MCOMMERCE RACE - Who's Ahead Japan or US

According to Jupiter Communications, a worldwide authority on Internet commerce, Japan has a $400 million head start over the U.S. and Europe in the mCommerce (or "mobile commerce") race.

Revenues generated from mCommerce in 2000 will amount to $10 million in the U.S. and $15 million in Europe.

The US and Europe will only bring in their first $100 million each in 2001, and will need two years to reach the $400 million of mobile commerce revenues generated in Japan today.

The research also shows that by the end of 2000, the number of wireless subscribers with Internet-enabled handsets will reach 6 million both in the US and Europe, versus a whopping 30 million in Japan.

By 2003, the year mobile deployment should reach critical mass, the U.S. will have 115 million subscribers to Europe's 254 million, and total mobile commerce revenues will reach $600 million in the U.S., $1.7 billion in Europe, and $3.5 billion in Japan.

Regionally, Asia should dominate mCommerce by 2005, capturing 42% ($9.4 billion) of total global revenues. Japan's projected revenue that year ($5.5 billion) will make it the single greatest mCommerce country, accounting for 56% of Asia's total and one-quarter of the global total.

U.S. mCommerce Solutions Market Will Grow 1000 Percent by 2005; Datamonitor Report Forecasts Growth from $90m in 2000 to $1.2bn in 2005, Ultimately Catching up to Europe

According to Datamonitor, a leading market analysis firm, the U.S. mCommerce solutions market, while off to a slow start, is set to reach $1.2 billion over the next five years and will eventually surpass Europe. A new Datamonitor report, "mCommerce Infrastructure in the US," released today, identifies why the U.S. is currently defying its traditional role as IT market leader by trailing Europe in the mCommerce arena and illustrates how it will catch up.

In the U.S., the inability to reach a single mobile telecommunications standard, low wireless device penetration, high prices and lack of awareness have been the stumbling blocks to attaining the critical mass required for introducing new services. Additionally, U.S. companies are holding back on transitioning to 3G networks, which would provide higher speed wireless Internet access, as they must leverage their already existing investments in digital networks.

Another factor contributing to the slow adoption rate in the U.S. is security. As the Internet has changed the way people purchase goods and manage their finances, security has become a crucial issue in order to allow users to communicate and conduct transactions in a trusted environment. The only way to make customers spend or transact in the volumes that retailers and service providers have in mind will be by offering them a secure environment.

As the market evolves, however, U.S. strength in content creation may shift the mCommerce pendulum back to this side of the Atlantic. Datamonitor predicts that the fastest growing mCommerce sector in the U.S. will be financial services, which - from $90m in 2000 - will rise to over $1.8bn in 2004.

The U.S. mCommerce market is poised to surpass Europe for several reasons:

• The US has a single language with which to develop application content and internal services for a large population. This is not true in the fragmented European market;

• The US has a greater amount of country-specific content and vendors that can be applied to the mCommerce market;

• The US has more of the intellectual and commercial talent that is required to develop the mCommerce infrastructure than Europe.

1. Consumers remain unconvinced about the wireless web.

Despite aggressive advertising campaigns from telecom carriers and exhaustive press coverage about the wireless web, consumers aren't exactly flocking to buy web-enabled cell phones and handheld devices. Using IDC's estimate of web-ready devices in use today, eMarketer estimates that only 9% currently access the internet via their wireless device.

US users have been spoiled by the high-quality graphics and ease of navigation afforded by the PC. The typical web-enabled cellular phone, by contrast, has 3 to 4 lines of text, no graphics and uses an alpha-numeric keypad.

2. Wireless net content is very limited, at best.

The internet available to wireless users is considerably more limited than the wired internet. Few vendors have adapted their websites to accommodate WAP (wireless application protocol) or other standards. The wireless net is very focused and contains a small number of sites dedicated to web commerce. Thus, the wireless net that experts believe will account for 20% of the e-commerce market by 2003 (Yankee Group, 1999), is currently only a platform for checking e-mail, stock quotes, weather and horoscopes.

3. The US wireless telecommunications industry is lagging behind the technology.

Due to poor traditional telecommunications infrastructures overseas, the cellular phone is an indispensable tool that has become a popular medium of communication. Conversely, the traditional telecommunications infrastructure in the US is more reliable than its wireless counterpart. Because of these practical differences, the foreign market for mobile web devices and hence, m-commerce, is highly advanced and well-seated; in contrast, the US market is just revving up.

The author, Mr. Sandeep Tapaswi is Director, FANDS ^TM group, and can be reached at response@fandsindia.com.