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Mobile Commerce Takes Off

  • ID: 63211
  • Report
  • April 2004
  • 195 pages
  • Telecom Trends International (TTI)
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This study provides a comprehensive assessment of current status and emerging trends in mobile commerce. It quantifies and forecasts the m-commerce market, covering
- digital content
- online shopping
- financial transactions
- POS retail
- proximity payments
- marketing and advertising and enterprise segments

The report examines developments in digital content with particular emphasis on downloadable games, ring-tones and music, video and TV services. The report covers all the major regions of the world with particular focus on Asia-Pacific, Europe, and the United States. The report analyzes factors impacting m-commerce particularly security and billing, and analyzes business and pricing models suitable for m-commerce.

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1 EXECUTIVE SUMMARY

1.1 Overview

1.2 Summary of Key Findings

1.2.1 Current Trends

1.2.2 Emerging Trends

1.2.3 Market Forecasts

2 SCOPE, METHODOLOGY, TARGET AUDIENCE, AND AUTHOR

2.1 Scope

2.2 Additional Related Information

2.3 Methodology

2.3.1 Interviews

2.3.2 Additional Primary and Secondary Research

2.3.3 Trend Tracking
2.3.4 Global Subscriber Forecasts

2.3.5 Global Revenue Forecasts

2.4 Target Audience

2.5 About the Authors

2.5.1 Susan Welsh de Grimaldo

2.5.2 Naqi A. Jaffery

3 DEFINING M-COMMERCE

3.1 Overview

3.2 An Evolving Definition of M-Commerce

3.3 Company Perspectives

3.4 M-Commerce Broadly Defined

3.5 Categories Included in Broadly Defined M-Commerce

3.5.1 Remote Transactions

3.5.1.1 Digital Content Downloads

3.5.1.2 Streaming Media

3.5.1.3 Services/Semi-Tangibles

3.5.1.4 Tangible Goods
3.5.1.5 Marketing and Promotions

3.5.1.6 Financial Transactions

3.5.1.7 Customer/Constituent Services

3.5.2 Proximity Payments

3.5.2.1 POS for Tangible/Semi-tangible Goods

3.5.2.2 M2P/P2M Transactions

3.6 Question: What Is and Is Not M-Commerce?

3.6.1 Promos and Freebies: No Revenue Generated from Consumer

3.6.2 Free Monetary Transaction Services and Payment for Other Services

3.6.3 Trivia Games and Voting: Entertainment, Marketing, or M-Commerce

3.6.4 Only Part of Transaction Completed on Mobile Device

3.6.5 Wi-Fi, Bluetooth, and Wireless WAN Connections on Laptops, PDAs

4 EVOLVING M-COMMERCE: MARKET STAGE AND DEVELOPMENT

4.1 Today’s Nascent Market Stage
4.1.1 An Early Stage Market

4.1.2 Market Stages

4.1.3 M-Commerce Market is Changing Fast

4.2 Global Market Trends and Market Stage by Category

4.2.1 Digital Content

4.2.2 Downloadable Applications

4.2.2.1 BREW

4.2.2.2 Java

4.2.2.3 i-mode

4.2.2.4 Downloadable Mobile Games

4.2.3 Mobile Multimedia

4.2.4 Location-Based Services (LBS)

4.2.5 Messaging for M-Commerce

4.2.5.1 Short Codes and SMS

4.2.5.2 Premium SMS

4.2.5.3 MMS

4.2.5.4 Push MMS for Mobile Video Streaming
4.2.6 Mobile Payments

4.3 Case Study: Walt Disney Internet Group

4.4 Trends and Market Stage by Region

4.4.1 Regional Comparison

4.4.2 Asia-Pacific

4.4.2.1 Japan

4.4.2.2 South Korea

4.4.2.3 China

4.4.2.4 Australia

4.4.3 Europe

4.4.3.1 Vodafone

4.4.3.2 T-Mobile

4.4.3.3 Orange

4.4.3.4 mmO2

4.4.3.5 Hutchison’s 3

4.4.3.6 TeliaSonera

4.4.3.7 Telefónica Móviles España

4.4.4 North America

4.4.5 Latin America

4.5 What’s Next? M-Commerce Evolves

4.5.1 Messaging Moves to Content
4.5.2 Transactions Become More Interactive as P2P Takes Off

4.5.3 Digital Content Trends

4.5.3.1 Video and Multimedia

4.5.3.2 Games

4.5.3.3 From Ring-Tones to Ring-Tunes
4.5.3.4 Evolution of Storefront for Digital Content

4.5.4 Brand Involvement in Mobile Markets

4.5.5 Mobile Payments and Purchases: From Digital Content to Tangibles?
4.5.6 Consumers to Enterprise? From Early Adopters to Mass Market

4.5.6.1 Age Groups

4.5.6.2 Enterprise

4.5.7 Timeframe for M-Commerce Evolution
4.5.7.1 Recent History

4.5.7.2 Near-Term/Short-Term (Within One Year)

4.5.7.3 Mid-Term (One-to-Three Years)

4.5.7.4 Long-Term (Three Years or More)

5 MARKET ENABLERS

5.1 Devices

5.1.1 Handset Replacement Cycle
5.1.2 Terminal Development Trends

5.1.3 User Interface (UI)

5.1.4 Out-of-Box Capabilities

5.1.5 Operating Systems (OS)

5.1.6 Browsers
5.1.7 Multimedia: Audio, Graphics, Video

5.1.8 Personalization and Settings

5.1.9 Multimode Phones

5.1.10 Connectivity Solutions

5.1.11 Device Proliferation and Segmentation

5.2 Network
5.2.1 Network Upgrades
5.2.2 Location-Based Services (LBS)

5.2.3 Future Network Trends

5.3 Platforms Supporting M-Commerce and Related VAS

5.3.1 Requirements of M-Commerce Platforms

5.3.2 E-Commerce Solutions

5.3.2.1 E-Commerce Platforms

5.3.2.2 Content Publishing, Aggregation, Delivery and Charging

5.3.2.3 Enabling Tools

5.3.2.4 Location-Based Services

5.3.3 Role of Mobile Messaging

5.3.3.1 SMS and MMS as Delivery Mechanisms

5.3.3.2 Messaging Solutions

5.3.4 BREW

5.3.5 Java/J2ME

5.3.6 NTT DoCoMo’s i-mode

5.3.7 Payment Mechanisms

5.3.7.1 Charge to Mobile Bill

5.3.7.2 Use of SMS in the Payment Process

5.3.7.3 Mobile Wallet

5.3.7.4 Server Wallets

5.3.7.5 Smart Cards

5.3.7.6 Interactive Voice Response (IVR)

5.3.7.7 Point-of-Sale (POS)

5.3.7.8 Other Local/Proximity Payments

5.3.7.9 Simpay

5.3.7.10 Mobipay

5.3.7.11 paybox.net AG
5.3.7.12 Valista

5.3.8 Billing/Back-End Systems

5.4 Digital Rights Management (DRM)

5.5 Security Features

5.5.1 Authentication

5.5.2 Non-Repudiation

5.5.3 Confidentiality and Integrity

5.6 Standards and Interoperability

5.7 Development Tools, Extensions, and Application Features
5.8 Navigation: UI at the Distribution Level

6 MARKET DRIVERS

6.1 Demand Drivers

6.1.1 Culture and Events

6.1.2 Age and Familiarity with the Internet and Mobile Devices
6.1.3 Devices

6.1.3.1 Cool

6.1.3.2 Color

6.1.3.3 Low Price Points for Cool, Color Handsets

6.1.3.4 Device Segmentation

6.1.3.5 Multimedia: Sound Quality and Video as Drivers

6.1.3.6 Packaging and Out-of-Box Functionality

6.1.3.7 Handset Subsidies
6.1.3.8 Enterprise Device Functionality

6.1.4 Market Segmentation

6.1.5 Services, Applications, and Content

6.1.5.1 What Types of Consumer Content and Services Are Best for Mobile?

6.1.5.2 What Is Driving Sales?

6.1.5.3 Drivers of Digital Content Purchases

6.1.6 POS Payment Drivers

6.1.7 Market Scale and Viral Marketing

6.1.8 Marketing and Consumer Education

6.1.8.1 Catalog and What’s New

6.1.8.2 Retail and Demos

6.1.8.3 Trial Offers and Special Promotions

6.1.8.4 Alerts

6.1.8.5 Wired Websites

6.1.8.6 Early Successes

6.1.9 Ease of Use/Usability

6.1.10 Flexible, Clear Pricing

6.1.11 Prepaid

6.1.12 Enterprise Drivers
6.2 Operator Drivers

6.2.1 Competition and Need for New Revenue Streams

6.2.2 Operator Sales Force Drivers

6.3 Developer Drivers

6.4 Drivers of Brand Involvement

7 CHALLENGES M-COMMERCE STILL FACES

7.1 How to Get from Here to There

7.2 Business Case and Models: How to Make Money on M-Commerce

7.3 Developing the Right Partnerships

7.4 Figuring Out Content, Applications, and Service Offerings
7.4.1 Location-Based Services (LBS)

7.4.2 Enterprise

7.5 User Experience

7.5.1 Ease of Use and Consistency

7.5.2 Navigation

7.5.3 Personalization

7.6 Figuring Out Pricing Models

7.6.1 Consumer Mindset
7.6.2 Operator Incentive

7.6.3 Content Aggregator and Developer Incentive

7.6.4 Prepaid M-Commerce

7.7 Development Costs and Other Developer Issues
7.8 Marketing M-Commerce and M-Commerce for Marketing

7.9 Educating Consumers

7.10 Sales Force Training and Incentives

7.11 Customer Relationship Management and Customer Care Costs

7.12 Billing and Operations

7.12.1 Need for Synchronization

7.12.2 Challenges of Legacy Billing Systems

7.12.3 Challenge to Support Multiple Payment Options: Micropayments, BOBO, Cash

7.12.4 Need for More Complex Settlement Scenarios

7.12.5 Defining Who Has Liability

7.12.6 Sharing Commissions on POS Sales

7.13 Network Challenges

7.14 Device Challenges

7.15 Security

7.16 Privacy

7.17 Spam

7.18 Viruses

7.19 Need for Standards

7.19.1 POS Solutions

7.19.2 Digital Rights Management (DRM)

7.20 Interoperability and Roaming

7.21 Economy, Financial Markets

7.22 Regulation

8 FORECASTING M-COMMERCE

8.1 Overview
8.1.1 The Challenge of Forecasting M-Commerce

8.1.2 What the Forecasts Show
8.1.2.1 M-Commerce Users

8.1.2.2 M-Commerce Revenues

8.1.2.3 M-Commerce Transaction Categories

8.1.3 Global Forecasts
8.2 Global M-Commerce Users
8.2.1 Methodology

8.2.1.1 Addressable Market

8.2.1.2 Adoption Rate and Key Adoption Factors

8.2.2 M-Commerce User Forecasts

8.2.2.1 Global M-Commerce Users by Region

8.2.2.2 Global M-Commerce Users by Category

8.3 Global M-Commerce Revenues

8.3.1 Methodology

8.3.2 M-Commerce Revenue Forecasts

8.3.2.1 Global M-Commerce Revenues by Region

8.3.2.2 Global M-Commerce Revenues by Category

9 CONCLUSIONS & RECOMMENDATIONS
9.1 Conclusions

9.1.1 Defining M-Commerce

9.1.2 M-Commerce in Context

9.2 Key Findings

9.2.1 Current Global and Regional M-Commerce Trends

9.2.2 What’s Next? Evolving Trends in M-Commerce

9.3 Recommendations

9.3.1 For Operators

9.3.2 For Technology Vendors

9.3.3 For Merchants and Brands
9.3.4 For Financial Institutions

9.3.5 For Industry Associations

9.3.6 For All Players Across the Value Chain

APPENDIX I: VODAFONE

APPENDIX 2: LIST OF ACRONYMS

LIST OF TABLES
TABLE I: GLOBAL M-COMMERCE USERS BY REGION (2003 - 2008)
TABLE II: GLOBAL M-COMMERCE USERS BY CATEGORY (2003 - 2008)

TABLE III: TYPICAL PRICING FOR BREW DEVELOPER APPLICATION PRICE (DAP)

TABLE IV: GLOBAL M-COMMERCE REVENUES BY REGION (2003 - 2008)

TABLE V: GLOBAL M-COMMERCE REVENUES BY CATEGORY (2003 - 2008)

List of Exhibits
EXHIBIT 1: GLOBAL M-COMMERCE USERS BY REGION, 2003

EXHIBIT 2: GLOBAL M-COMMERCE USERS BY REGION, 2008

EXHIBIT 3: M-COMMERCE CATEGORIES

EXHIBIT 4: MARKET STAGES FOR SUCCESSFUL PRODUCTS/SERVICES

EXHIBIT 5: WHAT’S CURRENTLY HOT?

EXHIBIT 6: CONTENTS OF SK TELECOM’S “JUNE” SERVICE

EXHIBIT 7: SK TELECOM’S NATE SERVICES
EXHIBIT 8: KTF’S 'MAGIC MULTIPACK CONTENTS

EXHIBIT 9: KTF’S K-MERCE CATEGORIES

EXHIBIT 10: KTF’S FIMM CONTENTS

EXHIBIT 11: KTF’S VIZ OFFERINGS

EXHIBIT 12: KTF’S FIMM RATE PLAN

EXHIBIT 13: TELSTRA’S INFORMATION SERVICES

EXHIBIT 14: 3’S OFFERINGS

EXHIBIT 15: VODAFONE AUSTRALIA’S CONSUMER SERVICES

EXHIBIT 16: VODAFONE LIVE! OFFERINGS

EXHIBIT 17: T-MOBILE’S INTERNET OFFERINGS

EXHIBIT 18: T-MOBILE’S MOBILE MULTIMEDIA STRATEGY

EXHIBIT 19: OVERVIEW OF HUTCHISON TELECOMMUNICATIONS GROUP

EXHIBIT 20: EVOLUTION OF M-COMMERCE

EXHIBIT 21: TERMINAL DEVELOPMENT TRENDS

EXHIBIT 22: GLOBAL M-COMMERCE USERS AND REVENUES (2003-2008)

EXHIBIT 23: GLOBAL M-COMMERCE USERS BY REGION (2003 - 2008)

EXHIBIT 24: GLOBAL M-COMMERCE USERS BY CATEGORY (2003 - 2008)

EXHIBIT 25: GLOBAL M-COMMERCE USERS BY CATEGORY (2003)

EXHIBIT 26: GLOBAL M-COMMERCE USERS BY CATEGORY (2008)

EXHIBIT 27: GLOBAL M-COMMERCE REVENUES BY REGION (2003 - 2008)

EXHIBIT 28: GLOBAL M-COMMERCE REVENUES BY REGION (2003)

EXHIBIT 29: GLOBAL M-COMMERCE REVENUES BY REGION (2008)
EXHIBIT 30: GLOBAL M-COMMERCE REVENUES BY CATEGORY (2003 - 2008)

EXHIBIT 31: GLOBAL M-COMMERCE REVENUES BY CATEGORY (2003)

EXHIBIT 32: GLOBAL M-COMMERCE REVENUES BY CATEGORY (2008)

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M-commerce is still at an early stage but advancing quickly. Real progress has been made during past two years with a number of new pilots and commercial launches. Many enablers are now in place, including the widespread deployment of 2.5 and 3G networks, the emergence of devices with superior features, availability of sophisticated browsers, and the growth of mobile messaging. Digital content currently accounts for most m-commerce revenues. Some countries have reached mass market with P2P messaging and ring-tones; operators hope to migrate their customer base up the value chain to other transactions. New data offerings launched over the last year and a half are succeeding as a result of ease of use and user-friendly interfaces. Mobile payment systems lag behind digital content, but early deployments are growing. The mix of types of m-commerce transactions are evolving, as more categories are introduced and more niche content with device and market segmentation is added. In the near term, consumer content will continue to drive m-commerce growth along with marketing that uses digital content. Mainstream brand involvement, enterprise use, and P2P transactions are all growing in importance.

Despite the slow start for POS, online purchasing, and proximity payments, m-commerce has reached a stage when commercial implementations have become a reality and a rapid ramp up appears imminent.

Summary of Key Findings
Current Trends
Current global and regional M-Commerce trends are as follows
- M-Commerce enablers are in place
- Mobile content services are still growing
- Devices are driving data usage
- Remote mobile payment services are launched
- Proximity payment services are expanding
- Asia-Pacific operators are actively deploying range of m-commerce services
- Pan-European operators are rapidly expanding services
- American operators are focusing on digital content

Emerging Trends
Emerging trends in m-commerce include the following:
- The range and types of transactions and goods purchased by consumers over mobile phones will continue to expand
- As the community of messaging users is built, there will be more opportunities for m-commerce applications
- MMS will enable m-commerce enabling applications that cannot happen in SMS
- Brands will play key roles as retailers of recognized and trusted goods and services.
- Adoption of standards for m-commerce will drive higher acceptance by operators and merchants
- The process of user education and early deployments will drive habit changes
- Increasingly, target market segmentation will help drive up revenues and take m-commerce from the realm of early adopters to mass market
- Viral marketing—word-of-mouth marketing among users—will have a big impact on the uptake of m-commerce

Market Forecasts
The following are highlights of Telecom Trends International forecasts for m-commerce:
- Globally, there were 94.9 million m-commerce users by year-end 2003 who will grow to 1.67 billion users by 2008.
- Revenues from m-commerce will grow globally from $6.86 billion in 2003 to over $554.37 billion in 2008

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Note: Product cover images may vary from those shown
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