WIRELESS INTERNET BUSINESS: It Is Different!

Portals and vortals (some not-so-imaginative commentator’s term for vertical portals) are old ideas. It is time for wireless portals. Call them wortals, mortals (mobile portals), or by any other name you might fancy. But the fact is that the likes of Airflash, Wapaw and Avantgo are all set to take the place of traditional (Everything becomes old, traditional, giving away to the modern. The Web, with all its might, is no exception.) web portals like Yahoo!, Lycos, and Excite. At least, in terms of mind share. And sooner than you think. 

In the next six-seven years, more people will access Internet from their cellphones than their PCs. Sounds quite strong as a statement. But that is what most analysts say. And they do not sound too prophetic. Last year, more than 160 million cellphones were sold world-wide–much more than number of PCs sold. By 2002, there may be 700 million cellphones in use. That is why everyone is rushing off there.

There is a new opportunity. Every guy thinks it is for him. And him only. He does not know how. He is not too keen to find out. He is busy exporting his business model and process to the new opportunity. He is not willing to accept that it is a fundamentally different business. But that is nothing new. It happened with many companies not too long ago. Right?

Is It Really Different?

Yes. It is a new business. There is a new set of rules, yet to be defined properly. But one thing is certain. You cannot port the same business model, which worked for the traditional Web business, and yet hope to succeed in the mobile Internet domain. Yes, the mobile Internet may not be a different entity by itself. But the business of mobile Internet is different. And there are reasons for that.

Reason #1: The media are
different

One,
while the Web is global and anonymous, the cellular is local and
personal. Your cellular phone, like you, has a unique identity.
No other person on the earth can have the same number as your
cellphone. Your PC does not have that. In the traditional
Internet, there is no difference between a surfer who is
accessing it from a kiosk and you, who are accessing it from
your own personal notebook.

Two,
every medium is unique in itself. When cinema came, it was used
as a memory for stage. The movies were getting shot at one
location. But soon, it was realized that it had no time and
space constraint. Someone imaginative enough has to exploit the
new capability of the medium. Cellphone is with you always. That
is a uniqueness. This can be exploited to provide unique,
effective on-the-move services. What are they? A million-dollar
question.

Three,
for succeeding in the business, one needs to understand the
limitations of the medium. Every gap can be turned to a business
opportunity. Information overload, for example, is a no-no in
mobile data services. Local content is crucial.

And there are many more
such subtle but fundamental differences. Reason #2: The objectives are
different

Internet got started in
the eighties. The Web is comparatively newer. In the early phase
of development, Internet developed as a communications and
information-sharing medium. Collecting and storing information
has been the objective of traditional Internet. The content
provider tries to provide as much as possible. It is a game of
plenty. It is for the user to filter the information.

In mobile Internet, the
service provider–whoever that is–will need to do a lot of
filtering. The new mantra is relevance. The user cannot go
through loads and loads of information. He needs just what he
needs–nothing more, nothing less. And each user has his own
choice. You have to customize it for each single user. Tough,
but not an impossible task. Just know your customer extremely
well. And understand his needs.

Reason #3: The ground realities are different

The wireless content business need not follow the same path that the Web content business does. In the early phase of Internet development, there were clear boundary lines between segments. Few technology suppliers were in access. Almost no access provider was into content. Today, a Microsoft is in content. An AOL can acquire a Time Warner. The development cycle of wireless Internet will be different because of this.

One identifiable early trend is the way the wireless content business is getting organized. In the traditional Web business, content came first. Their organization (directories and portals) came later. Today, there are already too many wireless portals (see box) out there, though there is very little WAP content available. A search for
India in Altavista today gives you more than 22 lakh matches. A search for India in Wapmap (WML pages only) gives you just 14 results.

And Hence: Revenue models have to be different

The two major ways of
getting money in the Web business (apart from VCs and IPOs) are
advertising on the web site and charge for information.
Interestingly, there is little innovation in these revenue
models. They have directly been imported from the earlier era.
Advertising is what media (newspapers, magazines, radio, and TV)
has been relying on for years. Pay for information is the model
that information researchers have been following for quite some
time. Analysts believe both these will not work in the mobile
domain.

It does take an analyst to
say that bar advertising is out from day one. It is also
difficult to believe that short message advertising will be
sustainable. Pay for information will also work for very few,
customized type of information.

That leaves one to look at
the other example from the traditional Internet business–e-commerce.
Mobile commerce (m-commerce) is the option here. The good thing
here is that the major roadblock that traditional e-commerce has
faced– security–is less serious in mobile domain. By
definition, m-commerce is more secure than e-commerce. Your
cellphone is yours. That adds a great level of security. But
then, few will surf on their cellphone to find a good ghazal
album. Only essentials–food, tickets, etc.–will be ordered
from a mobile phone. But yes, by all probability, more
frequently. Many think enabling
services like mobile banking will be the killer application in
the wireless domain. But now, most of our thinking is derived
from the earlier age. Till someone finds a really new killer
application, we have to live by that.

Just a single line
summary:
The business model and, hence, the revenue model in these two
businesses are as different as selling pharmaceuticals and
running a hospital.

Time to Take
Positions
If you are unsure about how a new business will develop, buy a
few small companies and/or announce some "major"
initiative in that area, and watch out for the future to unfold.
Though this comment is often made about a particular IT company,
to some extent it holds true for most technology majors today.
And that is what these companies are doing in the wireless
Internet business.

How else can you explain a
Lucent, a Microsoft, an IBM, and an Oracle setting up wireless
portals. "God knows" was the response of a global
analyst when asked about the strategy behind this mad rush at
setting portals. Interestingly, he believed in the power of WAP,
and the business opportunity that lies ahead, "What I am
trying to tell is that mobile Internet business is not
synonymous with setting up a wireless
portal."

He is right. We have seen
that in the past. We are going to see that in future. What
people are most comfortable with is playing the old game on the
new turf. Naturally, it fails. There can be
a lot of debate on the positioning of these mega players. Let us
look at something that is more imminent and immediate.

And that is the big battle
between the cellular service providers and the Web content
providers. Both have their strengths and weaknesses.

Cellular service providers
think they "own" the customer, they are local and so
have a better feel of the local requirement (a major advantage),
and better understanding of the customer. Their weakness,
however, is that they are limited to small areas and are not
seen as people who understand the content/information business.

The Web content providers
have strong brands and the logistics of information collection
and dissemination. And of late, have been getting a lot of money
from the market. Their weakness is that they hardly know the
user, let alone his requirements, and they operate on a global
one-way basis. Local content is kind of alien to them.

Interestingly, the
technology suppliers are backing the respective camps depending
upon their own strengths. Telecom companies like Nokia are
backing the cellular service providers whereas the IT majors
back the Web content providers. Tomorrow’s
Men
Any new business has new opportunities, which the traditional
businesses often ignore. That creates a whole new set of
companies which rush in to cash in on these opportunities,
created many a times by the gaps arising out of the failure of
the traditional service providers to fully understand the
"grammar" and thus the capability of the new medium.

There is no reason to
believe why this will not happen in the wireless Internet
domain. While both the cellular operators and web companies have
a lot of strength, many of them have one weakness. They are not
willing too much to adapt to the changes and in stead trying to
do the new business in the same old way. This will create a
major gap, which can be tapped by the new WAP service providers.
There are already quite a few of them.

Many experts see emergence
of strong wireless content brands, some of which will develop
into being mega challengers and some of which will get acquired
by the bigger companies. Those cellular, technology, or web
companies which adapt will survive.

Many also see cellular
companies turning to small content providers at the back-end.
Some of them may develop the expertise and build the brand and
may eventually challenge their principals–a la Microsoft.

It is difficult today to
say who these players will be. But today, some of the wireless
portals have done a pretty good job. Especially AirFlash, Wapmap,
Waply, and Wapaw. And as expected, portals sponsored by big
companies–about which we have read so many press releases–are
either non-existent or in a underdeveloped condition. Lucent’s
Zingo for example is just one page. It says, "Zingo
experimental portal. Status: presently offline and
inactive." And there is a Lucent logo. Many other "big
wireless portal initiatives" are still not out there.
Morning shows the day, did you say?