Tuesday, August 08, 2006

M-commerce article on Financial Express

M-commerce reverses paradigms
Posted online: Monday, August 07, 2006 at 0018 hours IST

Internet and mobile commerce, which are often taken to be alternative methods of transacting business, are in fact reverse paradigms. Internet space is horizontal, inhabited by the web sites of both small and large businesses – servicing a very large but general information browsing need. A small but a growing population of these sites is focusing on the specific needs – which are in fact Internet verticals.

Mobile commerce, which is currently struggling to establish its ground, will eventually evolve as verticals. These verticals will initially be local to each operator before they become globally accessible. The globalisation will in fact blur the verticals into a horizontal market

The difference in their evolutions is a result of how each is used and applied. Mobile commerce supports an “on the go” business model and draws its strength from the applications, which have a strong synergy with mobility. Internet has evolved as a solution that synergises with an environment over which the user has a greater control like an office or a home. The user likes to sit back, research, evaluate and ponder over the outcomes before it makes decisions. “On the go” usage is prescriptive, compulsive and requires quick decision making. This naturally leaves out those applications that require a different treatment.

i-mode knowingly or unknowingly was designed and positioned as mobile Internet – mobile access to Internet or horizontally inhabited spaces that are local to the operators. i-mode supports an operator specific horizontal ecosystem of about 90,000 sites in Japan and a “bit pipe” business model – which draws its revenue from the traffic going to all those sites and the sale of content that drives that traffic. This business model though it takes its genesis from Internet has had very limited success for the lack of verticals that synergize with “on the go” needs.

Most of the mobile Commerce initiatives launched in the last five years are i-mode “me too”, with their promoters little appreciating that the limited success that i-mode has enjoyed does not come from the horizontal paradigm but from a small number of verticals like mobile mail – an application that disrupted the market and drove 50,000 new subscribers day after day to subscribe to it. The same business model is struggling in Europe, Australia and Singapore.

South Korea, in its obsession to replicate its DSL success in the mobile space is grossly missing the subtle difference in the roles of fixed and mobile technologies. People buy solutions but not technologies. Technologies enable solutions to deliver a greater value and each technology synergizes differently with a given solution – delivering a different value system. That is exactly my point.

It is a fallacy to assume that mobile commerce will evolve as mobile Internet, just because both of them use mobile as the means of access. In fact, both have their own value systems, which largely dictate their role and application – hence their success in the market place

Mobile Internet, the driving force behind WiBro in Korea is a fallacy in short and medium terms. People will use mobile in a very small way to access Internet as a horizontal paradigm but would certainly like to use mobile in a big way to access lifestyle and business specific applications — which will address their needs while “on the go”. These needs are very specific and hence will be very limited in numbers, at least to start with. These specific needs will drive the vertical applications.

WiBro will not succeed as mobile Internet and any attempt to package it as DSL will not help its usage either. What in fact will help it to succeed is applying it to access verticals. However, operators may find it difficult to swallow as they have build their business models as an access mechanism to horizontal spaces.

The message is crisp and clear – mobile commerce is a different paradigm to Internet and any future attempt to replicate the latter’s success in mobile space will be an absolute fallacy.

The writer is a former professor, Korea University Business School

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