Mobile commerce ready for take-off

Chris Green looks at what lies in store for the world's 300 million mobile phone owners.

We already experience mobile commerce (m-commerce) in our day-to-day lives every time we walk into a shop and buy something. But what if you had a mechanism to perform banking transactions and business procurements, as well as these everyday smaller purchases?

With the growth of mobile computing devices and their closer integration with the internet and wireless communications, these are just some of the m-commerce applications now within our reach.

On paper, m-commerce has a good chance of making an impact on the lives of consumers and businesses looking for new channels to trade goods, services and content.

Feeling secure

With a user base of more than 300 million mobile phones worldwide, and an increasing rate of adoption among corporate and consumer users of PDAs, smartphones and laptop computers, the demand for secure mechanisms for m-commerce is almost as strong as the demand for conventional ecommerce services through larger computers and set-top boxes.

The number of m-commerce users will rise to about 29 million by 2004, generating trade worth $21bn a year, according to researcher IDC.

Callie Nelsen, a senior analyst with IDC's Wireless and Mobile Communications research division, said: "One of the most logical extensions of wireless mobile internet access is shopping.

"Online shopping is gaining in popularity and, despite security issues from wireless end users, ecommerce over mobile devices will also explode."

The north/south divide

Although western European countries are among the most industrialised in the world, there are clear differences in the extent of adoption of internet usage and ecommerce.

There is a distinct difference between northern and southern Europe, and internet penetration and ecommerce adoption vary according to the gender and age of the internet user and buyer.

This has translated to the adoption of mobile devices and the use of services such as Wap, as well as the adoption of new broadband mobile services such as GPRS.

What m-commerce means for business

The most important concept is the ability to reach your customers wherever they are. Traditional business with an internet arm can be reached by mobile customers only by a voice phone call or at best a laptop.

This is acceptable if the enquiry is a request for basic information, but it doesn't allow the customer and the merchant to conduct trade.

By extending the internet presence to include a skew suitable for a mobile device, the online operation can encompass users, giving them access to the same range of transaction services and account options available to them through a fully featured PC web browser or mail order catalogue.

An example of this is online auction site eBay. Users in the US receive text messages on their mobile informing them if they have been outbid on an item. They can raise their bid by replying to the message with the necessary bid information.

Users can access the eBay site via Wap in the US and the UK to place bids, view outstanding bids and place items up for auction. The site stores users' contact details and credit card information, so they only have to enter a password to access the service and authorise transactions.

The eBay model can be applied to many retailers and business-to-business exchange sites. Customers and users can access information and administer transactions regardless of whether they have access to a desktop computer at that time.

Mobile marketing

As well as using mobile devices as a direct sales channel, companies are using them to market and promote brands and products to customers.

For example, FlyTxt offers mobile marketing services to companies in the form of Wap sites offering information, competitions and other incentives to promote a product or a brand name. This can involve SMS messages, or ring tones and display logos, targeting younger age groups.

And during the recent World Cup qualifying campaign, Carlsberg used SMS-based marketing to promote its brand in the UK by setting up a text messaging service.

A customer could send a request message to a phone number that was promoted through conventional means, and were sent a message containing a code. This could then be shown to bar staff at participating pubs, where the customer would receive their free pint of Carlsberg lager.

M-commerce has the potential for a very productive future thanks to the success of mobile phones and PDAs.

However, the deficiencies of existing mobile data technologies, and the overblown expectations of Wap, mean that companies still have to deal with limitations and a negative public image, on top of developing uniform security services and transaction applications.