Analyst predicts mobile ecommerce explosion

Mobile ecommerce presents a wealth of opportunities for content and service providers, but many are entering the market unprepared, according to new research.

However, while new entrants may not be the best prepared, they will be in a strong position to grab an early lead, shape the market and establish industry standards, according to the 'Mobile ecommerce: Markets Strategies' report published by Ovum this week.

"The combination of enormous potential and uncertain revenues gives the feeling of a new gold rush, with hordes of hopefuls heading into uncharted and unforgiving territory, many with minimal preparation," said Duncan Brown, analyst at Ovum and author of the report.

He added: "Players offering applications must be clear that substitutes exist at all points and work out why their offering is attractive."

Ovum predicts that the number of mobile devices able to access the internet will exceed the number of PCs by 2003 at the latest. Ovum defines mobile ecommerce as the extension of the internet beyond the static terminal of the PC or TV, using the public mobile network for information access and transactions.

Brown said it would be important to a wide range of industries including telecoms, IT, finance, retail and the media, as well as end users that will spend more than $200bn worldwide on such services by 2005.

Mobile devices in use will exceed one billion by 2003, and Europe will reap the biggest benefits with 165 million users and $74bn in revenues by the end of 2005. Asia-Pacific follows with 129 million users and $56bn in revenues, with the US accounting for 110 million users generating $47bn in revenues.

Despite the huge revenue potential for businesses, "there is also considerable uncertainty about the best approach to raising that revenue", said Brown. In the short-term, systems integrators and software vendors will strike gold by providing the foundations of mobile ecommerce to the main players.

As the market matures, banks, merchants and content providers will be able to identify which services and products are popular with customers, but the big challenge will be finding the applications that users will pay for. Ovum says they will succeed where they meet the three C's: convenience, cost (low) and compulsion.

Brown warns that a complexity of the market is that it "requires close partnerships between a series of players to make the application work", as no single organisation has all the skills and resources needed to deliver the end-to-end experience.

The key to success is forming strategic partnerships vital to establishing market position, said Brown. "Early movers will be able to shape markets, develop industry standards and gain market share," he added.