M-Commerce Gives Shell-Shocked Web a Glimmer of Light

Dot-com companies are shutting down daily, tech stocks are tumbling and the euphoria that once infused all things Internet has dissipated. But for the eternal optimists who populate the “new economy,” there is still one sliver of hope: mobile commerce.

“M-commerce,” which has become the latest high-tech buzzword, turns cell phones and two-way pagers into shopping devices, along with Palm and Pocket PC hand-helds with wireless Internet access.

What it offers is the tantalizing prospect of capturing a slice of modern life that until now had been immune to shopping fever. A lengthy wait at the doctor’s office becomes an opportunity to send flowers to a loved one. Stuck in traffic? At least it’s a chance to order a copy of the CD that’s playing on the radio.

Unless you’re asleep, m-commerce theoretically makes it possible to shop any time, anywhere.

About 6 million people worldwide are expected to buy $260 million worth of goods and services this year by employing mobile devices, according to a new forecast by market researcher Jupiter Media Metrix. By 2005, 171 million people will be spending $10.8 billion on m-commerce, Jupiter estimates.

Those kinds of numbers have made m-commerce one of the few bright spots for the estimated 50,000 people who are gathering in Los Angeles this week for Spring Internet World--one of the primary conferences for showcasing the latest Internet ideas.

Many industry observers are expecting this year’s conference to be the most dismal since the Internet became a mass phenomenon in the mid-1990s. With dot-coms falling like flies, the level of cynicism over Internet commerce is running high.

But m-commerce quickly is moving forward and already has taken root overseas, where land-line connections to the Internet are more scarce than in the U.S. and wireless networks are more robust.

In Japan, technophiles already are spending nearly $200 million a year on items such as software using their cell phones and other mobile devices. In Europe, people are paying tens of millions of dollars to send short text messages over the air.

In the U.S., analysts expect shoppers to turn to m-commerce for the convenience of ordering a takeout dinner on the way home from work or trading stocks while waiting out a weather delay at the airport.

Cell phones already outnumber desktop computers, and that leads some analysts to predict that mobile commerce will outstrip traditional electronic commerce.

“M-commerce has the potential to be every bit as big or bigger than e-commerce in the long term,” said John Dee Fair, vice president of research and development for Telephia, a San Francisco firm that tracks the wireless industry. “Not today, and not this month, but it will have every bit of the capability that the wired Internet has. And it’s going to have additional advantages.”

Skeptics see that as yet another hopelessly rosy assessment from the same folks who thought the world needed half a dozen Web sites that sold pet food. After all, the hurdles facing m-commerce are difficult to ignore.

Personal digital assistants, pagers and cell phones always will sport smaller screens than PCs, making graphics hard to see. Their monochromatic screens do a poor job of conveying the colors in the spring clothing line on display at sites such as Gap Online. Such problems might forever relegate mobile devices to second-class status when it comes to Web surfing, some analysts say.

Then there are technical considerations, such as the fact that condensed Web pages are more cumbersome to navigate. Wireless devices also connect to the Web at least five times more slowly than desktop PCs.

“It’s not going to be the savior for Internet commerce,” said Tole Hart, a senior analyst with Gartner/Dataquest, who estimates that between 100,000 and 200,000 people have engaged in mobile commerce in the U.S. so far. “I would expect to see more traffic on [traditional] Internet e-commerce because it’s a better shopping experience.”

But there are early indications that m-commerce is at least as good as e-commerce for certain kinds of shopping.

Books are the most popular shopping category for mobile shoppers, followed by electronic devices and software, according to a survey released this year by Telephia.

Movie tickets are gaining ground with mobile shoppers, said Dylan Brooks, a wireless analyst with Jupiter Media Metrix. That category will expand to include tickets to museums, concerts and other events.

“What people are buying are things you don’t need to touch or feel,” said David Waxman, director of business development for YadaYada, a wireless Internet service provider based in New York. “On a little screen, you can’t see a picture very well, so you have to buy things like movie tickets or a CD.”

One of the primary forces driving m-commerce is the ability to turn Internet-enabled wireless gadgets into the ultimate impulse-buying devices.

M-commerce is tailor-made for purchase decisions that must be made quickly. Bidders in EBay auctions can request automatic notification on their mobile devices whenever they are outbid by competitors. If they wish, they can log right into EBay and place a higher bid, said Tole Hart, a senior analyst with Gartner/Dataquest.

Online stock trading is also catching on with mobile shoppers for the same reason. E-Trade Group, TD Waterhouse and other brokerages have extended their online trading to devices with wireless Internet connections.

While the world of traditional e-commerce shrinks with each online retailer that goes out of business, companies are racing to expand the offerings available for m-commerce.

One of the first areas they’re tackling is the travel market since travelers are mobile by definition.

Business executives have been known to use their PDAs to purchase plane tickets from the back seats of taxicabs while they’re en route to the airport. Hotel reservations also are making a strong showing, the survey found.

QSent, a 3-year-old firm based in Lake Oswego, Ore., will be at Internet World showing off iQtaxi, its service that lets users order a cab, sedan or limousine from their Internet-enabled phones or PDAs. After logging into https://www.iqtaxi.com, it takes five steps to reserve a vehicle.

More than 1,000 people have used the service, which is available nationwide, said QSent Chief Executive Patrick Cox. Drivers pay between 95 cents and $9.95 for each referral they receive through iQtaxi, but the service is free to users. (They still have to pay for their rides, however.)

“People are becoming mobile, and we want to provide services that are everywhere,” Cox said. “Anywhere you need to book a taxi, we want to provide that.”

Some m-commerce services are designed to make traditional shopping more convenient. Vicinity, a Sunnyvale firm, is one of several companies with programs to help people find specific stores and products and compare prices over the Internet.

“You’ve got someone who’s driving down the street and says, ‘Hmm, I want a Starbucks coffee or a McDonald’s hamburger,’ ” said Emerick Woods, Vicinity’s chief executive and president. “At that moment, if you can connect that person to the store, you have a much higher probability of capturing that customer.”

This is the dream scenario for retailers. Although some users fret that it’s an invasion of privacy, marketers envision sending advertising messages to the wireless devices of potential customers when they come within a few hundred feet of their stores.

“You could walk by the Starbucks and get a message that says, ‘If you go in now and give them a code, you can get two lattes for the price of one,’ ” Fair said.