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How should CFOs in the United States view the wireless Web revolution taking place in Europe? As coming attractions.
Louella Miles, eCFO
April 15, 2000
As DHL's global electronic commerce strategy manager, Brussels-based Colum Joyce knows a thing or two about changes in technology. Thirteen years ago, DHL (www.dhl.com) management asked a global group, including Joyce, to devise a strategy to help keep the company current with cutting-edge business applications — without getting ahead of the curve. In response, Joyce and his colleagues developed a business-driven, technology matrix. "The matrix says that when 5 percent of our market adopts a new technology, we start looking at it," Joyce explains. "When 10 percent adopt it, we start planning it and basically deciding what we want to do. When 15 percent have it in place, we build a prototype. After 15 percent, we're putting it out into the market."
And what is DHL putting out into the market right now? Wireless access to the company's tracking and shipment information services. Given Joyce's 15 percent threshold, that says plenty about the rise of wireless Internet access in Europe. So, too, does a recent report by Forrester Research, in Cambridge, Massachusetts, that predicts that nearly a third of Europe's online consumers will be using non-PC devices to get on the Web by 2004.
Not surprisingly, the sudden consumer fascination with the wireless Web stems in part from the rise of a new technology, wireless application protocol (WAP), which will be found on the next generation of handheld communication devices. Initially developed by Nokia, Ericsson, Motorola, and US software company Phone.com, WAP makes it a whole lot easier to access and surf the Web on a wireless device, such as a portable phone or personal digital assistant.
Before WAP, loading and navigating standard HTML pages on mobile phones and other handheld devices could be maddening. One big problem: HTML-pages are designed to be viewed on a computer monitor, not on a 1.5-inch liquid crystal display. Worse, wireless devices currently do not provide nearly the same bandwidth as telephone lines. Indeed, attempting to load a standard HTML document using a mobile phone is the technological equivalent of sucking a bowling ball up a straw.
But WAP eases the cranial distress. By stripping down Internet content to work over a wireless communications protocol, WAP eliminates slow-loading pages and timed-out sessions. What's more, the development of so-called third-generation technology should bring much broader bandwidth to mobile devices within three years. Nokia, which now markets a WAP server, estimates that 15 percent of all mobile phones sold in 2001 will be WAP-enabled.
Not all industry-watchers agree, however, pointing out that WAP devices are just now hitting the shelves. They also note that competing wireless communications protocols may supersede WAP. It doesn't matter. Whatever the protocol, almost all handheld devices will eventually work with some sort of microbrowser that's optimized for mobile communications. In fact, some industry watchers say there could be more than 200 million Europeans connecting to the Web from mobile phones, personal digital assistants (PDAs), and other wireless handheld devices, within four years.
That's a startling number — one that has not gone unnoticed by many corporate executives in Europe. This sudden urge to get onto the Net without a wire presents an inviting opportunity for companies doing business in Europe. In fact, when Forrester Research surveyed 50 European ecommerce executives about their plans for creating a presence on the mobile Internet, 90 percent said they intended to deploy wireless Web sites. Moreover, half the respondents said those sites would go live in 2000.
This is not just a case of keeping up with the Jones's Web site, either. Executives in the survey said they believed their wireless- wired sites would do more than enhance customer retention. They said they believed the sites would drive incremental revenue and attract new customers. DHL's Joyce, who has already deployed a wireless site, sees it the same way. "What we're looking at isn't so much the technology," he says, "but the ability to provide business service and to service a growing market share."
That puts him ahead of his counterparts working the other side of the pond. Generally, US corporations are thought to be about 18 months ahead of European companies in deploying ecommerce applications. But when it comes to wireless access to the Internet, European companies are well ahead of businesses in the US The reason is obvious. Currently, only about a third of Americans own mobile phones — and nearly 70 percent of those are analog machines. Digital phones work infinitely better in the digital world of data transmission.
But all-digital mobile networks are coming to the US Sprint (www.sprint.com), Nextel (www.nextel.com), and AT&T (www.att.com) offer digital mobile service. In fact, Sprint PCS has already come out with several wireless Web products. Industry research firm Dataquest says 3 million users in the US subscribe to wireless data services. Dataquest predicts that figure will be more like 36 million in three years. Much of that increase in business will come from business: The number of business wireless data users in the US will grow to nearly 9 million by 2003, according to digital research specialist Cahners In-Stat Group.
As the take-up in digital wireless increases, expect to see more American companies embrace wireless Internet access. The next generation of Palm Pilots (www.palm.com), for example, will offer wireless Net access. Officials at America Online (www.aol.com) have announced they are preparing a version of the AOL Instant Messenger (AIM) application for use on Motorola's (www.motorola.com) WAP-enabled devices. Etailer Amazon.com (www.amazon.com) also recently launched a Web portal specially designed for wireless devices. The portal, among other things, will enable wireless users to monitor the status of purchases and check shipping availability.
By US standards, these offerings are well ahead of their time. By European lights, they're late to the game. Ted Bechman, CFO of Gameplay.com (www.gameplay.com), Europe's largest online games destination, says his company embraced alternative Web platforms early on. "The belief in our company is that in order to dominate the games space, we need to be present on all relevant platforms," he explains. "Gameplay's offerings cover the Web and iDTV (interactive digital television), as well as the traditional methods, such as telephone retail. The company also has a multiuser gaming service and a WAP portal, which is under trial."
While wireless data is set to explode, so too is iDTV. According to researcher Jupiter Communications, one in three homes in Western Europe will receive digital television by 2003. Deciding what Web content to make available on iDTV won't be easy. "Companies that simply port their Internet strategy onto iDTV will fail," notes Noah Yasskin, an Internet strategy analyst at Jupiter. "Interactive DTV is not the Web on TV."
Technology experts say corporate managers need to be equally careful about the data they serve up to their wireless customers. Although the protocols and description languages for WAP sites and Web sites are similar — intentionally so — wireless sites require special attention. "A Web site is not a WAP site at all," says Matthew Nordan, the European Internet commerce analyst for Forrester Research. "It's not as though you create a Web site and run it through a WAPalizer and connect it to a mobile phone."
Indeed, the wireless Web protocol serves up smaller bits, or cards, of queued-up data. Things like train schedules, email, stock quotes, and news flashes seem ideally suited for handheld devices. Applications that require installation scripts, graphics, complex menu structures, or complicated key sequences are best left in the wired universe. "We believe we can provide content that can be used in the WAP arena," says Bechman. "If we felt, say, that the games we could provide are too big to be used on a WAP phone, we might wait."
In the Information Age, waiting can be deadly. That puts some serious pressure on CFOs, who must assess whether their corporate Web offerings will play on alternative platforms — and whether an investment in a platform will provide an ample return. This is complicated by the fact that few finance directors are tech- heads. "I have not met that many CFOs who understand the technology," concedes Lionel Anciaux, the Brussels-based head of WAP at EuropeanInvestor.com (www.europeaninvestor.com). "But it is an economic decision on alternative platforms. Often, the technology is so new that it is difficult to guarantee returns."
Worse yet, finance directors in Europe are finding they often have to ditch old ideas about return on investment when examining outlays on alternative platforms. "Looking at it from a CFO perspective, a different set of rules apply," Bechman explains. Those rules have very little do to with IRR or ROI. "It is about domination of space," he says, "rather than the traditional methods of measuring success."
Dominating space won't necessarily break the bank, however. According to the Forrester survey of 50 European ecommerce executives, it costs about $87,000 to develop and maintain a wireless-accessible home page — or about 6 percent of the budget for the average European ecommerce site.
Good news, particularly since the wireless Web isn't the only game in town. At EuropeanInvestor.com, Anciaux says he doesn't want to lock customers into one platform. In fact, he says, the recent growth at the financial information specialist can be partly attributed to the company's embracing several access technologies. "The Net is nice, but what is important is content," he insists. "We don't want to force someone to use one technology."
In the near term, Anciaux believes SMS (short message systems) holds the most promise for EuropeanInvestor.com. With SMS, mobile phone subscribers tell banks or financial institutions what market information they're interested in. Those institutions then send onscreen alerts, via EuropeanInvestor.com, updating users about their areas of interest. "We have a huge demand from banks and telephone operators for financial services," Anciaux says.
Short message systems have a place in the E-tail world, as well. Sep Riahi, vice president of business development at lastminute.com (www.lastminute.com), a Europe-based specialty shopping portal, says the company often uses SMS to notify shoppers when airline tickets become available. "The key is a personalization mechanism that stays in our database, saying that a visitor to our site has so much money to spend — say £100 for a flight — and we can then send that person a message when we have something suitable," he explains.
Current offerings from lastminute.com include a flight on a MiG airplane in Russia, as well as the opportunity to spend a night in Marilyn Monroe's old house. Riahi says, however, that their most popular offerings are last-minute travel, entertainment, gift, and restaurant services. Customers can connect to the company's Web site via several alternative platforms, including WAP phones, PDAs, and interactive television.
But Riahi warns that different industry standards, particularly for iDTV, can create headaches for online businesses. "Cable companies are using a standard that is easier for Internet companies to adapt to Java and HTML," he explains. Jupiter Communications predicts that iDTV will be most popular in the UK, Denmark, and Germany.
Meanwhile, Back at the Matrix
But some European corporates say figuring out when to embrace an emerging alternative platform can be tricky. Move too late, and you play catch-up forever. Move too early, and you might end up backing a dog of a technology.
Evan Rudowski, the managing director of Excite UK (www.excite.co.uk), a joint venture between British Telecommunications and Excite@Home, says his company's Internet policy is crystal-clear: Stay on top of new technologies, act quickly, and build the brand. "At Excite, battling for share, awareness, and ubiquity, our motivation is a combination of near-term business opportunities and long-term positioning and brand building."
No small task. To reach those goals, Rudowski says Excite@Home tries to cast as wide a Net as possible. "We try to pursue opportunities that allow us to achieve as many of those goals as we can," he explains. "WAP fits that fairly well." Remarkably, six months ago, managers at Excite UK weren't even looking at WAP. But the company has moved fast — it was the first to launch WAP services out of all the portals in Europe. "I would like to claim we are visionaries," says Rudowski. "But we're more opportunist than anything else."
But opportunism, like spontaneity, works best when it's planned. Successful Internet players in Europe aren't scared of sweeping changes in technology. They plan for it. David Atter, a spokesman for beeb.com (www.beeb.com), the shopping portal for the BBC, says the company launches a prototype when 10 percent of the market is talking about a product.
Following that game plan, beeb.com has put together an impressive Internet content production system that's able to publish in various formats, including mobile devices. "There isn't a huge penetration of mobile phones able to access the Internet today," explains Atter. "But when it takes off, we're ready."
Which takes you right back to DHL's matrix. Having seen his fair share of next-big-things, Joyce decries corporate executives who get caught up in the hoopla surrounding new technologies. To him, it's the strategy, not the technology, that matters. "Most of this stuff is not a technology issue," Joyce says flatly. "It is an attitude issue."
Louella Miles is a business journalist who writes frequently about corporate reputation, ecommerce, and international football sponsorship.
Coming Soon to a Small Screen Near You
As of press time, almost all the major handset manufacturers have announced plans to roll out WAP-enabled devices by 2001. Ericsson (www.ericsson.com) already markets two phones (R320 and R380) and a WAP-enabled personal digital assistant (MC218), while Nokia (www.nokia.com) will begin selling its 9110i Communicator in late 2000. Motorola's (www.motorola.com) WAP-enabled Timeport 7389 and V2288 phones hit the shelves in March 2000.
All these WAP-ready handheld devices should make surfing the wireless Net one swell experience. Users navigate WAP applications with up and down scroll keys, rather than with a mouse or complicated keyboard commands (data can be input using an alphanumeric keypad). What's more, WAP applications are designed to be viewed on the tiny screen found on the average mobile phone. The microbrowser also allows for expanding the viewable area of an application if the program is being accessed from a machine with a larger screen, such as a PDA.
More important, WAP microbrowsers are configured to use less memory and CPU power, thus extending the battery life of a mobile device. They also allow for easier resumption of an Internet session if a mobile device loses its signal. And according to the WAP Forum, a standards-setting body, the WAP's stacking protocol eats up a lot less bandwidth than standard HTTP/TCP/IP pages.
But not all is rosy in WAP world. According to wireless data consultancy Mobile Lifestreams (www.mobilelifestreams.com), other protocols for wireless mobile Internet access (such as SIM Application Toolkit and Mobile Station Application Execution Environment) already exist. The consultancy also notes that setting up a WAP service on a handheld device could prove confusing. Further, Web surfers tend to stay online for a long time. Considering the cost of some wireless phone services, subscribers may be in for a nasty surprise when that first WAP phone bill shows up in the mailbox. —John Goff
Remove Wrenched Ankle
Making wireless Web sites out of corporate home pages is a lot like the kid's game Operation. It's not overly complicated, but it does require a deft touch to extract the right thing.
Experts say applications and Web-site content need to be thoroughly analyzed, as do the buying habits of customers. Although the interface on a wireless microbrowser is different from the interface on a regular browser, the online shopping experience should feel the same. The fact is, wireless online shoppers still want to do the kinds of things they do when they surf the Net on a PC — check out merchandise, compare prices, and place orders.
While some companies have the resources to devote to customizing their Web sites for wireless access, small and midsized businesses may need help. Toward that, several wireless Web outsourcers have set up shop recently. The latest, ViaFone (www.viafone.com), is a California-based application service provider that takes existing Web content and makes it mobile ready. ViaFone's technology, which is based on its own Mobile Commerce Server platform, works with a number of devices, including WAP phones, pagers, and PDAs. Music etailer CDnow (www.cdnow.com) hired ViaFone to set up a system that allows mobile phone users to browse and purchase music online. In addition, CDnow wireless shoppers can listen to music clips over their cell phones.
Another non-PC Internet specialist, Everypath (www.everypath.com), was launched two years ago. Also based in California, Everypath relies on proprietary technology to ensure that Web sites can be accessed from wireless devices. Executives at Everypath say they can render a site for data devices in just seven days. His master's voice takes longer: Everypath needs two weeks to create a Web site that responds to audio commands. —J.G.