Background: Rapid Diffusion of Mobile Technology

Mobile technologies—for communications, for accessing the Internet, and for m-commerce transactions—are growing hyperbolically. Mobile devices have become the fastest adopted consumer products to date. In 2000, more mobile phones were shipped than automobiles and PCs combined (Chen, 2000; de Haan, 2000). In the 1990s, the number of mobile phones worldwide grew by 50% annually compared to less than 10% growth in fixed connections. The proportion of mobile phones increased from one out of 50 phone connections in 1990 to one out of three in 1999 (Wellenius, Braga, & Qiang, 2000). The number of mobile subscribers worldwide increased from 11 million in 1990 to 318 million in 1998 (Wai, 2001) and is projected to reach 1.2 billion by 2005, with 450 million using some sort of location-based service (Secker, 2001). The fixed telecommunications industry took more than 130 years to reach comparable levels of diffusion. An estimate suggests that by 2009, there will be more cellular subscribers in the world than fixed-line subscribers (ITU, 2000). Another estimate suggests that by 2005, Internet access through wireless devices will outstrip access via personal computers (UNDP, 2001). Furthermore, more than 25% of e-commerce will take place over handheld sets by 2005 (Shaffer, 2000).

To exploit the opportunity created by the meteoric growth of mobile phones, companies around the world are rapidly integrating m-commerce technology into their business models. This is happening as much in developed as in developing countries, often with fascinating cross-border differences in the most prominent initial applications. An exemplary developed-country m-commerce provider is the U.S. online book retailer Amazon.com that signed deals with wireless providers Sprint PCS, Verizon, Airtouch, and Nextel to leverage m-commerce technology in the company's offerings (Lindsay, 2000). Of fast-moving m-commerce firms in developing countries, a notable example is GWCom. This mobile wireless applications services provider in China launched its wireless portal byair.com in 1998 to provide timely information and e-commerce capabilities, such as stock trading and banking, to users with mobile phones or wireless palmtop devices. By March 2000, byair.com had more than 6,000 subscribers with up to 3,500 daily stock trades and 250,000 page views. It handled more than 30 million information requests and 200,000 wireless stock transactions ^[2] (Ebusinessforum.com, 2000). Wireless users have been using GWCom's application platforms to conduct online trading since 1998 in Shanghai and since 1999 in Shenzhen. In March 2000, 3,000 investors in Shanghai and 100 in Shenzhen were trading stocks over the paging networks managed by GWCom. The average daily volume of 3,000 Shanghai users in early 2000 was $3.6 million, about 30 times as much as the average trading volume on stockstar.com, the largest and most popular Web-based stock-trading company.

Farmers and small business owners from developing countries are also making extensive use of m-commerce applications. They are utilizing the information gathered via mobile phones to eliminate or reduce the role of intermediaries in the value chain and to lower the risk of their profit margins being squeezed by larger firms or firms from developed countries. Bangladeshi farmers employ such phones to find the proper prices of rice and vegetables. Farmers in remote areas of the Ivory Coast share mobile telephones so that they can follow hourly fluctuations in coffee and cocoa prices in the international market. Thanks to mobile phones, they can now choose the time to sell their crops, when the world prices are in their favor. A few years ago, the only way to find out about market trends was to go to the capital city. Then, the deal making was largely based on often-unreliable information from buyers (Lopez, 2000). Similarly, fishermen in India use mobile phones to obtain information about the price of fish at various accessible ports before deciding where to land their catch (Rai, 2001). ^[3]

^[2]See http://www.gwcom.com/html/news0303.htm.

^[3]The examples in the foregoing paragraph are of using mobile phones as aids for regular commerce. The step to m-commerce, however, is a short one, when reliable and easy-to-use data-ready phones become widely available.