The Wireless Internet

Ever since its conception, wireless carriers and analysts alike have touted the wireless Internet as The Next Internet.  Many companies, for both corporate and commercial purposes, have implemented strategies based on this premise, creating entire departments devoted to keeping pace with this evolving technology—speeding them into the next generation of Internet access.  Following the belief that the wireless Internet would evolve at the same breakneck speed that the wired Internet did six years ago, these companies have poured money into developing wireless portals, vying for dominance in an as yet unproven field.

Some industry analysts even trumpeted the emerging wireless Internet as becoming the predominant medium for Web-browsing and mobile e-commerce (m-commerce).  The e-commerce boom began on the wired Web five years ago, and investors wanted nothing more than to be there when this phenomenon plays out again in the world of wireless.  Caught up in the frenzy, Internet service providers and other consumer portals of the wired Internet rushed to develop and market wireless versions of their existing Web sites.

These companies soon discovered the caveat that lay behind anytime, anywhere accessibility to their portals:  mimicking the look and feel, the “magic,” of a Web site on today’s wireless, hand-held devices is an impossibility; a whole new set of rules must be learned and applied.  Further exacerbating the situation is the abundance of competing technologies, standards, protocols, platforms, and devices—many of which are incompatible and require their own individual set of rules and restrictions.

Some industry experts have gone so far as to liken the current state of the wireless Web to the now prehistoric days of the wired Web, when users tapped into bulletin boards using a 300-baud modem.  The grim reality is that when compared to its predecessor—for those accustomed to the rich content and graphical offerings of the current wired Internet—today’s wireless Internet is no more than a bastardized counterpart with severe functionality handicaps.  The small size and graphical limitations of a wireless, hand-held device’s screen, coupled with mere rudimentary interface capabilities, place severe restrictions on what content can be offered and how it is accessed and displayed.  Applications that feature rich graphical displays are doomed, as are Web sites that are several levels deep, because they require too many keystrokes to navigate.  These limitations are only compounded by current bandwidth and data transmission speeds, generally 9.6 to 14.4 Kbit/s.  Such a platform does not drive a consumer market.

Analysts said that wireless would be The Next Internet.  It’s not.  They said it would drive m-commerce.  It hasn’t.  The only thing that outperformed expectations was the hype.

Today, companies are backpedaling.  The most notable scaling down has been Amazon, who, in light of disappointing revenue—$1 million from m-commerce versus $2.8 billion overall for 2000—has all but eliminated its m-commerce department, which numbered some 38 employees at its peak.

The perception that enterprise wireless Internet use would be leveraged by consumer use, where wireless devices are most prevalent, has proven inane.  Wireless Internet access can, in fact, be uniquely exploited by mobile enterprise users: it is optimized for anytime, anywhere access to time-critical information (push or pull from corporate databases).  In this respect, the wireless Internet opens a floodgate for a variety of potential vertical and horizontal industry applications.

Internet services such as e-mail and short messaging services (SMS) are growing rapidly and will continue to do so.  These two data services alone, however, are incapable of driving an entire market.  The expectations of consumers for robust and stimulating media have swelled too much for such a scenario to be conceivable.

Extensive Web-browsing and m-commerce, viewed as boons for the wireless Internet consumer market, are not yet practical—given the present limitations on content, delivery, and presentation—and are not expected to exert any sizable market clout in the near term.  In the long term, as advances in technology allow such innovations as streaming video and voice-activated applications, perhaps even an as-yet unthought of killer application, these uses will become more widely accepted by consumers.  In the end though, the interface and display capabilities of the mobile devices themselves, which must be small-sized to remain practical, will endure as limiting factors.

While Insight does not foresee the wireless Web generating many opportunities over the next few years, the overall sector of wireless data is expected to demonstrate sizable growth during the forecast period, particularly in the area of business data-only wireless services.  Business data-only wireless initiatives, and the growth of this market, are discussed in further detail in Insight’s report entitled Wireless Data, Wireless IP, and Vertical Markets, 2001-2006.

Wireless Portals

The traditional definition of a portal as a doorway, gate, or entrance is stretched to the limit when referring to the Internet; a portal can be practically any site, so long as it is one positioned as an entrance to other sites on the Internet.  Portals, essentially, are aggregators, providing access to Web services—generally search capabilities, e-mail, and instant messaging—and a plethora of content.  From a financial perspective, a portal should be a revenue-generating online community that offers enticing interactive services.

A portal can be the first place a user goes online—the default Web page set on a browser or one selected personally by the user—but need not be; secondary portals are those that provide equivalent content and services, but are just not a user’s initial point of entry.

On the wireless Web, many wireless carriers transform the home deck of a user’s Internet-ready mobile device into a carrier-branded portal—the default and premier portal for accessing the Internet with that carrier’s services.  It is through this carrier-branded portal that a user has access to Internet services and can search the wireless Web.  Carriers aim to include all of the capabilities in their portals that major wireless portals, such as America Online and Yahoo!, Inc. do, hoping that users will not seek out such secondary portals because they will want to retain their assigned e-mail addresses and bookmarks.

These carrier-branded portals, whose evolution sprang as a solution to the variety and disparate capabilities of mobile devices, have come to be known as “walled gardens”; so named because wireless carriers dictate which services and content, and ultimately which wireless Web sites, are accessible.  Many Web content providers disapprove of this practice, arguing that wireless carriers are controlling subscribers by limiting them to only those Web sites that have paid for the privilege of admittance into their walled gardens.

Every Web site that wants to make its content available through the wireless Internet must create a version compliant with wireless application protocol (WAP) or one of the other leading standards for wireless content delivery, such as i-mode.  Less than one percent of Web sites today have a WAP counterpart—a further reason, stemmed from combined technological and financial complications, why the wireless Web has not been adopted by the consumer market as rapidly as industry analysts initially predicted. 

In the US, the Internet available to wireless users is considerably more limited than the wired Internet.  Few vendors have adapted their Web sites to accommodate WAP or other standards.  According to one research study that considered 577 commercially-operated English language wireless Web sites, 14 percent qualified as portals.  In their findings, they reported that “these sites are not as user-friendly as their wired world counterparts.”

Enterprise Wireless Portals

Many enterprises view wireless as an extension of their existing Internet strategies.  The wireless Internet must not be thought of as a new platform, but rather as a new technology for business modeling.  Wireless Web services should facilitate transactions and functions and improve an enterprise’s value chain.

Even with today’s limitations of wireless speed, quality of service, and reliability, many examples of sales force automation, customer care, health service, warehouse management, and shipment tracking are already in use.  One thing is for sure:  where value is achieved today will be different from where it will be achieved three to five years from now.  Three significant technologies will change the future short-term value of wireless data transmission:

• 2.5G and 3G technologies

• Voice recognition, and

• Bluetooth.

Once these technologies are combined and harnessed, mission-critical solutions that sit behind corporate firewalls and require broader wireless bandwidth will become practical.  Of those businesses that have a Web site in 2001, approximately 7 percent also have a wireless Web site—a site with special accommodations for mobile users.  By 2006, the percentage of businesses maintaining a wireless Web site in addition to a regular Web site will grow to 12 percent.

Hand-held Wireless Devices

Numerous hand-held devices capable of somehow accessing the wireless Internet exist:  Internet-ready cellular phones, personal digital assistants (PDAs), and two-way pagers—each possessing its own particular advantages and limitations.  With all of the available brands—Nokia, Motorola, Palm, Microsoft, Research In Motion (RIM)—and operating systems for them—Palm OS, Windows CE, EPOC, Java—it is amazing that any two devices are able to operate on a single standard.  As it currently stands, some do not, most notably Palm, but most are making efforts to accommodate either one or both of the primary standards for wireless content delivery, WAP and i-mode.

PDAs are hand-held computing devices that have an operating system and memory.  These extend pared-down computer functionality, allowing the downloading, storage, and execution of code.  Screen sizes vary, but generally are limited to 160 x 160 pixels.  In contrast, Web-enabled cellular phones, which are forecasted to become the predominant mobile device of choice for wireless data, are considered to be relatively dumb devices.  Aside from the usual voice and data services, they offer limited microbrowsing capabilities for viewing text-only Web pages on a very small screen.  Two-way paging devices are the most handicapped, capable only of sending and receiving short messages and, now, retrieving information snippets, such as stock quotes, horoscopes, and sports scores, from the wireless Web.

In the coming years, the value of a mobile device will be determined by how well it captures and presents user-based services.  The challenge is not just information, but anytime, anywhere access to that information, and the ability to personalize a device for improved control and efficiency.  Eventually, some devices will come equipped with intelligent controls to discriminate between crucial and non-crucial contacts and identify information that the user would want to receive immediately.

In the US, the ultimate vision of the wireless Internet requires major changes not only to the text input, voice capability, and user interfaces of hand-held devices, but also to Web site design itself.  Most experts agree that improvements in hand-held design and functionality are dependent upon widespread adoption of protocols such as WAP.

In short, the wireless Web is currently struggling through its formative years.  The market for these services will grow, but only as rapidly as advanced technologies are deployed and more enticing applications—audio streaming, video streaming, stock trading, and games—can evolve.  For now, opportunities in the wireless data space will remain in the business data-only wireless services sector.

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