[Tornado-Insider] 3G’s Killer App Question Mark

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From: Linda (joelinda1@home.com)
Date: Thu Jun 01 2000 - 18:58:03 PDT

                  3G’s Killer App Question Mark
                  May 30, 2000 19:05 CET
                  By Guy Middleton, Senior Editor, TORNADO-INSIDER.COM

                  Nokia hopes to be at the core of the operators’ third-generation networks as well
                  as supplying the handsets. But the Helsinki-based firm that claims close to a
                  third (17,000) of its staff work in R&D says it's too early to know what will be
                  3G's killer application.

                  Nokia is confident that the proportional shift of operator revenue from voice to
                  data-based services will accelerate rapidly with the arrival of 3G services.
                  “Today voice is probably bringing in 95 percent of mobile operators’ revenues.
                  We believe that by 2005 mobile Internet services will account for around 60
                  percent of the total revenues,” says chief technical officer at Nokia Mobile
                  Phones, Yrjö Neuvo.

                  Should this view be accurate, application developers with their eyes on the 3G
                  market should be busy be over the next few years. Alongside this explosion in
                  services revenue for the operators comes a prediction that from the handful of
                  services pitched at 2G WAP users there will be in excess of 5,000 available by
                  2003 from 3G operators and third parties.

                  “The largest opportunities are ahead – surprising and novel applications will
                  emerge. Five to six years ahead we don’t know what the applications will be,”
                  adds Neuvo.

                  IBM, which is working closely Nokia on a number of 3G-related projects says
                  for most e-commerce sites adaptation for use on 3G terminals will be about
                  optimizing content for the larger screen areas of the wireless terminals. The
                  company claims a typical site takes around 11 days work to convert to a more
                  3G-friendly format and is working on applications that will do this conversion on
                  the fly.

                  Nokia takes the view that 3G services will, like radio and television before it, be
                  driven by entertainment. This approach seems to be driving some of the
                  company’s venturing activities.

                  In the US Nokia Ventures has invested in Pogo.com, an online games developer
                  as well as MongoMusic, a music technology company that combines a search
                  engine with a music-matching service. Since Nokia Ventures extended its
                  venture activities to Europe (in February) it has only announced two investments
                  – one being in Finnish wireless games developer Riot Entertainment. Riot
                  Entertainment develops SMS and WAP driven games. Another investment – in
                  a UK-based firm – is due to be announced later this month.

                  There isn’t likely to be a killer app for business in 3G, argues one analyst. For
                  business users it will be all about bandwidth: “Businesses will be sending a lot
                  more data to and fro,” says Internet analyst at Nomura, Dan Bieler. For
                  consumers messaging will remain central but will be enhanced by live video.
                  Music downloads and games will also be key for consumers, says Bieler.

                  But the possibilities of 3G mean that Nokia will increasingly move into
                  partnering with content providers to add more “intelligence” to its powerful brand
                  says Bieler.

                  “Nokia is running the risk of becoming a vendor of plastic and chips - this is not
                  a model for the future. In the future much of the intelligence will be in the
                  networks. The operators don’t want to simply become carriers.” Bieler adds
                  while the operators may want to fight the expanding role of backbone and
                  handset manufacturers, when it comes to brands like Nokia they may find it
                  difficult to resist.

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