Study: Despite Glitches, Mobile's Here to Stay

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Consumers are frustrated by the current limitations of mobile commerce, according to a study by the Boston Consulting Group, but expect that m-commerce will become a part of their daily lives within a few years.


One in four mobile device owners surveyed stopped using m-commerce applications after the first few attempts, citing slow transmission speeds, difficult user interfaces and high costs. In addition, 60 percent of owners of m-commerce devices worldwide don't use m-commerce applications.


The study, released this month, surveyed 1,633 early and potential m-commerce users in the United States, Japan, Germany, France and Sweden.


"Mobile technology, as much as it has improved, does not live up to all the marketers' boasts, leaving many consumers disappointed and frustrated," the report said.


However, the good news is that "these sources of consumer frustration are being addressed by operators and equipment manufacturers," said David Bean, vice president at BCG.


Eighty-one percent of respondents said m-commerce devices would become part of their daily routine for sending e-mails, getting news and information and shopping. In addition, 82 percent believe the devices would become their "personal travel assistant" within the next three years. In addition to travel, the report said that buying event tickets, books and CDs and downloading music would probably be the most popular m-commerce applications in the future. About 61 percent also said the devices would function as universal payment tools.


Given this high level of consumer acceptance, the report stated that by 2003 m-commerce will be where the Internet was in 1998 in terms of transaction value. Total revenue generated by m-commerce is expected to reach about $100 billion in the business-to-consumer space. About 50 percent of revenue is expected to stem from data transmission charges, e-mail subscription fees and advertising charges, while the other half would come from the value of transactions and related activities, the report said.


Despite the growth, however, m-commerce transactions will still be less than 1 percent of total retail sales in 2003, BCG predicted.


To be successful in the future, the report said mobile device marketers should:


• Build the mass market by using simplicity. "As with the Internet in its early years, today's most popular m-commerce applications -- e-mail, news, weather and sports reports -- are the simplest to use," the report said. Companies must also reduce the entry cost, introduce more appealing user interfaces such as voice activation, make sure the user's first experience goes well, and address privacy and safety concerns.


• Capitalize on the unique capabilities of mobile applications. Marketers should use emerging location-based and authentication features and leverage the roles that future handsets will play, including personal assistants, mobile wallets and information centers.


• Manage the gateway to consumers. Marketers should find ways to leverage brands, billing relationships and other capabilities to serve customers efficiently. "One way to achieve this is to establish easy-to-use mobile portals, either alone or in partnerships with others," the report said.


• Find ways to link customers' various online experiences. "Many consumers are looking for a seamless experience and expect to use their hand-held devices, their PCs, and, before long, their interactive TVs in complementary ways," the report said.


• Create sustainable business and revenue models. BCG's information from Japan shows that mobile advertising can work.
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