desires for particular mobile services and applications. The London businessman and the Osaka teenager, sharing neither a common cultural nor professional background, have little in common when it comes to mobile demand.

From the business perspective, wireless solutions have never been more accessible or needed. Wireless voice in the business environment is extremely important, as shown in Table 3. Wireless data, however, is critical for many of the largest enterprises in the world.

Wireless corporate access to corporate data behind enterprise firewalls will be the critical mover for wireless data. Through these applications we will finally see the true benefit of mobility: anytime, anywhere access to the people and information you need. Like the take-up of personal computers, mobile voice, and e-mail, wireless data will flourish first in the business environment, and then gain significant acceptance in the consumer market.

Issue #2: Personalization/Customization
Mobile devices are inherently more personal than sedentary technologies. Visit any operator's retail outlet and get a look at the personalized accessories for voice devices alone! The quest for personalization doesn't begin and end with faceplates and ringtones.

Users who are set in their ways regarding payment card usage, mobile service plans and options, Internet surfing, and purchasing habits have indicated their varying preferences for transferring these capabilities to the wireless environment. Even when it comes to methods of payment, users differ dramatically for similar items.

Even more drastic are the payment preferences among the different age groups of users. The different payment capabilities of various age groups translate directly to the mobile environment and dictate how they choose to pay for wireless entertainment, information, and transaction-based services.

Personalization will be a key driver for commercial location- based services (LBS). Time of day, volume of marketing solicitations, vendor selection, method of alert; each of these options must enable user choice in order to succeed. One of the biggest hurdles left for the wireless industry to clear regarding LBS is actually of its own making: the user community was too quickly flooded with scenarios for wireless Starbucks-coupon spam, and has accordingly resisted that idea. However these same users have expressed an interest in location-targeted marketing if they have the ability to personalize the services according to their individual preferences.

Issue #3: Interoperability
Lack of interoperability is a major inhibitor to the take-up of mobile services and applications. This current environment bears a striking resemblance to the wireless voice market of a decade ago, as PCS came onto the scene. New technologies put the industry in flux and scores of new players tried to enter this volatile market. PCS offered a way for consumers to get improved service at lower cost. Incumbent analog carriers were defiant, but change was inevitable; market forces were too strong to resist. As an organization whose mission is to expand markets and accelerate the adoption of new technologies, PCIA worked to bring down the regulatory, technical, and marketing barriers that were holding back PCS.

The same thing will happen with mobile integration - change will come; interoperability issues will be solved. The question is, which companies recognize this and are working toward a solution? And which ones will remain content to fight for the ever-shrinking market of a technology that has been abandoned by most others?

SMS
The current lack of interoperability among carriers has held back the U.S. market. SMS text messaging, whose truncated words and emoticons are becoming a second language in many European countries, is only now starting to take off in the United States. SMS popularity took European operators by surprise, and they're now transmitting more than 30-billion messages each month!

Location-Based Services
Location-based services present exciting new opportunities for marketing departments. This technology allows for extremely targeted marketing and personalized offerings tied to a (potential) customer's physical nearness to an establishment. For example, companies such as Dunkin' Donuts have begun extremely successful campaigns with wireless carriers and application vendors to target potential customers through their mobile devices as they move within a certain range of their participating stores.

Of course, for LBS to live up to its potential, devices must be able to communicate and move seamlessly between systems and networks. Will users be satisfied with proximity services only within certain networks? What about roaming on other networks? Information content is relevant both in your home city and while traveling, and truly successful LBS will only be accomplished when users are assured they will enjoy their desired features regardless of the network or system they are roaming on.

Issue #4: Privacy/Security
The twin issues of privacy and security are a major concern for every company considering a wireless strategy. No entity, from a college student with a checking account to a billion-dollar multinational financial services company, will use mobile technology to make transactions unless a threshold of comfort is met.

Privacy of personal location and information, as well as the security of payments, has naturally grown with the promise of mobile convergence. Users in the United States, for instance, are extremely sensitive to potential abuses.

Privacy and security of corporate information is obviously critical. If the enterprise user is going to lead the way for ubiquitous take-up of wireless services in the consumer market, security must be assured.

Conclusion
Mobile products and services are making their way into every sector of the world economy. From a trucking company outfitting its fleet with GPS devices to better track and calibrate pickups and deliveries, to Starbucks' pilot-test of location-based latte ordering to ease counter congestion and enhance and build customer loyalty, mobile integration is touching enterprise and consumer markets as few could have predicted just a few years ago. For mobile integration to truly succeed, however, companies must learn and master the four fundamentals mentioned above that are shaping the market landscape.

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