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U.S. lags in mobile data adoption

As mobile opportunities emerge, the United States finds itself in an unusual position: back of the pack.

As mobile opportunities emerge, the United States finds itself in an unusual position: back of the pack.

Europe and Japan are solidly positioned at the front of the next wave of digital devices with better products with greater functionality and much higher adoption rates. As a result, they are expected to lead the United States in mobile data revenue and usage.

Of the 500 million mobile Internet users projected in 2005, Europe and Asia are projected to account for 34 percent and 32 percent, respectively, with North America trailing with only 19 percent. On the revenue front, Europe and Asia again lead the way with a combined 70 percent of projected "m-commerce," or media commerce, revenue in 2004.

The reasons for the geographic discrepancy vary. Differing technology standards (TDMA, CDMA, GSM) have slowed the release of phones and services in the United States. The circuit-switched networks that currently dominate the U.S. market connect people via dedicated lines. In other words, the lines remains tied up for as long as people maintain the connection. As a result, data usage is priced per minute, acting as a disincentive to mobile data usage.

In Japan, packet-switched networks allow carriers to charge based on the amount of data being transmitted. The next generation of networks (2.5G and beyond) are packet based, but in the meantime, consumers will be motivated to spend less, not more, time using their mobile phones for data services.

Perhaps the biggest hurdle we face to mobile data adoption in the United States is our infatuation with the PC. The value proposition of the small screen of a personal digital assistant or cell phone is not as appealing when the basis for comparison is a PC monitor.

We use mobile phones as business tools. For many Europeans and Asians, mobile phones are like an appendage, and penetration rates hover around 50 percent in certain countries. As a result, the migration from mobile user to interactive mobile user is relatively easier. By 2004, Forrester Research projects that over one-third of the entire population of Western Europe, not just the mobile population, will use interactive mobile phones.

Without a doubt, the United States lags both Europe and Asia, but the gap with Europe in particular does not appear to be as wide as publicized. More Web-enabled handsets may be in the hands of Europeans than Americans, but our conversations with European carriers and leading Web sites clearly indicate that usage is still negligible. Early data from Yahoo, for example, indicates that despite a smaller number of mobile data subscribers, the United States accounts for more mobile data usage than Europe.

The United States also has many advantages that could enable the region to establish a much stronger presence for the next generation of mobile, including common language, strong U.S.-based technology companies, and an entrepreneurial culture. To target a similar number of consumers in Europe or Asia, content must be written in many different languages. In the United States, where one common language is spoken, content developers will find it less expensive to reach a large audience.

In addition, many of the leading technology and Internet companies are based in the United States. Motorola, for example--the world's second-largest supplier of mobile phones--is very focused on 3G, a future generation of technology for mobile.

While the somewhat slower start in the United States can be attributed in part to significant cultural and technological differences between the United States and the rest of the world, the adoption of wireless technologies and data by the United States is simply a matter of time.

In the United States, unlike other parts of the world, the PC might always remain the primary Internet access vehicle among a growing cadre of access platforms.