Mobile Commerce: Current States and Future Trends

Advances in wireless technology increase the number of mobile device users and give pace to the rapid development of e-commerce using these devices. The new type of e-commerce, conducting transactions via mobile terminals, is called mobile commerce. Due to its inherent characteristics such as ubiquity, personalization, flexibility, and dissemination, mobile commerce promises business unprecedented market potential, great productivity, and high profitability. This paper presents an overview of mobile commerce development by examining the enabling technologies, the impact of mobile commerce on the business world, and the implications to mobile commerce providers. The paper also provides an agenda for future research in the area. 2 Siau, Lim, and Shen Copyright © 2003, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. INTRODUCTION Advances in wireless technology increase the number of mobile device users and give pace to the rapid development of e-commerce conducted with these devices. The new type of e-commerce transactions, conducted through mobile devices using wireless telecommunications network and other wired e-commerce technologies, is called mobile commerce (increasingly known as mobile e-commerce or m-commerce). Mobile commerce enables a new mode of information exchange and purchases, and it presents an unexplored domain. To customers, it represents convenience; merchants associate it with a huge earning potential; service providers view it as a large unexplored market; governments look it as a viable and highly productive connection with their constituents. In short, mobile commerce promises many more alluring market opportunities than traditional e-commerce and, as a result, the global mobile commerce market is expected to be worth a staggering US$200 billion by 2004 (Guy Singh, 2000). Because of the characteristics and constraints of mobile devices and the wireless network, the emerging mobile commerce operates in an environment very different from e-commerce conducted over the wired Internet. Although mobile commerce will emerge as a major focus of the business world and telecommunication industry in the immediate future, the marriage of mobile devices and the Internet is filled with challenges as well. The article is structured as follows. We will first summarize the features of mobile commerce. Next, value-added applications of mobile commerce and an overview of mobile commerce technology are presented, and the business implications are discussed. We then highlight the challenges in implementing mobile commerce. Finally, we suggest possible directions for future mobile commerce research. FEATURES OF MOBILE COMMERCE The essence of mobile commerce revolves around the idea of reaching customers, suppliers, and employees regardless of where they are located. Mobile commerce is about delivering the right information to the right place at the right time. It gives users the ability to access the Internet from any location at any time, the capability to pinpoint an individual mobile terminal user’s location, the functionality to access information at the point of need, and a need-based data/information update capability. Mobile commerce has features not available to traditional e-commerce, some of which we discuss next: Ubiquity. Ubiquity is the primary advantage of mobile commerce. Users can get any information that they are interested in, whenever they want regardless of their location, through Internet-enabled mobile devices. In mobile commerce applications, users may be engaged in activities, such as meeting people or Mobile Commerce: Current States and Future Trends 3 Copyright © 2003, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. traveling, while conducting transactions or receiving information. In this sense, mobile commerce makes a service or an application available wherever and whenever such a need arises. Reachability. Through mobile devices, business entities are able to reach customers anywhere anytime. With a mobile terminal, on the other hand, a user can be in touch with and available for other people anywhere anytime. Moreover, the user might also limit his/her reachability to particular persons or at particular times. Localization. The knowledge of the user’s physical location at a particular moment also adds significant value to mobile commerce. With location information available, many location-based applications can be provided. For example, with the knowledge of the user’s location, the mobile service will quickly alert him/her when his or her friend or colleague is nearby. It will also help the user locate the nearest restaurant or ATM. Personalization. An enormous number of information, services, and applications are currently available on the Internet, and the relevance of information users receive is of great importance. Since owners of mobile devices often require different sets of applications and services, mobile commerce applications can be personalized to represent information or provide services in ways appropriate to a specific user. Dissemination. Some wireless infrastructures support simultaneous delivery of data to all mobile users within a specific geographical region. This functionality offers an efficient means to disseminate information to a large consumer population. VALUE-ADDED APPLICATIONS As mobile commerce extends current Internet sales channel into the more immediate and personalized mobile environment, it also revolutionizes the business world by presenting it tremendous opportunities to provide additional value to hardto-reach end customers. These value-added services include: Easy, timely access to information (e.g., the latest availability of flights). Delivering a service that not only reaches more people but also is available all of the time, mobile commerce enables consumers to make purchases from wherever they are whenever they are ready. This will result in an increase in revenue to the company providing the mobile services. 4 Siau, Lim, and Shen Copyright © 2003, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. Immediate purchase opportunity (e.g., last-minute purchases of tickets or gifts). Provided with a personalized, immediate opportunity to purchase, the customer will make the purchasing decision on the spot and not go to an alternate source. Wireless coupon based on user profiles. Since a mobile device’s location can be determined precisely, the stores around the mobile device user can transmit user-specific information, such as current sales or specials, and alert the user about similar upcoming events. Wireless coupons, which enable an advertiser to deliver geographically targeted and time-sensitive message to a willing consumer directly with a promotional offer virtually anytime and anywhere, will increase acquisition efficiency and allow direct offers suited to user profiles or stated users’ preferences. Beaming money. Some bank transactions such as withdrawals and deposits will be conducted via mobile terminals in the near future. Electronic money can even be transferred to mobile devices allowing the latter to be used for electronic payments. The only limit on the number and types of mobile commerce applications is our imagination. Varshney and Vetter (2001) identified a few important classes of applications such as mobile finance applications, mobile advertising, mobile inventory management, and product location shopping. As wireless technology further evolves, its application in business will only be broadened by more and more innovative mobile commerce possibilities (see Figure 1). Figure 1: Applications of mobile technology Travel reservations and booking, Online auction bidding, Wireless coupons, Buddy finding, Beaming money, Navigational aids, Location specific transactions, and many others. Voice communication Yellow pages, Travel updates, Email, Stock trading, instant messaging Yesterday Today Tomorrow Mobile Commerce: Current States and Future Trends 5 Copyright © 2003, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. MOBILE COMMERCE TECHNOLOGY: AN OVERVIEW Mobile commerce is enabled by a combination of technologies such as networking, embedded systems, databases, and security. Mobile hardware, software, and wireless networks enable mobile commerce systems to transmit data more quickly, locate users’ positions more accurately, and conduct business with better security and reliability. In this section, we introduce the key technologies that make mobile commerce a reality and that will improve its performance and functionality in the near future. Communication technology GSM. Global System for Mobile Communication (GSM) is so-called the second-generation (2G) digital network, operating in the 900 MHz and the 1800 MHz (1900 MHz in the US) frequency band. A circuit-switched service, where users must dial in to maintain a connection when data communications are desired, is the prevailing mobile standard in Europe and most of the Asia-Pacific region. GPRS and EDGE. GPRS (General Packet Radio Service) and EDGE (Enhanced Data GSM Environment) are so-called 2.5G technologies. GPRS uses the existing network infrastructure but is being marketed as delivering ISDN-type speeds. Rather than sending a continuous stream of data over a permanent connection, GPRS’s packet switching system only uses the network when there is data to be sent. Users can send and receive data at speeds of up to 115 kbits/second with GPRS. EDGE, a faster version of GSM, is designed to enable the delivery to multimedia and other broadband applications. It will use new modulation techniques to enable data rates of up to 384 kbits/second over the existing GSM infrastructure. UMTS. Universal Mobile Telecommunications System (UMTS), the so-called third-generation (3G) technology, aims to offer higher-bandwidth, packetbased transmission of text, voice, video, and multimedia needed to support dataintensive applications. Once UMTS is fully implemented, computer and phone users can be constantly connected to the Internet and have access to a consistent set of services worldwide. Integrating the functions of a whole range of different equipments, the new 3G-enabled mobile phone can be used as a phone, a computer, a television, a paper, a video conferencing center, a newspaper, a diary, and even a credit card. Fourth-Generation Technologies. Although 3G technologies are just emerging, research has commenced on fourth-generation (4G) technologies. These 6 Siau, Lim, and Shen Copyright © 2003, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. research initiatives encompass a variety of radio interfaces and even entirely new wireless access infrastructure. Better modulation methods and smart antenna technology are tow of the main research areas that enable fourthgeneration wireless systems to outperform third-generation wireless networks (PriceWaterHouseCoopers, 2001). Bluetooth: Bluetooth, named after a tenth-century Danish king who conquered Scandinavia, is a low-power radio technology for communication and data exchange. Using a single chip with built-in radio-transmission circuitry, Bluetooth is an inexpensive short-range wireless standard supporting local area networks (LANs). It was developed to replace the cables and infrared links within a tenmeter diameter. Bluetooth can be used to link electronic devices, such as PCs, printers, mobile devices, and PDAs, to wireless data networks. Figure 2: Evolution of wireless communication technology Analog cellular GSM GPRS EDGE UMTS 1G Technology 2G Technology 2.5G Technology 3G Technology 4G Technology Mobile Commerce: Current States and Future Trends 7 Copyright © 2003, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. The 1 generation wireless technology was the cellular phone. The 2 generation wireless technology, which includes digital cellular phones, is narrowband and currently in use worldwide. The 3 generation wireless technology offers high bandwidth to support data-intensive applications. WAP. Wireless Application Protocol (WAP) is an open and global standard for mobile solutions, designed specifically to deliver Web information to mobile terminals (as shown in figure 4). As an end-to-end application protocol, it attempts to provide solutions to the challenges in developing mobile applications, such as connecting mobile terminals to the Internet and making mobile terminals become communication devices capable of communicating with other devices over a wireless network. It also permits the design of interactive and real-time mobile services. Information Exchange Technology HTML. HTML (Hyper-Text Markup Language) is widely adopted by the Internet community as the document format for browsing. The availability of Figure 3: Evolution of wireless technology Cellular Phone Digital Cellular Phone & etc. 3G Cellular Phone 1 Generation 2 Generation 3 Generation Figure 4. WAP Operation System Mobile Client WAP GateWay Web Server Request Request