Initially marketing campaigns in the US led consumers to believe that the mobile Internet would give them full access to the wired Web. But when customers tried to access a site like Amazon.com from a mobile phone, they found it could take as much as 50 minutes to place an order. The cell phone’s awkward keyboard and tiny screen made entering personal details (name, address, credit card number) a nightmare. Consumers hoping to manage stress through m-commerce couldn’t have been particularly happy to encounter a technology that was difficult to use.

So why has m-commerce been able to succeed in Japan? Part of the reason again has to do with consumer expectations, says Professor Douglas Lamont of DePaul University in Chicago. “The Japanese never had e-commerce and they never had the Internet. The whole idea of sitting in front of a screen and typing up requests as we’ve done with the Internet never functioned in Japan. People did not have PCs. Then they switched right over to the cell-phone technology. They jumped ahead in technology and forgot the other one completely,” he says.

Adds Kalakota, “In the US, the factor that has held us back is that our population is not very educated about how to use the device for communication other than voice. In the Japanese model, their [short messaging system] has helped them [...]. From a user-training level, they are considerably more advanced than we were. Penetration depends on two things: are the users comfortable with the device, and the delivery of value.”

Interestingly, Lamont thinks the Japanese written language may also be more compatible with tiny cell phone screens than Western scripts. “You read Japanese language from right column to next column,” he says. “The eye picks it up right away. We look on a level of left to right. The Japanese read one screen on one full swoop. We have to read line by line, word by word, letter by letter. That’s a very different concept. In Japanese manga (comics), you just look at the page and you get the sense of what’s going on. This is different from what we (in the West) do.”

A commonly heard complaint in the US is that the quality of information available on the mobile Internet is poor. American m-commerce applications tend to be dominated by infotainment. Even when mobile activities go beyond downloading songs or playing games, the mobile Internet experience tends to center around time-constrained, goal-oriented activities like reserving movie tickets or getting directions. There is still a noticeable absence of transaction-based services like shopping, banking and trading.

There are of course also security problems in m-commerce — including some that have no counterparts in traditional wired networks. Eavesdropping on data transmission lines, for example, is relatively easy, and mobile devices are easier to steal than computers. As on the wired Internet, receiving email, downloading songs and pictures, and running Java applets are all possible paths for viruses and worms.

Technology limitations have also contributed to the failure of m-commerce to catch on in the US. Issues remaining to be solved include extending handset battery life, increasing small screen usability, and improving chip integration. Accessing the Internet by mobile phones is currently hindered by slow transmission speeds, frequent disconnects, and a veritable Babel of wireless communication standards over which data is transmitted.

Because the wired Internet protocol suite (TCP/IP) was not developed with wireless in mind, transition services such as the Wireless Application Protocol (WAP) have been developed in Europe and the US to bridge the gap between mobile infrastructure providers and the Internet protocols and web standards. But WAP users complain about slow connections; sites being down or poorly designed; uneven content quality; and small screens.

WAP never got a foothold in Japan where, of the approximately 30 million Internet users, half gain access by wireless phones. Instead NTT DoCoMo deployed a wireless Internet service, iMode, based on its own proprietary technology. As many as 80 percent of all DoCoMo’s mobile phone subscribers sign up for iMode, dwarfing the adoption rate for WAP-based mobile phones.

With WAP technology, customers are billed on the basis of a combination of air-time and access charges, but DoCoMo charges customers on the basis of the actual bandwidth they use, i.e., the number of packets they send and receive. This is different from the case of WAP services, where a customer is billed for access and for the number of minutes he or she is connected — not just to download and upload information, but for the time to read and write email or read the latest stock updates.

DoCoMo eliminated the competition in Japan with its packet-based billing and iMode phones, and in the process turned iMode into a dominant national brand. The company also offered subscribers tens of thousands of iMode sites, such as restaurant locators, ski condition reports, hotel reservation systems, on-line auctions, and airline ticketing; links with banks and stock brokers; and product and market websites. Users could also check email or play games.

Email on iMode is limited to 500 bytes (up to 160 characters), which is basically text messaging. Messages may be selected from predefined responses to facilitate text entry. The existence of a single network in Japan makes sending short messages possible, convenient and cheap. As a result, sending email by cell phone in Japan has evolved from being a fad for kids and young adults to a necessity for business persons.

Given the current economic climate in the US coupled with Americans’ vivid recollections of the dot-com debacle, the initial rapid growth of mobile start-ups scared off many potential investors. Says Kalakota, “M-commerce was very hot when the money was free-flowing. The minute the money started drying up, mobile commerce projects, which were considered too innovative, were basically chopped left and right. The whole innovation stream dried up pretty quickly. […] As a result,” says Kalakota, “the smaller companies that were innovating are all dead. And the big giants, like ATT Wireless, are struggling to keep their existing networks up and running. They don’t have any money to invest in m-commerce-related technology.”

M-commerce business models in the US remain perceptibly unstable. An effective way to bill for m-commerce, as already noted, has yet to be worked out. Transactions such as checking the latest weather report, getting a traffic update or buying a soda are relatively inexpensive, and it is impractical for many providers to bill for these kinds of services.

Because most consumers object to entering personal information over and over again using a mobile device, there is a clear need for a service that makes their personal information available on demand. Currently, mobile operators, independent mobile portals, and banks are battling with each other to provide this service. But in Japan personal information is stored by one company: DoCoMo.

In spite of the limited offerings of the mobile Internet in the US, the challenge seems less for American companies to deliver new experiences than to achieve market penetration. Although general information and entertainment portals such as AOL, Yahoo!, Microsoft mobile and others have emerged as the leading hubs of mobile Internet traffic, it is the mobile cellular operators that have established service relationships with mobile users. But the mobile operators lack experience with the Internet and the ability to develop user-friendly portals. As a result, mobile partnerships can be expected to develop, with the strongest brands holding the upper hand at the bargaining table.

Although Douglas Lamont suggested several years ago in his book Conquering the Wireless World: The Age of M-Commerce (Capstone, 2001) that there was no reason for iMode to remain an artifact of Japanese culture, he now doubts that the popularity of m-commerce in Japan will be duplicated any time soon in the US. Says Lamont, “In terms of m-commerce — transactions over the cell phone — we’re not going to do that. There doesn’t seem to be the impetus among the American public to do it. We’re going to stay with our system of using the computer. Mobile technology is too difficult for people to handle. They don’t want to be bothered with it.”

But Associate Professor Norman Sadeh, who is director of the Mobile Commerce Lab at Carnegie Mellon University and author of M-Commerce: Technologies, Services, and Business Models (Wiley, 2002), disagrees. “I think we are going to see a repeat of what’s happened in Japan taking place in the US,” he says. Although Sadeh feels that local factors in Japan such as DoCoMo’s dominance there, the country’s relative lack of Internet users, and a scarcity of PCs in private homes have all contributed to m-mode’s popularity, he adds, “If the services and applications were not compelling enough, these justifications would not have been sufficient to make this happen.”    

[8-Mar-2004]