Mobile role models
By Terho Uimonen and James Niccolai
WHEN IT COMES TO wireless data services -- the new frontier in the
Internet's rapid development -- even the largest U.S. IT companies
are learning to play second fiddle to their European cousins.
For one thing, the European market right now is better prepared to
actually use wireless services. The penetration of data-enabled
mobile phones already is higher in Europe than in the United States
-- a gap that is expected to widen rather than narrow over the next
few years. In addition, a more integrated wireless infrastructure
allows Europeans to roam with their handsets without having to worry
about network incompatibilities.
With a market primed to move on to a new set of sophisticated
handheld mobile devices, leading European carriers and mobile phone
vendors are poised to deliver a whole new set of services and
gadgets. Services that exist today overseas point to services for
U.S. consumers tomorrow. As a result, IT managers need to keep a
close watch on how the mobile Internet unfolds elsewhere to develop
Web site features and mobile services for future mobile use in the
Likewise, American technology companies are making moves to follow
their European counterparts. In the latest of a string of
announcements made by U.S. and European companies, Microsoft's
long-awaited move to more firmly establish itself in the wireless
arena consisted of setting up a joint venture with L.M. Ericsson
Telephone Co., the Swedish mobile-phone network equipment provider
and handset maker.
The majority of the joint company will be owned by Ericsson and based
"I know no better place to base the company than here," said Steve
Ballmer, president of Microsoft, speaking at a press event held in
the Swedish capital. Microsoft earlier this year established a
wireless research and development center near Stockholm, which
Ballmer called "the center of mobility."
To the surprise of many observers, Ericsson did not even sign up to
use the software giant's OS in its products -- it only committed to
using Microsoft's new Mobile Explorer microbrowser in some future
Microsoft, however, had a great deal to gain from partnering with one
of the leading companies in mobile telephony. Much of the joint
venture's core development and marketing activities will be targeted
at mobile-phone network operators, a market with potentially large
returns in which Ericsson is already well-established, helping
Ericsson come within reach of the world's largest software company.
More importantly for business users, the partnership will drive for
more standardized wireless access to e-mail and data residing on
corporate intranets, based on Microsoft's Exchange Server platform
and Ericsson's wireless infrastructure products, officials said.
"We see this as an important step in our efforts to work
cooperatively with the [mobile-phone] industry," said Bob Muglia, the
newly appointed vice president of Microsoft's Business Productivity
Microsoft is not alone in signing up European partners to advance its
wireless efforts. Hewlett-Packard and IBM have spent much of the past
year building closer ties with other mobile players in Europe, most
notably Finland's Nokia. Intel also recently announced the
establishment of a research and development unit in Sweden that will
target the wireless market.
Oracle, meanwhile, has a three-year-old development relationship with
Sweden's Telia, the country's largest telecommunications carrier.
Located in the Swedish port city of Gothenburg, the joint development
team's efforts already have resulted in new Oracle products including
Portal-to-Go, the database vendor's first software offering aimed
squarely at delivering Web content to mobile phones and other
handheld devices. The companies are codeveloping further applications
for Portal-to-Go, including an instant-messaging program.
Europe's infatuation with digital mobile phones stands in contrast to
the continent's relatively slow adoption of PCs and the Internet.
While only about one-fifth of European households currently own a PC,
mobile-phone penetration in several countries has reached about 40
percent. In technology-mad Finland, more than 60 percent of the
population already has a mobile phone, and the country's largest
carrier, Sonera, foresees that wireless subscriptions soon may
outnumber fixed-line connections in the Nordic country.
The discrepancy between PC and mobile phone saturation is causing
some Internet companies to rethink their strategies in Europe. Online
auctioneer eBay, for example, has already launched a trial offering
its services to German mobile-phone users.
"In Italy, there is such a high mobile-phone penetration that we are
considering offering auctions there via mobile phone without even
setting up a Web site for auctions," said Oliver Samwer, eBay's
managing director for Europe.
Increasingly, Europeans are using their beloved mobile phones for
more than just gabbing. In the United Kingdom alone, the country's 20
million or so users exchanged some 140 million short-message service
(SMS) text messages during the month of October, according to
statistics from the Mobile Data Association, an industry group in
Throughout Europe, SMS is proving hugely popular with youngsters in
particular, say analysts. One reason is that SMS messages can be
exchanged between users subscribing to different operators, because
virtually all of Europe's digital mobile phone networks are based on
the same Global System for Mobile communications (GSM) technology.
The rallying around the GSM standard is viewed by many as a key
differentiator between Europe and the United States, where fragmented
technology and spotty coverage, combined with a slower uptake of
digital phones, has held back universal development efforts.
"On the applications side of things, having that single standard is a
huge plus," said Declan Lonergan, director of wireless services for
Europe at Strategy Analytics, in London.
And although Europe appears to be moving faster than the United
States, both markets are moving in the same direction -- from
voice-centric devices to devices that are easier to enter and receive
data on, Lonergan noted.
"I'd put Europe ahead of the U.S. at this point, although everyone's
looking at Japan as being ahead as well, thanks to the I-Mode
explosion," Lonergan added.
However, wireless data is still at an embryonic stage in Europe, held
back in large part by a lack of widely available data-enabled
handsets. Meanwhile, over 2 million Japanese subscribers to NTT
Mobile Communications Network's (NTT DoCoMo's) I-Mode service already
access Internet-based content and services, including e-mail, via
their mobile phones.
But if the success of SMS is any indication, Europe appears to be
full of pent-up demand for wireless data and information services. By
2003, the number of cellular data users in Western Europe will reach
51 million -- up from 3.5 million in 1998 -- as compared to 28
million and 1.9 million, respectively, in the United States,
according to estimates from Strategy Analytics.
Already, operators in the Nordic countries, which observers say are
leading the way, are seeing rapid growth in data traffic.
In Sweden, for example, Telia now expects that within two years, data
will make up as much as 30 percent of the traffic generated by
corporate customers of the carrier's Department of the Future mobile
services portfolio, up from 10 percent today, according to Jonas
Wilhelmsson, senior business development manager at Telia Mobile.
Waiting on WAP
Europe's lead, however, may be dwindling. Delays continue to plague
the long-awaited arrival of handsets supporting wireless application
protocol (WAP), a network-agnostic specification designed to allow
access to specifically written Internet content from mobile phone
handsets and other compliant devices.
Although Nokia, the world's largest mobile-phone supplier, in
September launched its first WAP-compliant offering, the 7110
handset, it has to date failed to deliver the product in any
significant volume. Meanwhile, in October Ericsson was forced to
admit that its R380 handset, the vendor's first handset purposely
designed with data access in mind, will not become widely available
until the second quarter of next year.
And WAP, according to some observers, will level the playing field
and lessen the problem of the more fragmented network infrastructure
in the United States
"Europe definitely has a lead in terms of the technology," said
Denise Lahey, vice president of Oracle's mobile and embedded products
division. "But then the U.S. is a lot further ahead in terms of IP.
With the coming of WAP, and the new standard being IP-based, I think
the U.S. will start coming up to speed more quickly."
The first generation of WAP content and services will largely be
text-based, due to the limited bandwidth capabilities of data
transmissions over GSM networks. Most GSM networks today only support
data moving at 9.6Kbps, although some carriers have deployed
compression technologies to speed up traffic to 14.4Kbps.
By sticking with simple, no-frills, text-based content and services,
however, operators are banking on users not even noticing the
slowness of the transmissions.
Initially at least, services such as banking, stock quotes and even
trading, traffic information, news, and e-mail are expected to be
among the standard offerings from WAP portal providers, according to
analysts and industry representatives.
"I think next year will be the year for WAP," said Strategy
Foundation for the future
Looking beyond WAP, operators throughout Europe are also rushing to
upgrade their current circuit-switched GSM networks to a new
packet-switching technology. Called general packet radi service
(GPRS), the packet-switching technology is viewed by many as a key
enabler for future, more advanced data services. GPRS networks,
expected to come online in the second half of next year, will be
capable of supporting data moving at as fast as 115Kbps, offering
speeds comparable to fixed-line ISDN services.
The next step will be the big one. NTT DoCoMo, once again, is
expected to launch the world's first third-generation (3G) mobile
network in early 2001. These 3G networks promise to bring
transmission speeds of at least 384Kbps, and to give birth to a whole
new generation of smart phones and services such as mobile
Many Asian and European countries are already in the midst of
allocating spectrum and auctioning off licenses for 3G network
operators, but the United States may again be slipping behind,
according to some analysts.
"Unless the FCC [Federal Communications Commission] comes out and
says they'll be licensing spectrum for 3G technologies, there will be
little progress here [in the United States]," said Naqi Jaffery, a
Dallas-based industry analyst for mobile communications at Gartner
Group's Dataquest market research company.
The growth of mobile voice traffic in the United States has been so
rapid that network operators, especially AT&T and Sprint, are already
running into capacity issues, Jaffery noted. Data technologies,
especially high-bandwidth ones, use so much spectrum that the
operators have little incentive to implement third-generation
services unless the FCC steps in and frees up more spectrum, he added.
Microsoft's Ballmer, meanwhile, said that mobile Internet access
could bring the United States up to speed when it comes to adoption
of wireless technologies.
"Things have taken long enough now to get started in the U.S., and to
really see the kind of acceptance, use, and penetration that we see
in most other parts of the world, will require something new,"
Ballmer said. "And the mobile Internet, I think, is the key."
Terho Uimonen is a senior correspondent for the IDG News Service, an
InfoWorld affiliate, based in Stockholm, Sweden. James Niccolai is a
senior U.S. correspondent based in San Francisco. Mary Lisbeth
D'Amico, in Munich, contributed to this article.