Strategies of M-commerce

Chia-Liang Hung2004/03/27

Topics

Evolution of wireless technologies Key factors impacted the wireless

diffusion Composition of wireless services Characteristics of m-commerce Lessons of i-mode Suggestions of m-commerce

strategies

The Last 100 Feet— Competition of penetration rate

Server-client mode of microcellular network

Decentralized local wireless loop Promise of satellite broadband services Local rooftop community network—free

and high-speed radio network access communities

Home wireless network—PAN system

Evolution of mobile standards

3G2.5G2G

cdmaOneIS-95A

cdmaOneIS-95A

GSMGSM

IS-95BIS-95B

PHSPHS

CDMA2000 1x IS-95C

CDMA2000 1x IS-95C

GPRSGPRS

HSCSDHSCSD

EDGEEDGE

WCDMAWCDMA

CDMA2000 1x EV DO

CDMA2000 1x EV DO

PDC-PPDC-P

PDCPDC

較少演化路徑主要演化路徑

CDMA2000 1x EV DV

CDMA2000 1x EV DV

The Trends of PAN/WLAN 802.11a—transmission at 5GHz (11Mb~54Mb) 802.11b(Wi-Fi)—2.4GHz (11Mb) 802.11g—extension of 802.11b (20Mb~54Mb) 802.11e—mediation of 802.11x 802.16a—Wi-max Bluetooth—2.4GHz (1Mb) HomeRF/2.0—2.4GHz (1.6/10Mb) HyperLan2—European protocol (ETSI), 5GHz (54M

b)

Location comparison of wireless Internet users

80% in Japan 40m i-mode users & 15m WAP users

10% in Korea 7m WAP users

7% in Europe 5m WAP users

3% in U.S.A. 2m WAP users & 0.7m Palm users

58% in i-mode vs. 41% WAP vs. 1% Palm

Carriers ARPU over time

ARPU: average revenue per user

Carriers A

RP

U

($)

Time

Voice only

M-C

ommerce

Unified messagingInstant messagingContent channelsIntegrated messagingMobile email

2000 2005

Transformation of data transmission

Circuit switching vs. packet switching Good for dedicated large amount

transmission vs. efficient for short- & large- burst transmission

From setup delay to immediate setup & transmission

From point-to-point connection to broadcasting

From logon for every transmission to one logon at power-up

Toward generally secure

基礎網路設備廠商

行動電話服務廠商(Operators & WISPs)

行動閘道設備廠商

行動平台廠商

行動應用服務廠商 (MASPs)

內容創作廠商

資訊包裝組合廠商

行動入口網站

Value Layers of Mobile Infrastructure

Application platform&

Technology platform

Application catalysts

Network infrastructure

Oracle Mobile, Yahoo!, MSN

WSJ, CNN, NBA.comABCNews

Palm OS, MS Win CE, Symbian EPOC, WAP Forum, Bluetooth SIG, GAA (GPRS application alliance), UMTS forum, Lucent, Nokia, Ericsson, Mo

torola/ IBM, Phone.com, Cisco

IBM, Aether, Oracle, Wirelessknowledge, Razerfish, Signalsoft, Webrask

a

Wireless markup language Web Clipping

Supported by Palm; based on HTML VoiceXML

Supported by IBM, Nokia, Motorola, Lucent; based on XML

Compact HTML Supported by Microsoft, Ericsson; based on HTML

i-mode cHTML Supported by NTT DoCoMo, based on HTML; primaril

y popular in Japan WML

Supported by WAP Forum, based on Phone.com’s HDML

The characteristics of mobile service

Mobile handset Limited memory capacity Limited battery power Limited computing capability Small-sized display screen Difficult to input

Mobile network Lower transmission rate Unstable accessibility

Influenced factors on mobile diffusion

Degree of openness Investment size Government involvement Interface ambiguity among protocols The customer-supplier relationship between

operators and equipment vendors The role of global development on wireless

infrastructure The role of product platform on mobile

phone

Reach vs. richness Reach refers to the network penetration &

timely access Mobile > fixed line

Richness refers to the bandwidth of information Mobile < fixed line

Japan mobile services focus on reach, simplicity, & local relevancy more than richness, while U.S. and European operators are overemphasizing richness.

Trade-off between reach and richness

Reach

Richnes

s

Mobile Internet (phones)

Fixed-line Internet (PCs)

Trade-offOn Internet

Japanese approach

European & US approach

Mobile Internet(PDAs)

Business model of mobile service

Mobileoperator subscribers

o, i

trade I, o

phonemanufacturers

$

$

$

$

fee

o, Mobile phone

Fees for commission

Buy phone

Contentproviders

Monthly fee, phone

expenseMobile retailer

Fees for

advertising $

fee

phone

phone $

e.g., NTT DoCoMo’s i-mode

Partnerships of NTT DoCoMo

Payment flows of i-mode mobile service

In Japan mobile market: Subscribers operators ($40 monthly & traffic charges);

mobile retailers (< $50 for phones); and contend providers ( ￥ 0.3 per packet for assess, average 3000~4000 packets)

Operators mobile retailers ($300~$400) Mobile retailers phone manufactures (< $300 for pho

nes) Content provider operators (9% for commission)

Killer applications of Japanese Mobile commerce

Simplicity, personalization, locality, & killing time Entertainment (71%); Travel (8.4%); Financial (5.1%); Books & music (4.2%); Services (3.3%); Electronic products (1.6%); Other (5.9%)

Cooperate with physical retailer networks

i-mode connecting with Sony PS

Mobile payment mechanism

Prepaid card or SIM card (for micro-payment)--the transfer pricing model directly through the first mobile IC card

Mobile credit card, Smartcard, for m-commerce, the second IC card inserted into the mobile phone for micro-payment

Equipment vendors vs. operators vs. banks Ericsson, Nokia, Motorola, Sagem, etc. France Telecom, Sonera Visa, Master Card

Mobile operators as intermediaries Gateway of transmission or controlling transaction?

The former—mobile users directly link to banks The latter—operators as the account aggregators

Digital certification—VeriSign, Certicom, F-secure

Japanese specific telecommunication institutions

Special context NTT family, that is NEC, Matsushita, Fujitsu, Hitachi, etc. which had cooperated for the 5G computer, weave the new value network harmoniously

Dominant position of mobile installed base & ISP users

large market share and economies of scaleLower PC penetration

induce quick exploitation of the mobile phone platform to access Internet

Strong competitors—shifting the war from voice to data

KDDI—the pioneer of new Qualcomm CDMA data packet system

J-phone—a member of Vodafone, the global largest mobile operator

The lessons of i-mode

The leading company in the era of chaos A goose flying deployment Total solutions the whole product Alliance & joint venture to aggregate complementors, co

mplementarities for new businesses Increasing return—EOS, and market penetration/e

xploitation Positive feedback—the win-win loop Network externality—adoption/diffusion rate Compatibility with the installed base Incentive compensation & risk sharing

Asymmetric transmission fee

Feedback loops in the Mobile Internet

Users

Content Phones/

other devices

Business models

Portals/search engines

Services Young

All ages

Simple

Rich

Simple (micro-payment & packet services

Complex (Java, 3G)

Simple

Complex

Simple

Complex

+

Large screens but simple

Multifunctional

Comparison of i-mode users between Japan’s domestic area and the overseas countries

Date Domestic users

Date Overseas users

1999.02 0 N.A. N.A.

2000.02 4.4 N.A. N.A.

2000.08 10.0 N.A. N.A.

2001.02 20.0 N.A. N.A.

2001.12 30.0 N.A. N.A.

2002.12 36.0 2002.03 0.

2003.08 40.0 2003.05 0.5

2004.02 41.0 2004.02 2.0

2004.07 42.0 2004.07 3.0

2005.06 44.0 2005.06 5.0

Seeking levers in the transformation of mobile environment

Performance

Indicators

Lock-in

Effect

Network

Effect

Strategic Institutional Levers

Market Leadership

Economic Scale

Initial State of

Penetration

Coordination

Capability of

Technology

Institutional Transformations

Vertical/Horizontal

Disintegration

Decreasing Market

Concentration

Unstable

Evolutionary

Infrastructure

International comparisons of institutional levers

DoCoMo in Jap

an

E-Plus in

Germany

KPN mobile in Netherlan

ds

KG Telecom in

Taiwan

Base in

Belgium

Burygues in Fran

ce

Market leadership

60%/1st

12%/3rd

42%/1st

16%/4th

14%/3rd

19%/3rd

Economic scale

25m 7.5m 5.2m 3.7m 1m 6.0m

Initial penetration

30% 73% 75% 106% 79% 65%

Coordination capability

High /local

Foreign support

Foreign support

Foreign support

Foreign support

Foreign support

Japanese special customer behaviors

Another perspective of designing & breeding i-mode services A social & psychological view of new

technology in our everyday lives Strength Passions

Love Impatience Luck Fun

Conclusion Anyone, anytime, anywhere—a dream? Pre-requisite condition

Server-end—packet-based transmission bearers/infrastructure

Client-end—widely spreading handheld devices Killer apps of M-commerce—timely, locality,

simplicity Mobile B2B—inventory control & logistics/reverse

logistics; M-CRM 1-to-1 marketing Mobile B2E—integration ERP & KM into mobile

EIP & XRP (extended resource planning); time, travel, & property management