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The future of wireless technology and its impact on e-business

The future of wireless technology and its impact on e-business. Presentation to Loyola University GSB Dr. Linda Salchenberger April, 2000. Anna Hillers 400 N. McClurg Ct. 1912 Chicago, IL 60611. Evolution of wireless technology. Wireless meets Internet. Everything – everywhere - always.

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The future of wireless technology and its impact on e-business

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  1. The future of wireless technology and its impact on e-business Presentation to Loyola University GSB Dr. Linda Salchenberger April, 2000 Anna Hillers 400 N. McClurg Ct. 1912 Chicago, IL 60611

  2. Evolution of wireless technology Wireless meets Internet Everything – everywhere - always Best-in-Class Segment Players Trends and Emerging Business Models Anna Hillers

  3. Evolution of wireless technology Wireless meets Internet Everything – everywhere - always Best-in-Class Segment Players Trends and Emerging Business Models Anna Hillers

  4. Conversion: Analog/Digital Encoding/ Compression BTS = Base (Transceiver) Station MSC= Mobile Switching Center BTS = Base Station Mobile Phone: Data, Voice GSM Global System for Mobile Communications With 200 million subscribers world wide and international coverage, GSM is the most successful digital mobile telephone standard • Global System for Mobile Communications (GSM) Features: • SIM (Subscriber identity module) allows for identification independent from phone • International Roaming (worldwide) • Voice and Data Service (SMS, 2 way messaging -> 14.4 Kbit/sec) • Call forwarding, Caller ID, Wait/Hold, Voicemail Anna Hillers

  5. HSCSD: High Speed Circuit Switched data • Circuit Switching: • Allows for ISDN speed: 56.7Kbit/sec • Introduced 1999 by some GSM carriers GPRS: General Packet Radio Service • TCP/IP protocol (Internet protocol), supports a wide range of bandwidth • Allows for up to 115 Kbit/sec • Will be introduced by the end of 2000 EDGE: Enhanced Data Rates for the GSM Evolution • Allows for up to 384 Kbit/sec • Will be introduced by 2001 3G: Third Generation (UMTS) • Increase of bandwidth • Allows for 2 Mbit/sec • Will be introduced by 2002 Upcoming Standards HSCSD, GPRS, EDGE, UMTS HSCSD, GPRS, EDGE are GSM-based standard, which enhance data transmission through enhanced software. UMTS, the European version of 3G will reach up to 2Mbit/sec through higher bandwidth. Anna Hillers

  6. UMTS Total mobility Integrating other systems, UMTS will offer total mobility with a trade off between mobility and capability, leading to different levels of service InternationalRoaming Next country 2.4-9.6 kbit (rest of world) Major roads: <384 kBit City: 2 MBit Suburbs: >384 kbit <115 kbit (GSM) Anna Hillers

  7. UMTS Technical features compared with GSM UMTS is downward compatible to GSM technology but will be capable to offer advanced features beyond existing GSM systems UMTS GSM • Up to 2 Mbit mobile packet data • Up to 384 Kbit mobile video • Fixed/mobile convergence of protocols • Switching platform based on GSM II+ • Wide range of terminals: voice, data only, multimedia • Downward compatible to GSM networks • Coverage limited but roaming available • 9.6 Kbit/s data, up to 112 Kbit/s with GPRS • Up to 64 Kbit/s mobile video with HSCSD • Services similar to ISDN • GSM switching platform • Primarily voice terminals,first organiser announced • No compatibility to other networks • Full coverage, worldwide roaming Anna Hillers

  8. UMTS Development path The present differences in coverage and service between GSM and UMTS will disappear in future as GSM evolves, while UMTS expands coverage UMTS • UMTS will initially only be available in urban areas, relying on GSM outside covered areas • Early UMTS terminals will only offer limited service (speed data <64Kbit), later developing towards high speed 2Mbit/s services UMTS Service/Capacity Speed GSM GSM • GSM is the standard with highest mobility (coverage footprint) worldwide • GSM will develop data up to 384 Kbit via GPRS Coverage Anna Hillers

  9. UMTS Time schedule for introduction of UMTS The EU requirement will force UMTS licensing in most EU countries during year 2000 but Japan and UK will take the lead Licensing Preparation Licensing of UMTS I Service development Licensing of UMTS II Year 2000 in UMTS licensing period Mid 1999 UMTS auction in UK EU allows max. 12 month licensing delay License condition in D, DK, F, S (others) published March 2001, DoCoMo plans to launch UMTS in Japan Jan 2002, UMTS to be launched in Europe • The three major stakeholders are • Customers, which demand service • Telecommunications operators, which want to stay ahead of the competition • Governments, which strive for the highest price Anna Hillers

  10. UMTS Example for UMTS licensing in the UK Not only telecom companies might apply for UMTS licenses but also non-telecommunication firms such as IT-companies and equipment suppliers Non-telecom companies Telecom companies • Regional players • Cellnet • Vodafone • Orange • Hutchison • Industry Groups • Virgin 3-5 UMTS licenses are currently auctioned • IT-companies • Microsoft • Eurpean players • Vodafone-Airtouch • Telia • Deutsche Telecom • Distributor • European telecom • Fixed network operators • Internet SP • Energis • NTL • Service provider • debitel • Mobilcom • Talkline • Airtel • License includes • 4 licenses with 2x15Mhz + 5Mhz unpaired each • Service requirement: 80% population coverage =70% area by the end of 2007 • License limitation for 20 years • No mandatory roaming, but roaming expected by government Anna Hillers

  11. Evolution of wireless technology Wireless meets Internet Everything – everywhere - always Best-in-Class Segment Players Trends and Emerging Business Models Anna Hillers

  12. Client WAP Gateway Origin Server CGI Scripts etc. Encoded Request Request User Agent Encoders and Decoders Encoded Response Response (Content) Content WAP Programming Model Benefits • Globally open standard that has already reached critical mass (80% of the industry) • Enables easy, secure access to relevant Internet/Intranet information and other services through mobile phones, pagers or other wireless devices • Provides the technology to develop, deploy and support wireless application, namely e-commerce Wireless meets Internet Middleware/Critical Services WAP The wireless application protocol (WAP) is the standard for bringing content, commerce, and other value-added services to wireless networks and mobile devices. Anna Hillers

  13. Wireless meets Internet Middleware/Critical Services Bluetooth The Bluetooth phenomenon will likely have a powerful impact on this industry in the near future. Description Applications • An evolving specification of short-range radio frequency being developed with most wireless vendors and some PC manufacturers • Enables networking between devices within a range of 10 meters (30 feet through a radio frequency link in the unlicensed 2.4 gHz band) • Will be embedded in most cellular phones and laptop devices by the end of 2000 and cost between $5 and $15 per module • Will be capable of speeds approaching 1 Mbps • Backed by an alliance between Intel, Nokia, Ericcson, Toshiba, and IBM • Device-independent mobile data • User could use Bluetooth to receive an e-Mail on a PDA from a notebook without having to power on the notebook • User could access the Internet via cell phone while receiving Web pages on a laptop or PDA • Wireless access to peripherals • Connection of PCs with printers, faxes, other peripherals (e.g., PDAs) • Ad hoc conferencing • Facilitate ad hoc meetings (e.g., airports, hotels) that include data-sharing • Integration of digital cameras with mobile digital devices • Can send pictures directly from a Bluetooth-equipped camera to a PDA, notebook, or printer; or it could transmit to a wireless network Implications • Reduces burden of creating single, complicated, small devices • Improves connectivity between devices Anna Hillers

  14. Evolution of wireless technology Wireless meets Internet Everything – everywhere - always Best-in-Class Segment Players Trends and Emerging Business Models Anna Hillers

  15. Current Industry Dynamics The Global Field At this early stage of development, the market for mobile data over cellular services will be more developed in Europe and Asia than in the United States. • Thanks to the consistent GSM Europe and Asia are ahead of the fragmented U.S. market . • The U.S. have seen higher growth in part of the value chain, which is closer to the Internet (middleware, value-added services, content, commerce). • Wireless “smart” phones dominate in Europe and Asia, while PDA-based wireless units are more prevalent in the United States. Current Situation SMS Users by Region (millions of subscribers) Europe U.S. Asia/Pacific Cellular Data Users by Region (millions of subscribers) Europe U.S. Asia/Pacific Future Trends Worldwide Smart Handheld Device Shipments(millions of units) 1998–2003 CAGR • Multinational cross-border partnerships will blur geographic distinctions. • Migration toward 3G will fuel more uniform growth globally. • Mass market will fuel need for high capacity data transmission U.S. 32% Japan 42% Western Europe 38% Rest of World 67% Anna Hillers

  16. Migration to Data in Wireline and Wireless Networks 100% Incumbents Evolving to IP-Based Networks IPData Wireline Incumbents Revectoring Evolution to IP-Based Networks New Entrants Using IP-Based Networks Wireless New Entrants/Lead Incumbents Evolve to IP-Based Wireless Traffic Carried by Carrier Networks Mass Market ISP/e-Commerce 50% Sub-$100 Devices Client/Server Business (IT) Solutions Application Enablers Business/Commercial Network Improvements Lower $/MOU Browser (Netscape) Technology Adoption Micro-Browsers Air Interface Improvements Incumbents Focused on Voice Voice Mass Market Voice 100% 1990 1995 1998 2002 2005 Source: Nortel Networks and the Yankee Group. KeyMessages • Wireless will follow wireline model. • Network evolves to an IP architecture as data traffic carried over the network increases (more than 50 percent). Current Industry Dynamics Wireline Versus Wireless Networks Growth of Data Traffic We have seen explosive growth of data traffic over wireline networks in the past 10 years. In the next five to seven years, an analogous explosion will occur over wireless networks. Market Growth Forecasts “The compound annual growth rate (CAGR) for wireless data from 1996 through 2003 is projected to be 35%. The market is expected to reach close to $2.5 billion by the year 2002.” Source: Frost & Sullivan Market Research. “Two million wireless data subscribers existed in 1997. Over 40 percent average annual growth is expected through 2002.” Source: U.S. Mobile Data Marketplace. Anna Hillers

  17. Convergence Customers Convenience Convenience Simple Text Corporate/ Institution Wireless Connectivity e-Mail Business PC Usability and Power Internet Access Content Consumer Commerce The convergence of three strong and powerful industries is creating a flood of opportunity. Applications, once confined to large corporate infrastructure, are finally becoming available and affordable to the mass market. The true potential has yet to be realized. The evolution of advanced content and commerce will cause this market to explode. Current Industry Dynamics Technology meets customers Opportunities in the mobile data market are immense. Anna Hillers

  18. Technology Barriers Market Barriers Device Ergonomics (Form Factor) Lack of “Killer” Apps Data Security Cost of Access Data Throughput Cost of Handheld Devices Network Reliability Network and Technology Standards Pricing Models Integration of Various Components Perceived Value to Customer Current Industry Dynamics Technology and Market Barriers Several technology and market barriers exist to impede the rapid development of wireless data services. Anna Hillers

  19. Technology Trends Market Trends Throughput GPRS, EDGE and UMTS will increase transmission speed Lack of “Killer Apps” Intranet/extranet browsing is vital to mobile work force Network Reliability Network coverage and infrastructure is improving (build-out) Cost of Access Prices will fall similar to the wire line industry Device Ergonomics SIM Applications, WAP will improve the interface Increased Customer Value Devices with server-based micro-browsers cost considerably less than devices with built-in micro browsers Equipment and middleware providers are addressing security Data Security Cost ofHandheld Devices WAP is becoming a standard protocol, Migration paths to 3G are developed Networkand Technology Standards Pricing Models Providers must develop new pricing schemes Integration of Various Components Bluetooth will improve connectivity Current Industry Dynamics Technology Barriers Current Initiatives Trends indicate that most of these technology and market barriers are expected to be addressed in the next two years by several key enablers. Anna Hillers

  20. Type of Service Content e-Mail Services Drivers of Mass Market Adoption Internet Access Intranet Access WirelessKnowledge Large-Scale Use of the Internet andDependence on It Text-Based Information Services News Financial Travel Improved Reliability and Speed of Wireless Networks Weather AccuWeather Sports Entertainment Development ofData-CapableInformation Devices Content Aggregators and Distributors e-Commerce Current Industry Dynamics Mobile Data Mass Market Applications Over time, as wireless technology and the Internet have evolved, mobile data services have finally begun to penetrate the mass end-user market. Anna Hillers

  21. Evolution of wireless technology Wireless meets Internet Everything – everywhere - always Best-in-Class Segment Players Trends and Emerging Business Models Anna Hillers

  22. IT Telecom Infra-structure Access Devices Carriers Middleware/ Critical Services Value-Added Services Content Commerce Create Technologies and wireless architectures Phones Pagers PDAs etc. Provide wireless voice access or Internet access Software that optimizes networks and Browser capabilities Large range of services: Synchronization, Commerce enabling applications, Document compatibility Create and bundle Content for providers Provide Application tools Common Web Commerce services Key Issues to Understand • What role does the segment play? • Who are the leading participants? • What are the most significant trends in each segment? The Wireless Value Chain To best capture the abundance of opportunities available in this growing market, we must understand the dynamics of each value chain segment. Anna Hillers

  23. WWW Wireless Value Chain From Content to Customer Today, multiple content distribution models exist – some models gain advantage of value chain disintegration, by providing more direct service Carrier Value Added Services Content Sources WirelessDevice • Online Anywhere software converts Yahoo! content to a wireless format in real time Customized and Packaged Data Services WirelessDevice Value-Added Information Reseller Selected Network of Content Providers • Reuters • CNN • The Weather Channel • Infospace.com • Intelligent Information Incorporated Carrier Network and Proxy Server (Phone.com) WAP-CompliantDevice Content inWML Format Web Content in HTML Format • Converts HTML Web documents into WML, thus readable by WAP-compliant wireless devices Anna Hillers

  24. Market Forces by Value Chain Segment Access Devices The wireless access device serves a critical function as the primary interface between the user and data applications. Wireless Handsets PDAs Mobile Computers Modem Devices Others QualcommPDQ Phone Sharp Mobilon Tripad Sierra Wireless Aircard 300 Rocket eBook from NuvoMedia 3Com Palm VII • Europe/Asia will see first devices • Data entry methods will also need to improve • Windows CE-based PDA will become an increasing threat to Palm dominance • Increased competition • An extremely large market will open up when throughput rates increase to 115 kbps and beyond • Market will flourish since it is a compelling alternative to purchasing wireless-ready devices • Wireless applications for nonstandard devices will begin to gain acceptance as the market continues to mature Anna Hillers

  25. Best-In-Class Segment PlayersAccess Device 3Com Palm Products (Palm VII) Palm computing has shot to the forefront of convenient, handheld Internet access products with the introduction of the Palm VII. Key Success Factors • Maximize revenue streams from product sales, service, licensing and commission on commerce • Increase customer base through shift from “organize” to “access” information Key Initiatives and Strategic Direction Effectiveness • Hundreds of content providers signed up for content provision • Wireless manufacturers are creating wireless attachments • Joint venture with Aether to form Open Sky – offer services nationwide over any standard • Connection speed is limited at 8 kbps • Pricing structure somewhat limited in usage. • Limited success for the Palm because of distribution only in New York. Technical, billing, customer support, and other issues need to be worked out as well. pdQ-800 pdQ-1900 Target Market and Services Business Model Strategic Positioning • Consumer and business markets. • Device offerings include the Qualcomm PDQ phone and the Palm VII. • Internet access and wireless services available through BellSouth’s Wireless Data network covering 260 U.S. regions • Revenue streams: product sales, recurring service revenues, licensing agreements and commissions on commerce transactions • Service provided is branded by Palm (Palm.net). Service revenue potential ranges from a cost of $120 to $300 per year, shared with Palm • First to market, solid reputation, brand name recognition • Palm VII has a slight change in target market: Goes from “people who want to organize their information” to “people who want to access information.” Anna Hillers

  26. Market Forces by Value Chain Segment Carriers The growth of wireless subscribers, coupled with strong Internet growth, are the primary drivers for the service provider market and will lead to new relationships and increased competition between carriers • An increase in Internet use results in increased air-time for service providers, and increased revenue per user. • Ability to provide Internet and e-Commerce-based services will increase “lock-in” and reduce churn. Opportunities: Internet + Wireless = • New relationships between network operators, IPS and wireless equipment manufacturers all aiming to provide wireless access and content • Incumbents and new entrants are racing to sign up content providers and establish relationships Equipment Manufacturer Network operator ISP Anna Hillers

  27. Best-In-Class Segment PlayersCarrier GoAmerica GoAmerica is a new breed of service provider that specifically targets the mobile data market. Key Success Factors • “one-stop” shopping concept for nationwide wireless data services through strategic partnerships with equipment makers and content providers • Focuses on building brand image Key Initiatives and Strategic Direction Effectiveness • Formed partnerships with Yahoo and Ericsson Wireless Solutions • Reached strong market penetration for its services • Teams up with best-in-class players to provide its services Target Market and Services Business Model Strategic Positioning • Offers services to corporations carriers, and mobile professionals. • Offers an interactive Web content service • Service is compatible with several popular devices. • Resells air time from AT&T. • Acts both as a content aggregator as well as a wireless service provider and provides content aggregation services on a wholesale basis. • Offers wireless services to traditional ISP • Positions itself as the leading nationwide wireless ISP • Partners with best-in-class service providers, content providers and device manufacturers such as AT&T, 3Com, BellSouth Wireless Data, and Wireless Knowledge Anna Hillers

  28. WAPProtocol Stack Other Server-Based Middleware GPRS SAMA+ CDMA+ IS95-B SMS Other WAPClient Other Device-Based Middleware (Nettech’s InstantRF, Smart IP . . .) MicroBrowser e-Mail Fax Other Windows CE Symbian’sEPOC 32 Apple’sNewton Market Forces by Value Chain Segment Middleware/Critical Services The middleware segment includes a broad variety of software solutions, often consisting of a client/server architecture designed to optimize the mobile link. Illustrative www-Protocol Stack Server-Level Middleware Network Protocol Client-Level Middleware Device Value-Added Servicesand Applications Device OS Anna Hillers

  29. Best-In-Class Segment PlayersMiddleware/Critical Services Phone.com Phone.com’s positioning as the converter of mass market phones to wireless “companions” has been a huge success. Key Success Factors • Positioning as the ubiquitous standard for wireless Internet applications (creator of WAP) • Market leadership with strong penetration to all major carriers and manufactures worldwide. Key Initiatives and Strategic Direction Effectiveness • 75% of the wireless phone browser market under multi-year contracts to embed its product into new devices • 31 global carriers under multi-year contracts, some of which are prepaid licenses • Contracts with a lot of manufacturers to use technology in their next phone generation • Phone.com’s unique platform is the only integrating Internet and wireless system. • “push” data to its customers, increase customer loyalty (by reducing churn), and raise potential revenue per user (RPU) are strong incentives for carriers and phone subscribers to use Phone.com’s technology. Target Market and Services Business Model Strategic Positioning • Offers platforms for carriers and for device manufacturers, Content, and Network Management Systems • Software optimized for mass market wireless telephones, supports all wireless protocols, and is operating system and processor-independent. • 2 sources of income: Serves as a bridge between device manufacturers and carriers • Push Server technology allows for increased revenue potential • Network management and content applications cater to carrier and developer markets, respectively • First-to-market leader in wireless and Internet integration (Former Unwired Planet) • Set the standard for wireless data services through its leadership of the WAP forum. • Major competitive threats are Nokia, Ericsson, and Microsoft Anna Hillers

  30. Market Forces by Value Chain Segment Value-Added Services Value-added software providers create applications to enhance the ease with which wireless/Internet devices function. Sample Value-Added Service Offerings Synchronization • The segment is very young and highly fragmented. • Many services, once considered value-added— such as e-Mail—are now essential. • Large device manufacturers are generally not as concerned with true interoperability as the consumer; therefore, the role these entrants play will be important. • Some device manufacturers have shown strong, proactive interest in developing these services, as evidenced by Motorola’s involvement in Starfish. • Overall, this segment will continue to grow rapidly. Conversion of Software Information Management Access Software for Content and Applications Anna Hillers

  31. Best-In-Class Segment PlayersValue-Added Software AvantGo With its product expertise in transforming “Web content” to “wireless data” and its capability to aggregate numerous content partnerships, AvantGo is positioning itself to become a true “wireless portal.” Key Success Factors • Strives for industry leadership through high profile partnerships • Bundles e-Commerce opportunities with content channels Key Initiatives and Strategic Direction Effectiveness • "wireless portal” for Palm OS and Windows CE devices, like AOL for desktop PCs • Bundling agreements on devices from HP, Phillips, Casio, Palm Computing, IBM, and Symbol • 40 Fortune 500 companies use AvantGo to provide mobile information • Supports hundreds of thousands of registered users of both Palm OS and Windows CE handheld devices Target Market and Services Business Model Strategic Positioning • Enterprise product and a free consumer service. • Scalable solution for transferring data and applications onto handheld computers. • Personalized content offline or wirelessly in real time—anytime, anywhere Compatible with PalmOS/Windows CE platforms • Mobile enterprise solutions and Web-based application hosting to Fortune 1,000 companies • Partnerships with a variety of content providers • Free service as a promotion for business solutions • Spearheading the Mobile Link initiative, an open industry standard for connecting mobile devices to server-based applications • Microsoft and 3Com are investors. AvantGo serves as an independent software vendor (ISV) to both Anna Hillers

  32. Market Forces by Value Chain Segment Content In today’s wireless data market, there are three main groups of companies that are providing content to all types of wireless devices. Information Suppliers Value-Added Information Resellers Web Portals Description • Media and news companies that author, publish, and syndicate content • Act as intermediaries by aggregating, customizing, and transforming Web content • Resell content and services primarily to carriers and/or end-users • No brand presence on the Web • Act as intermediaries by aggregating, customizing, and transforming Web content • Large brand presence and subscriber base on the Web Players • CNN • Reuters • The Weather Channel • Fidelity • Intelligent Information Inc. (iii) • AvantGo.com • GoAmerica • Infospace.com • @Mobile • Palm.net • Yahoo! Mobile • MSN Mobile • AOL Anywhere Features • Basic news, financial and weather information • Personalized content including news, financial information, and weather alerts • Limited content • e-Mail, calendar tools, and targeted e-Commerce • Personalized content including news, financial and entertainment information • Large breadth and depth of content • e-Mail, calendar tools, and e-Commerce Anna Hillers

  33. Best-In-Class Segment Players ContentYahoo! Yahoo! is positioning itself to be the leading content provider for wireless Internet users. • Continue to build strategic content distribution agreements with a number of wireless service providers. • Increase revenue stream by incorporating more content-driven commerce opportunities and value added services. Key Success Factors Key Initiatives and Strategic Direction Effectiveness • Acquired Online Anywhere, a provider of Web delivery solutions for non-PC appliances, which tackles the non-PC market • Announced several wireless content distribution agreements: PageNet, Sprint PCS, Palm Computing • Strong commitment and investment by Yahoo! • Difficult to assess since wireless Internet access and content distribution is in a very early stage Target Market and Services Business Model Strategic Positioning • Users of Palm and Microsoft CE computing platforms • Markets Yahoo mobile! Via Yahoo site • Targets Yahoo!’s existing 35 million subscribers and that of its wireless partners’ (Sprint PCS, PageNet) • “Stickiness” shall generate revenues through Yahoo online storefront and auction site • Fees for the distribution of personalized news and content alerts to pagers and PDAs • Personalized content and direct marketing • First portal to align itself with a service provider to provide Web access • Wireless partners for access to Yahoo content “anytime and anywhere” • International expansion Anna Hillers

  34. Online Banking Auctions • Players • Wellsfargo.com • Paybox.com • Citibank Online Stock Trading • Banks will push their services to wireless users • eBay and SkyTel have partnered to provide auctioning services to SkyTel’s two-way paging customers • Discount brokerages already offer wireless stock trading • Fidelity has teamed up with Palm to offer brokerage services • Players • eBay • onsale.com • Yahoo! auctions • Players • Fidelity • e-Trade • Mydiscountbroker.com Entertainment • Showtimes.com currently transmits showtimes to Yahoo! mobile users; next step is to sell tickets • Look for traditional ticket houses to sell tickets wirelessly Retail • Books and CDs represent low-cost impulse purchase opportunities for wireless users • Expect significant wireless e-Tailing Travel • Players • Travelocity • Expedia.com • Biztravel.com • Ability to purchase airplane, train, and bus tickets and reserve car and hotel reservations • Players • Ticketmaster.com • Showtimes.com • Players • Amazon.com • Buy.com • Barnesandnoble.com Market Forces by Value Chain Segment Commerce With WAP as a standard and mobile Internet access growing, wireless e-Commerce is set to explode. Wireless User Anna Hillers

  35. Best-In-Class Segment PlayersContent/Commerce Intelligent Information Incorporated Intelligent Information Incorporated is striving to make the user experience more personalized, a key success factor in this industry. • Increase number of content distribution partnerships with wireless service providers • Expand content and services to meet the immediate and high value-added needs of users Key Success Factors Key Initiatives and Strategic Direction Effectiveness • Partnered with AT&T Wireless to provide personal news service for its digital/PCS subscribers. • Customer base: 50% of the largest U.S. paging carriers and 8 PCS/digital cellular carriers • Ability to customize information leads to reduced churn and increased revenue per user through longer on-phone times and more outbound calls. Target Market and Services Business Model Strategic Positioning • Provides wireless personalized and customizable information and consumer e-Commerce services by creating a “wortal” • Markets content and services to wireless carriers and media enterprises • Revenue through the distribution of content to wireless service providers and new media enterprises. • Value-added services to wireless carriers: customer care and billing for news services • Cooperation with Nokia for activities focused on supporting WAP and the growing demand for mobility • Developing local/national content Anna Hillers

  36. Evolution of wireless technology Wireless meets Internet Everything – everywhere - always Best-in-Class Segment Players Trends and Emerging Business Models Anna Hillers

  37. How would wireless E-Commerce be marketed? What Type of e-Commerce Opportunities Should Be Delivered? Who Keeps the Transaction Revenues? Banner Ad User Content Trends and Emerging Business Models Trends Partnership and alliances fuel the current evolution, however it is unclear how the customer can reached and who “owns” him or her Anna Hillers

  38. Palm.Net Emerging Business Models The Device-Centric Model The new Palm model is a compelling example of how a device manufacturer can capture value in this new industry. Infrastructure Access Devices Carriers Middleware/ Critical Services Value-Added Services Content Commerce CustomerExperience User logs on to Palm.net mySimon.com User auctions for product on eBay User compares prices and reads reviews through mySimon.com Customer purchases Palm VII device Additional potential recurring revenue stream $$ $$ $$ ValueCaptured $600 “Traditional” revenue stream Retail price $10–$25 per month mySimon and other content providers strike deals to embed software on Palm Palm earns commission on transaction Anna Hillers

  39. Infrastructure Access Devices Carriers Middleware/ Critical Services Value-Added Services Content Commerce Select Content/Commerce Partnerships Wireless WWW Customer Pays for Network“Air Time” and Access to Content Select Content and Commerce Partnerships Trends and Emerging Business Models The Carrier Owns All In a carrier-centric model, the carrier truly “owns all”—the service, the content, and most importantly, the customer experience. • Customer pays carrier for network “air time” and access to content. • Models can vary: Subscription-based, pay-as-you-go, and “free device/charge for service.” • Carriers pay content aggregators and suppliers. Revenue Flows Anna Hillers

  40. Infrastructure Access Devices Carriers Middleware/ Critical Services Value-Added Services Content Commerce Wireless Trends and Emerging Business Models The Wireless Portal: “Wortal” In the “wortal” business model, established Internet portals still provide free content, thus successfully owning the customer in the wireless world. WWW Pays for “Air Time” and Not Content Other Companies Pay for Advertisements andMarketing Services Selected Content/Commerce/Applications • Customer pays carrier for network “air time” (i.e., flat monthly service fee or per-minute usage rate). • The “wortal” earns revenues from advertising and targeted marketing services for e-Merchants. • Content is free for end-user. Revenue Flows Anna Hillers

  41. Success? • Commitment of big players • Mobility is a customer need • 3G = ww success like GSM • 2 Mbit/sec will be needed + Wireless Internet • Bubble? • Volatile stock markets • Fierce competition • 3G = 3rd generation or third failure • Inherent fixed infrastructure, 2Mbit/sec = overkill? Trends and Emerging Business Models Summary The success or failure of wireless Internet will depend on the capability of all participants to offer superior value to the customer Anna Hillers

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