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A high-wireless act

Consumers have a message for companies trying to figure out why the wireless Web market has failed to take off in this country: It's the screen, stupid.


Mobile markets fall flat for many consumers

By John Borland
Staff Writer, CNET
January 18, 2001, 4:00 a.m. PT

Consumers have a message for companies trying to figure out why the wireless Web market has failed to take off in this country: It's the screen, stupid.

NTT DoCoMo's I-mode technology (left), popular in Japan, offers color screens and small graphics, while WAP technology (right), used widely in the United States and Europe, allows for only monochrome, text-based screens.
Only a year ago, companies were promising to liberate the power of the Internet from the confines of the desktop computer, bringing it to the nearest pocket-sized cell phone. The gap between hype and reality is hardly new to the high-tech world, but one glaring question continues to dog this multibillion-dollar industry: Why is the U.S. market so tough when other countries are flocking to the new technology in large numbers?

Part of the answer lies in a combination of industry hype, consumer confusion and cultural differences that change the way people use such technologies from country to country. But the main reason, analysts say, is the simple fact that products on the U.S. market are more difficult to use.

"There was a whole range of things that need to be changed," said Jakob Neilsen, an influential Silicon Valley computer consultant, who conducted a recent consumer survey that yielded complaints about Web site content, network connections, baffling navigation and other major problems. "That leads to the conclusion that, by the time all of these things have been fixed, something else will be along to replace it."

Interestingly, a major reason for this technological lag may be the very thing that is often touted as America's most powerful weapon in technology: competition.

In effect, the stampede of companies joining the wireless gold rush may have created a logjam of competing services, products and other factors that has helped stall the overall progress of the technology. The result has created difficult choices for wireless companies facing a fragmented marketplace.

By contrast, domestically dominant companies such as Japan's NTT DoCoMo have been able to forge tighter links between hardware, software and content companies. That's created an environment that many industry insiders say makes it easier to develop software and services for, and thus makes it easier for consumers to use. That's helped the Japanese market mature more quickly, many say.

"There was a misconception that (mobile Internet technology) would emerge from the womb as an adult," says Sprint PCS Chief Operating Officer Charles Levine, stung as many wireless executives are today by criticisms like Neilsen's. "It didn't."

Gartner analyst Tole Hart says the wireless Web may have unfolded differently in Japan than in the United States, but users in both countries want what it can offer.

see commentary

Perhaps. But few argue that the technology has matured more quickly in other countries. Analysts from Silicon Valley to Wall Street routinely point to Japan and Scandinavia, where average consumers have welcomed even the most rudimentary access to the Net over phones.

Worldwide, the only product that has emerged as an unambiguous success is NTT DoCoMo's I-mode service. I-mode offers color screens and small graphics that make it look and act very different from U.S. versions, which largely offer only small, monochrome, text-only screens.

As of mid-January, more than 17.7 million people had signed up for I-mode service, vastly outpacing the rate of growth of any U.S. wireless Net company.

To be fair, it's not a perfect comparison. Net connections via the computer are less common, and generally more expensive, in Japan than in the United States. The I-mode technology is thus a first or only method of reaching e-mail and the Net for many customers.

Social mores have also helped drive use of the technology. The Japanese tend to adopt consumer electronics technologies more quickly and use them for entertainment purposes, analysts say. Others have speculated that social conventions there frown more heavily on talking on the phone in public places such as buses or restaurants, driving people to use the silent Net connection more easily.

These caveats aside, virtually everyone who has played with the I-mode phones or developed Web sites for the technology say it is easier to use than the American and European Wireless Access Protocol, or WAP, technologies.

An investment by NTT DoCoMo in AT&T Wireless promises to bring some of that experience with a consumer powerhouse to the United States. Although the companies have not said precisely how they would integrate I-mode technology into AT&T's wireless service, Ma Bell has said it is looking to add the Japanese experience to its own lineup.

Next steps
That might not be a bad idea. Although the technology industry has been subjected to a deafening level of rosy predictions for the better part of a year, the U.S. public has reacted with little more than a shrug.

see related story: Duo aims to add graphics to wireless Web It's not that people aren't interested in the technology. Analysts estimate that about 6 million people in the United States use some kind of wireless data access, even if only infrequently.

Sprint's subscriber figures, as well as numerous industry surveys, show that consumers are open to the idea of reaching Net services--e-mail, news or stock quotes, even simple games--on the go. Sprint PCS saw 1 million of its subscribers try the service by the end of last year, half of that number signing up for at least a free trial subscription.

The problem, many analysts say, has been one of unfulfilled expectations.

U.S. companies that produce phones and offer service--from Sprint PCS to Motorola--say they had to explain their product in a simple way that consumers can understand. So phrases like Sprint's "Wireless Web" or the "Mobile Internet" quickly took hold, as marketing campaigns compared the new services to what they knew consumers would understand.

The reality, as anyone picking up a Net phone has seen in America, has been very different. And that reality has led customers to a reaction that has been lukewarm at best, and in many cases not far from an active backlash.

What is actually available is slow, text-based access to a relatively small number of sites, which themselves vary widely in reliability. These perform adequately, but only if the consumer is expecting something comparable to the Internet circa 1994 or so.

Because of industry marketing, "people really did think they were going to get an HTML screen scrunched down," said Iain Gillott, chief executive of iGillott Research, a telecommunications consulting firm.

Even many habitual users, when quizzed, lack the enthusiasm for the services.

Ryan Best, a Utah day trader and Special Report: A tough call consumer electronics retailer, says he uses his phone to reach stock quotes as quickly as or more quickly than he could over a computer. But he says the technology needs improvements before it can be used as advertised on a mainstream basis.

"They're going to have to have a keyboard that they can plug in or something," Best said, criticizing today's laborious method of using the number keypad to type URLs. "Nobody has the patience or time to do that."

In his research, Neilsen gave mobile phones with Net access to a group of average consumers, asking them to keep track of what they did and what they liked. It turned out that most didn't like much of anything, complaining the phones were difficult to understand and use. The majority said they'd rather pass on the technology altogether until problems had been fixed.

Picking up the pace
Defenders of the technology note that a new generation of standards is being prepared, in which the WAP text-based system and Japan's popular I-mode system will merge. Once the high-speed, next-generation networks are put in place, the speed and processing limitations that prompted the creation of three-line, text-based interfaces will disappear, they say, and phone screens will feature graphics and multimedia.

Moving along a parallel track, the distinction between handheld computers and cellular phones is being broken down. Companies like Kyosera and Samsung are offering phones with the Palm operating system that have keyboards and large screens built in.

The revenue equation may be more difficult, however. The carriers themselves are still posting strong revenues from wireless voice services. But growing competition has raised the prospect of shrinking profit margins, and the carriers are hoping data services can fill in gaps.

Critics of today's U.S. mobile phones say carriers need new technology, new applications and a better interface before consumers jump aboard enthusiastically. Though that point has yet to be reached, some look with hope to the possibility of I-mode coming to the United States.

"Once consumers see something that's that much better, it's going to take over," Neilsen said. 

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