While most in the wireless industry seem fairly positive that wireless Internet services are going to be the next big growth cycle of the future, few have solid ideas on exactly how that’s supposed to happen.
The pace of today’s technology makes it possible for players to implement their ideas almost as fast as they occur. New wireless application service providers and wireless portal start-ups are emerging at an almost dizzying pace, forcing all involved to take a second and get their bearing before joining the fray.
“A lot of dot-com guys are walking around trying to figure out how to play in this latest land rush that’s going to develop. It’s a sign the wireless Internet thing is really going to happen, happen big and happen sooner than anyone thinks,” said Mark McKechnie, analyst at Banc of America Securities. “It’s like deep powder for skiers, you want to be the guy making the fresh tracks.”
And it seems the crowd at the edge of the cornice keeps getting larger. John Dorfman, analyst at the Strategis Group, said interest in the consulting firm’s conference call detailing a recent report on wireless portals was overwhelming. While several wireless portals have launched in recent weeks, many attending the call represented companies yet to publicly announce themselves, he said. Half of those interviewed for the study-“US Wireless Portals: Strategies and Forecasts”-expect to go live by in the second quarter.
The reason is obvious-Strategis Group expects 25 million wireless portal users in the United States alone by 2006. Driving its growth is the opportunity for customized and personalized content capable of reaching users on a mobile basis, including location-specific information, the firm said. Of the wireless executives interviewed for the study, all believe mobile wireless commerce will be the key driver of the wireless portal market.
But there are many links to this particular value chain that makes the issue significantly confusing. There’s the content provider and aggregator, systems integrator or service bureau, wireless portal, wireless network provider, service distributor and subscriber device manufacturer, all of whom share responsibilities. Carriers control the transport and access fees, as to ISP and portal providers. Sometimes the carrier is the ISP and portal provider itself. Other times it outsources this.
Responsible for portal content and applications are the portal provider and the ASP. Again, sometimes one firm represents both, while other times several companies are involved.
Strategis Group believes the only way for all to play in this space is through tight partnerships.
“Wired portals enjoy a higher degree of brand recognition for overall Internet content delivery, yet will encounter an even more competitive environment as in the wired Internet space; therefore, partnerships and alliances will be keys to their success,” the report read.
Such multi-player partnerships lead to complicated revenue models. Wireless carriers are accustomed to subscription-based revenue models, while Internet companies traditionally use transaction and promotion models. The convergence of these disparate revenue models must lead to a reckoning at some point. Of the carriers interviewed for the Strategis report, 80 percent feel customers will pay for wireless Internet services on a subscription basis, while 64 percent of portal and content integration companies surveyed stuck with promotion and transaction revenue streams.
Finally, questions linger regarding the customer ownership issue.
“While wireless Internet operators will be able to control a subscriber’s start page, it is the operators’ prerogative to develop their own portals and applications once the subscribers have the ability to access the competition,” the report read.
However, carriers have largely downplayed the impact of strong Internet branding combined with their network. John Beletic, chairman and chief executive officer of WebLink Wireless Inc., recently signed a deal to add Microsoft Corp.’s MSN Mobile content to his paging network. Beletic expressed little concern that the dominant Microsoft brand would overpower the still-new WebLink one.
“I think this thing is being positioned as a huge battle while in reality its largely synergetic,” he said. “The customer is going to be owned by different entities. It’s not a factor of who owns what that determine who owns the customer. It’s who sold the customer.”
In that sense, Beletic said WebLink will stick to being the network provider, hoping WebLink customers will view their devices as portals to the Internet, and therefore wants to partner with the best content on the Internet.
“We are a wireless pipe that is a part of the Internet,” he said. “We’re going to be the best at providing the largest coverage in the country and extending that footprint. We’ll provide the delivery of high-quality networks and let others provide the content.”
Content alone, he said, is not going to sell a customer on one network or another. Coverage and devices will do that.
“Content is a value added capability to our services, not a differentiator,” he said. “The best strategy is not one where you try to build everything yourself. I think open systems is what makes sense.”
