A Framework of Future Development

The future direction of mobile commerce development is surrounded by considerable economic and technological uncertainty. As the recent history of PCs and the Internet showed, the growth and success of IT hardware depends critically on the availability of attractive software packages. Such packages range from specific software applications (so-called "killer apps") to portal designs that facilitate the user's overall interface with the technology. Particularly in developing economies, the development of the m-commerce landscape requires the emergence of country-specific mobile portals with specialized sites for Web phones. The evolution of m-commerce in such economies has been hampered to date by the lack of such portals. In developed countries, on the other hand, a frequent lament is that the key "killer application" for m-commerce has yet to be identified, again hampering penetration of the new technology.

With the caveat of such uncertainties in mind, summarized in the framework shown in Table 5 are some of the major regional differences that emerge from comparative analysis. Turning first to the vertical dimension (the global centrality of nations in developing m-commerce applications), a dichotomy between core (active developers) and peripheral (passive adopters) nations seems likely. As shown in the upper-right corner of Table 5, countries in the economically most-developed regions (North America, Western Europe, Japan) possess ideal supply and demand conditions for pioneering m-commerce applications. On the supply side, they possess the financial and technological resources to invest in high-risk ventures. On the demand side, they possess the high levels of income and sophisticated industrial users to afford and demand novel applications.

Table 5: Comparative Regional Environments for M-Commerce Development

Global Centrality in M-Commerce Innovation

Infrastructure Role of Mobile Telephony

Substitute for Fixed Lines

Supplement to Fixed Lines

Active developer

Industrialized East Asia (e.g., Japan, South Korea, Taiwan)

North America, Europe (e.g., the United States, Scandinavia)

Passive adopter

Developing Countries (e.g., Argentina, Sri Lanka)

"Null Set" (but may be filled for 4G)

Source: Authors' research.

Nonetheless, the considerations explored in our prior analysis give some reason to expect an "expanded core" of pioneering nations in m-commerce, including, in particular, East Asia (upper-left corner of Table 5). This is due, in part, to the mobile Internet handicap of the United States. Traditionally the world's leader in IT innovation, the United States is now saddled with such extensive sunk investments in fiber cables that investment in mobile Internet infrastructure (particularly in 3G) is lagging. The reasons are more general than just the U.S. lag, however. These reasons are captured in the horizontal dimension of Table 5, the distinction between countries where mobile telephony supplements fixed lines and countries where it genuinely substitutes for fixed lines. In the latter, especially certain developing countries in Asia and South America, mobile penetration is much higher than Internet access. Can this be turned to an advantage for business and development through m-commerce (ITC Executive Forum, 2001)? Particularly in the East Asian "Tiger" countries (Taiwan, Hong Kong, South Korea, and Singapore), with their specialization in consumer electronics and computing products, there is good reason to think that it can.

Recent contracts awarded by some developing Asian economies to telecom vendors in the United States and Europe indicate that many of the advances in wireless communications are likely to be installed in Asia before in North America and Europe. Fiber optic and cable networks enjoyed by consumers in the United States simply do not exist in most Asian countries. Furthermore, contrary to the popular belief that the wireless Internet will only be successful in markets with lower PC penetration, economies with high PC penetration, such as South Korea, are also showing phenomenal success in m-commerce. [7] For example, Korea Telecom Freetel launched 1X technology [8] at the end of 2001 and achieved a 35% penetration rate of wireless Internet use within five months, with 1X users consuming twice as much airtime as other mobile users (Luna, 2002). Furthermore, after introducing Binary Runtime Environment for Wireless (BREW) [9] applications, data revenue increased by 60%.

Demand and supply factors influence the potential of East Asian countries to become "lead markets" for m-commerce innovation. The use of wireless communications as a substitute for fixed-line access to the telephone and Internet network creates a demand advantage to the extent that it translates into earlier and higher diffusion rates in the population's use of the new technology than in other advanced countries. Just as important, however, are supply-side factors. Like Japan, East Asian Tiger countries feature a large number of producers specialized in innovative, high-technology products for global IT markets. Such East Asian countries, therefore, have the means to translate feedback from behavior in their domestic markets into novel product designs. Having already climbed the ladder from technology imitators to active technology developers, these countries have the requisite understanding of global markets to pioneer innovative m-commerce products, especially in components and hardware.

In contrast, not all developing countries using wireless telephony as a substitute for fixed lines can be expected to be global innovators in the use of the new technology. Developing countries using mobile networks as a cost-effective alternative to fixed lines in large rural areas (Sommermeyer, 2001), for example, will not necessarily be major innovators in using and developing the technology. In the context of the Asia-Pacific region, analyst Frank Yu of Ion Global argued that developing markets like China do not have a need to broaden their existing wireless penetration base by adding more services. He argued: "They have other basic needs they want to work on before they start experimenting with prototype systems. They'll just let Japan and Korea do that" (quoted in Stout, 2001). As the earlier example of GWCom illustrates, however, this fact does not preclude countries like China from pioneering innovative uses of existing wireless technologies. Meanwhile, the proximity of the huge Chinese market may provide advantages to Japanese and Korean producers in their exploration of new m-commerce applications.

[7]PC penetration in South Korea is about 50%, similar to levels in the United States (Luna, 2002).

[8]1X (or CDMA2000 1X) is the name that identifies the 3G technology that upgrades CDMA networks and wireless devices to 3G features and services.

[9]BREW platform, designed by QUALCOMM, is a thin application execution environment providing an open, standard platform for wireless devices. Carriers' BREW-based services enable wireless users to customize their handsets by downloading applications over the air from a carrier's application download server.

Wireless Communications and Mobile Commerce
Wireless Communications and Mobile Commerce
ISBN: 1591402123
EAN: 2147483647
Year: 2004
Pages: 139

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