M-commerce is surely a market waiting to explode. It is not just Europeans who love their mobile’s. According to the GSM Association, worldwide mobile subscribers were
701.6 million at the end of January 2001, compared with 468 million at the start of 2000.
In China, the Ministry of Information Industry estimates that there were an incredible 85.3 million mobile subscribers, up 97% over the year.

Despite all the current limitations of WAP and hype around m-commerce, there are reasons
to believe that consumers want to use their mobile’s for more than voice. Genie, the portal of BT Cellnet, had an increase of 513% in WAP page impressions in the fourth quarter of 2000 (compared with the third quarter). According to cellmania.com, there are now over 10,000 WAP sites from more than 95 countries. The unbelievable growth in SMS continues, with the GSM Association estimating that over 15 billion messages were sent in January 2001.
It seems a small step to m-commerce growing on a similar up-curve, but the questions remain: when, in what format and who will be the real beneficiaries?

When will m-commerce take off?
The hyping of early WAP terminals and services looks set to haunt the mobile industry. When asked about m-commerce, consumers now worry about security, complex navigation and completion time. Mobile operators and handset providers are loathe to put too much investment in GPRS (general packet radio service) for fear of cannibalizing 3G revenues – for example, Deutsche Telekom launched GPRS in Germany in February with just 20,000 handsets available. When it comes to providing the m-commerce capabilities that consumers require, there are great barriers in areas such as standards and engineering that have to be overcome – including battery life, screen resolution and network capabilities. For example, Forrester Research wrote in January 2001, that it doesn’t see “compelling games until late 2002.”
The real growth in m-commerce revenues is unlikely to happen until 2004.

What will drive m-commerce?
The mobile terminal is seen by some as the universal communications device, and companies such as Orange portray a completely wireless future. Although clever tariffing and marketing may mean some consumers never own a fixed telephone, for the vast majority of business and residential users, they will continue to use their PCs and fixed phones. So where does the mobile fit into this?

The three key advantages of mobile are that it can provide timely, location-aware and
personal information. These are a marketer’s dream. Consumers will grow far more dependent on their mobile terminal, and areas like mobile advertising could grow rapidly. However, mobile terminals will never have the bandwidth of a fixed network or the user-friendliness. The winning applications of m-commerce will take advantages of mobility and not try to compete in areas in which it is weak.

Who will be the winners?
Predicting industry winners is notoriously difficult. Gartner Group claimed in an August 2000 report that “70% of the revenue generated by the wireless Internet will be recognized outside the wireless network.” If true, this illustrates the difficulty in measuring success. It seems clear that proximity to the customer and being able to go up the mobile value chain will be key. Operators seem well positioned in terms of the customer but they are facing a titanic battle against the handset manufacturers and those setting up mobile portals, including ISPs, content providers, startups and software companies. Most have also shown little evidence of being able to move up the value chain. The mobile market will see large-scale consolidation in the future, with European operators down to four or five within three years, and few startups still independent.