Studies Say M-Commerce Market Is Unpredictable

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The only thing two research firms with new wireless reports agree on is that future wireless Internet usage and mobile commerce growth are difficult to predict.


While Accenture's survey of 3,100 wireless users found that a vast majority do not use the wireless Web, the firm forecast growth in m-commerce transactions and mobile advertising.


Most of the wireless users surveyed in the United States, United Kingdom, Finland, Germany and Japan do not use the wireless Web because they believe screens are too difficult to read, the service costs too much and it is too slow.


Only 15 percent of those surveyed in the United States, UK and Finland access the Internet through a wireless device, and less than 1 percent use it to make purchases.


"The primary concerns we hear from users have to do with the technological limitations of the devices and services now on the market," said Jon Beck, associate partner at Accenture's Institute for Strategic Change.


Accenture, New York, also found that about 40 percent of wireless users in the United States and Europe say the mobile Internet is somewhat or very appealing. In Japan, where 81 percent of the respondents said they access the Internet through wireless devices, two-thirds said a mobile Internet is appealing.


EMarketer, New York, which assessed data from more than 100 research organizations, determined that predicting revenue from the wireless Internet and m-commerce is silly.


"Researchers are pulling their numbers out of thin air, based on hot air," said Paul Mulligan, wireless analyst at eMarketer.


Many revenue forecasts are for technologies that do not yet exist commercially, and most are based on cell phone sales.


"Handset sales are flat-lining," Mulligan said.


However, eMarketer cited studies that forecast as many as 73 million wireless Internet subscribers in the United States by 2003 and 143 million in the Asia Pacific region.


The Accenture study found that Americans have the highest incidence of wireless purchasing, with 12 percent of U.S. wireless users making a purchase compared with 5 percent in Finland.


Jupiter Research, New York, predicts $22.2 billion in worldwide m-commerce revenues in 2005, including $10.8 billion from shopping, $8.1 billion from paid content and $3.3 billion from advertising.


Research firm Ovum found that global mobile advertising spending reached 13 million worldwide in 2000, with North American ads accounting for $4 million. Ovum predicted that global mobile ad spending would jump to more than $16 billion in 2005.


However, eMarketer analysts discovered that there are still too many unknowns to predict wireless ad revenues.


"You're really talking about a medium we've never seen before," Mulligan said.


Instead of pushing ads to consumers, as in a traditional advertising model, marketers will have to rethink the medium.


"Many of the opt-in models now are coupons," Mulligan said. "That's cheesy. Right now, marketers need to figure out how to do real clever opt-ins."


Mulligan noted that advertisers will have to be careful not to offend customers with push ads since cell phones are "one of the most personal mediums we have right now," he said.


Before the mobile advertising market is built, marketers must first address several questions, including whether the advertiser or the user will pay for the airtime and whether the ads will be unsolicited.


Eight-six percent of Internet professionals in an internet.com survey said advertising on wireless devices is intrusive. However, 50 percent warmed to the idea of wireless advertising if it would help reduce the cost of their wireless services.


Accenture analysts believe there is a market for location-based advertising and information. Its survey found that wireless users would like to receive location-based weather, restaurant, local community and travel information as well as e-mail and news headlines. Most people, however, currently use the wireless Internet for e-mail, text messaging and receiving news headlines.


"This study shows that, while people may not want to browse the Web extensively on their wireless device, they do want the anytime, anywhere access to information and options for purchasing available through the mobile Internet," said Richard Siber, partner for communications and high-tech at Accenture.


While the United States is the leader in wired Internet connectivity, Accenture found that Americans lag at least two or three years behind the Japanese and Europeans in cell phone usage. Nearly three-quarters of those in Finland and more than half the population of Japan own mobile phones, compared with one-third in the United States. Companies in Japan and Finland will likely be the first to integrate location-specific capabilities into mobile connectivity.


Europe has 34.7 percent of the worldwide cellular market, while the Asia/Pacific Rim region has 32 percent.


European wireless device users send more than 1 billion short text messages per month, and 72 percent of Japanese cell phone users connect to the Internet.


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