Wednesday, March 08, 2006

Mobile commerce gets renewed push - Reuters / Billboard

Tue Mar 7, 2006 9:13 PM GMT169



By Antony Bruno

LOS ANGELES (Billboard) - Depending on who you believe, mobile commerce is either enjoying a renewed lease on life or simply heading into another hype loop destined to disappoint.

In the late '90s, mobile commerce was hailed as a "killer app" for Internet-enabled wireless devices when the wireless industry was convinced people would use their mobile phones to buy everything from vending-machine sodas to tickets for rock concerts and even books from amazon.com.

But like many much-hyped wireless initiatives, the reality never materialized. Major corporations like Ticketmaster and Wells Fargo discontinued m-commerce initiatives after they failed to catch on with the public.

The problem was that for all its marketing potential, mobile phones remained lacking as a purchasing tool for all but the simplest transactions.

M-commerce's potential is based on instant gratification. Customers can browse, purchase and, for digital goods, have delivered a wide variety of content and services, all from their mobile phones. But the laborious process of entering credit card information -- whether verbally or via the phone keypad -- takes the "instant" out of the equation.

"Those experiences really aren't great on wireless phones right now," says David Goldberg, executive VP of strategy and business development for Ticketmaster.

On the surface, it seems simple to just add payments to the monthly mobile phone bill, which is what carriers do to sell mobile content like ringtones, music, games and other services.

But this content is often directly offered by the wireless carrier that has control over every element of the transaction from discovery all the way to delivery. Although carriers will add charges for content or services from third-party providers in certain cases, it is hardly a cure-all.

First, it takes time. Carriers are extremely protective of customer relationships and billing systems and are wary about who they partner with for such "billing on behalf of" services, as they are known.

Second, operators limit the amount that can be charged to the phone bill, which makes it difficult to buy a $400 Rolling Stones ticket with a phone.

Third, carriers want a cut of the sale, which ultimately raises prices.

Efforts are under way to route mobile charges through customers' banking accounts -- either existing or customized. It is no small task.

"There's a lot of difficulty both in technology and in terms of logistics with relationships and negotiations that have to take place," Goldberg says. This includes navigating a complex Web of partnerships among banking institutions, wireless operators and retailers, not to mention establishing consumer trust.

In early February, the network infrastructure arm of Motorola picked up this gauntlet. The company unveiled its M-Wallet system, designed to let users link multiple accounts in a virtual bank that can be used to pay for various items. This includes access to bank debit, credit and checking accounts, as well as merchant-branded gift and loyalty cards.

Only customers whose wireless carrier has implemented the system and who download the program to their mobile phone will be able to use it. Motorola expects to announce wireless carrier partners in the next two months.

According to Motorola director of business development Sarab Sokhey, the company will then take on the heavy lifting to convince various banking institutions to participate. It will also work with vendors to manage their gift- and loyalty-card programs.

"We will manage the whole process," Sokhey says, adding that he is in advanced discussions with several nationwide retailers. "The large retailers are the ones we are targeting."

Before the end of the year, Motorola hopes to extend the system to physical transactions as well, essentially replacing credit cards.

Phones equipped with a certain type of chip can transmit users' account information to specially designed scanners at point-of-sale terminals, allowing them to be "swiped," similar to a credit card.

This is a different technology than that used to scan bar codes displayed on mobile phone screens, which existing bar code scanners have difficulty reading.

It offers physical retailers the ability to get in the game -- issuing opt-in customers wireless coupons that could be redeemed at registers.

Nokia and Cingular are testing such a system at Atlanta's Philips Arena. Season ticket holders with certain models of Nokia phones that contain this chip can use them at concession stands, with charges coming from mobile wallet accounts.

Eventually, the technology may advance to the point where mobile phones can "scan" ads or posters with similar chips embedded in them to request more information and ultimately make a purchase.

Of course, these kinds of grand predictions have been made before. But the market and the technology has matured since then. Online banking has become mainstream. U.S. wireless subscribers bought $600 million in ringtones with their phones last year alone.

The pieces are there. If all involved just make it easier this time around, m-commerce could have a real shot at success.

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