M-Commerce: Challenges and Opportunities

M-commerce faces challenges, such as lack of standards, lack of ubiquitous wireless network coverage, technical differences among wireless devices, and security among others. Furthermore, the high prices of mobile services together with the slow access speed have not helped to add to the luster of the mobile environment. Some of the key challenges are as discussed below.

Wireless Constraints

Developing content for wireless devices requires rethinking the Web experience. Wireless content developers need to begin from the ground up, developing content for these new devices. These devices tend to have little real estate available for viewing content—often as small as 14 7 characters. Wireless devices also tend to be monochromatic, so images do not render well. Keyboards are difficult to use. Wireless devices tend to have limited CPU, memory, and battery life. Developers and designers need to find new, intuitive navigational techniques to overcome these constraints. Today, the most common navigational technique on wireless is the drill-down capability (Gutzman, 2000).

Another constraint of wireless capabilities is the amount of bandwidth available for use of data transmission. This new technology would put a greater burden on current bandwidths available for wireless transmissions. Alternate bandwidths must be opened for transmission.

Wireless User Behavior

Wireless users will not be expected to "surf the Web" in the traditional sense. This is due to the viewing and input constraints of using a wireless device and the relative inconvenience of performing any but the most straightforward, time-critical tasks. More likely, wireless users are expected to use their devices to execute small, specific tasks that they can take care of quickly, such as finding the time of local events, purchasing tickets, looking up news, or checking e-mail. Content developers need to develop with these motives in mind. Rather than just translating a content-rich site into WML, developers need to think in terms of surgical access to content and drilling-down capabilities to detailed information in the site (Gutzman, 2000).

Larger screens were developed for viewing, but use of magnification or projection techniques would make it easier for users to view Internet content. Keypads designed for smaller appliances should be developed with small typing ability in mind.

Infrastructure for Wireless Internet

Currently, the infrastructure to handle smart cards is not generally established (except in Europe). Most industry analysts believe that smart cards will eventually become mainstream for paying in shops and on the Internet, together with a PC. In many countries, smart ID cards will also become fairly wide-spread. One of the problems is that the cost for shops, banks, companies, homes, and PC owners to convert to smart cards makes the process fairly slow. There is an obvious risk that consumers, banks, and companies, after the initial WAP-euphoria is gone, may start to question the rationale behind having multiple payment systems and could begin to put pressure on the mobile-phone makers to force them to adapt their systems to the rest of the world. This is an awkward solution, because it sets unnecessary physical constraints for mobile phones and is also likely to need "software fixes" for each new card variant. Even when used over GSM, operators will simply be supplying a gateway to the Internet, which will be regarded as a standard part of a subscription. Without such support, the m-commerce market could become severely crippled (Rundgren, 1999c).

Security

Security of data transmissions and commerce being conducted by wireless devices is a great concern for businesses and individuals today. The wired Internet is vulnerable to interception or compromise by unauthorized users' attacks, because wireless LAN/WAN networks use a publicly available spectrum. Individuals have been wary of using Internet commerce for fear of having their credit card used improperly. A prerequisite for the success of mcommerce applications is the legal recognition and nondisputability of any transactions effected. The mobile digital signature may be an answer to this problem (Brokat, 2000).

New smart cards, available for wireless communications applications, will enable secure transactions via the Internet. The wireless identity module (WIM) will guarantee a new level of security by giving mobile Internet users the ability to safeguard their transactions through encryption and digital signatures. Compliant with the WAP, the WIM device will allow mobile network operators and service and content providers to begin implementing m-commerce services, such as secure information access, online banking, and the purchase of goods and services. The WAP-powered identity module supports "logical channels," enabling users to pass from one application to another without losing transactions that have already been carried out. The card offers two forms of protection: client-to-server authentication using ultralong keys, and the ability to generate the digital signature required to secure the application. Unlike an encryption-enabled browser, the secret keys handling the encryption remain in the user's smart card, by definition a tamper-resistant device, and allow it to be removed and transferred to other devices (Electronic Buyer's News, 1999).

One advantage of smart card IDs is that they are extremely hard to forge. To crack a private key stored in a smart card or guess its value based on a corresponding public key is very difficult. A PIN code is added as an extra security measure to avoid abuse if the card gets stolen or lost. An ordinary ID card can only be used for identification, while a smart-card-based ID card can also be used to digitally sign documents and transactions in a nonrepudiated way (Rundgren, 1999a). However, the security measures typically implemented with a wireless application delivery approach can add to the costs and make the computing system more complex to administer and use.

Privacy

Privacy is another issue not resolved by the growth of m-commerce. The new connectivity of consumers to the Internet is a great convenience for consumers, but it also comes at a price. The price is the value of privacy that individuals lose, as they become hooked-up to the Internet. One part of privacy is that the development of smart cards for use with cell phones is convenient for consumers wanting to buy or sell. However, much personal data is enclosed on the card, and it could be used for the wrong purposes. Many cell phones can be equipped with a global positioning chip that can identify the location of the user. This new technology would be good for emergencies but could also be used against the individual for monitoring purposes or other activities. These are issues that still need to be addressed and have been downplayed by current technology developers. Privacy is one of several issues that complicate the long-term timetable for developing location-based m-commerce. Another issue is the level of direct access marketers will have to customers, because the Internet will be located with the individual customer and can be contacted by voice, e-mail, or Internet (Vujovesic & Laberge, 2000). Next, we discuss the opportunities made available by m-commerce and wireless communications.

Opportunities

Despite the barriers that still exist for the unfettered deployment of m-commerce, cautious optimism for growth is pervasive. One of the driving forces for increased use of mobile devices is the desire to change business processes inside the enterprise, rather than between businesses or based solely on a consumer model as prevailing predictions from several years ago.

A current survey of businesses by Forrester Research (Cambridge, Massachusetts, USA) found that 47% of the country's leading companies are in the process of rolling out mobile applications or are considering doing so (Mertz & Serrell, 2002). PricewaterhouseCoopers, in their 2002–2004 Tech Forecast, projected worldwide revenue for mobile middleware to grow 60.7% compounded annually between 2000 and 2005 (PricewaterhouseCoopers, 2002). Applications for remote/off-site employees (viz., salespeople, truckers, and so forth) also provide a significant opportunity. A popular innovation in the United States is the satellite tracking and communication devices in approximately 1 million vehicles, such as the OnStar equipment from GM . OnStar has 800,000 subscribers in the United States and Canada and expects 4 million vehicles to be equipped with this system by 2003 (Kalakota & Robinson, 2001, p. 6).

With the packet-switching technology in the GPRS network, carriers can optimize how they transmit data, sending data when dips in the capacity utilization of the networks occur. By sending data at a lower cost, carriers can stimulate demand and extract higher profit margins by selling wireless data services. Pricing, coverage, and functionality are the key drivers for consumers in the United States to adopt new wireless technologies and services. To convince customers to adopt wireless, carriers will have to embrace pricing models, such as the pay-per-use billing model made possible by packet-switched networks. Accenture Inc. (New York, USA), an information technology consulting and management company, in its recent report titled "The Future of Wireless," predicts that the global market for small wireless Internet-capable devices, such as handheld computer, basic microbrowser phones, and smart phones will grow 630% by 2005 (Beal et al., 2001). This projection was based on the current level of mobile devices and the mobile commerce technology available in the market. Thus, this projection could increase dramatically with the arrival of new wireless technology.

While most of the industry foresight focused on mobile solutions for the enterprise arena, PricewaterhouseCoopers (now IBM) weighed in projecting both collaborative use (between enterprises) as well as consumer use. The upshot is that while enterprise solutions will maintain the lion's share of the m-business market, with the fastest growth and majority of revenue, collaborative and consumer markets will also grow exponentially over the next few years. Listed in Appendix B is the growth potential forecasted across the world by various research organizations.