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Reach Out And Sell Someone


Business Week e.biz -- Special Report: Europe

Reach Out and Sell Someone

E-business by mobile phone means marketers can talk to consumers nonstop

At first, using the phone to get a parking space sounds like a truly wacky idea. Think of it: Winding your way through Frankfurt, you simply press a button on the large-screen cell phone on your dashboard. The smart phone system locates you, finds a parking place nearby, then zaps you a map to guide you right to it. And you pay for the service on your phone bill.

With time, though, things could get ugly. What if auctioneers barge into the parking business? You could be wrestling with rush-hour traffic while bidding for spaces, the phone's electronic voice repeating, "Press enter if you are willing to pay six euros per hour." And when you finally win a space, you may have to scroll through scads of electronic coupons for nearby shops to get to the map.

Exciting and scary at the same time? That's mobile e-commerce--European-style. It's the long arm of the Internet that will soon extend the electronic marketplace right into hundreds of millions of pockets, purses, and cars--and all of humanity's waking hours. It promises mind-boggling conveniences. Imagine your phone directing you block by block, either with a voice or a blinking dot on a map, as you walk through Istanbul's crowded Kasbah. Suddenly, it interrupts itself to beep the alert you've requested: Microsoft Corp. shares have dipped below $100. You punch a couple of buttons to purchase 100 shares and continue the guided stroll.

As cell-phone makers head for the Net, the prospect of untethered Web businesses is turning some of Europe's biggest companies frothy. It's largely the hope of hosting tiny, customized e-commerce portals reaching millions of Europeans that's fueling Vodafone AirTouch PLC's $135 billion hostile bid for German cell-phone giant Mannesmann. The same force has turned mobile-phone powerhouse Nokia into Europe's most valuable company. And it was the fear of losing out on this monster market that led Microsoft, in the dead of winter, to trek far north for a joint venture to develop Web phone browsers with Sweden's Ericsson. "This will be the largest market in the world," says Vodafone CEO Chris C. Gent.

Of course, it won't happen without a struggle. Phone companies must come up with simple and speedy services, and find a way to sell ads without annoying users. In the next year, as the mobile Internet takes root, look for glitches and slow connections. "We'll hit our trough of disillusionment late this year," predicts Nigel Deighton, an analyst at the Gartner Group.WINNING FORMULAS. But with all the companies trying, some will get it right. And when winning formulas spread, the numbers promise the force of a marketing tsunami. Within four years, some 350 million people worldwide could be using the mobile Net, according to International Data Corp. And instead of waiting patiently, desktop-like, for shoppers to sit down and log in, the mobile Net will be riding shotgun through shoppers' lives, flashing, beeping, and vibrating with buying opportunities.

Make no mistake, mobile e-business is radically different from its plugged-in kin. This is not shopping for books, or browsing sites for ski weekends. Far more than providing new access to the old Web, mobile technology will create a brand-new one.

The key, naturally, is movement. With technology that follows people, and finds them, mobile e-commerce could well broaden the online marketplace to include millions of local businesses--butchers, barbers, even dry cleaners--that would never dream of buying an ad on Yahoo!

Here's how it will work: Picture a butcher shop in Paris, circa 2004. When customers come in, they're offered a discount for waving their phone through an infrared sensor that records the telephone's number. Business is brisk throughout the day. But near closing time, the butcher is anxious to get rid of some prime cuts of Argentine beef. He sends out a special offer to the phones of customers who have ordered Argentine beef recently--and who happen to be within, say, three blocks. The mobile network finds these customers and charges the store a couple of cents for each message delivered--though the Bordeaux wine ad on the message might pick up half the tab. Customers who buy online get a discount, and the cost of the steak comes out of the debit card in their phone.

It should be a year or two in Europe before butcher shops hit the mobile Net. For now, the Continent is just taking its first steps using the tiny screens, and most of the e-commerce sites are hand-me-downs from the fixed Web, principally stock trading. But by the end of this year, European phone companies will be upgrading their systems to an Internet technology called GPRS (General Packet Radio Service). This technology will permit cell-phone customers to remain online whenever the phones are on. That opens the door to customized messages pushed to each individual phone.

Within the following year, businesses and customers could be in contact as never before. How? Global positioning. Satellites will locate cell-phone users to within 25 meters. "That's when it starts getting very exciting," says Per Mosseby, the 25-year-old CEO of Sweden's Melody, a software company creating mobile applications to help companies deploy far-flung sales and maintenance forces.

Already, the biggest names in techdom are lining up for their piece of the action. From Intel Corp. to Oracle Corp., Silicon Valley giants are partnering with mobile leaders in Scandinavia. In early January, when Vodafone announced plans for its mobile portal, to be released this July, it presented a Who's Who of eager technical partners, including Nokia, Ericsson, IBM, and Sun Microsystems. At first, the Vodafone portal will provide a menu of basic data services for users, from e-mail to weather reports. But in time, Vodafone plans to turn the portal into an omniscient companion for customers--and a marketing dream for advertisers.

Consider the muscle that a mobile portal gives retailers. Charles Schwab & Co., the discount broker, already has established itself as an Internet heavyweight with some 3 million online accounts. Now Schwab has signed up for a place on Vodafone's portal. If the Vodafone-Mannesmann deal goes through, Schwab's place on the portal could link it with 48 million customers worldwide.OLD HAT. Legions of developers, from Helsinki to Seville, are creating the applications for this new branch of the Net. In cutting-edge Finland, banking and stock-trading on cell phones is old hat. But Gigia, a software developer, is working with gaming companies to develop mobile gambling applications--with jackpots pouring right into the mobile phone's debit card.

And outside of Paris, a French Canadian named Jean-Michel Durocher, chairman of startup Webraska Mobile Technologies, is developing a vast phone-based Internet navigation system. The early version, already out on the limited supply of Internet phones, displays traffic patterns in Paris. Eventually, its tiny maps on the phone screen should help travelers figure out not only where they are, anywhere in Europe, but which road or metro line to follow to their destination. "We're even including the bike paths in Holland," he says. Like most mobile Netrepreneurs, Durocher sees his product generating loads of transactions. He imagines movie theaters advertising their English, French, or German offerings--according, naturally, to the language profile of the traveler. He's even exploring hookups with a phone-parking entrepreneur.

No sign as yet of the auctioneers. But if mobile e-commerce takes off as expected, don't clear your throat too loudly on the cell phone. You might end up buying something.By Stephen BakerReturn to top


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