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Shopping via cell phones loses interest

New research says consumers have lost interest in buying goods online using cell phones. "The more they've used it, the less they've liked it," the study's author says.

Though interest in using cell phones to shop the Internet has steadily declined during the past couple of years, using them in lieu of cash and to send text messages is taking off, according to research released Wednesday.

Consumers have lost interest in the only type of mobile shopping that most of them have actually tried: purchasing items online using a credit card and WAP (Wireless Application Protocol) portal, according to the study by A.T. Kearney, the consulting unit of Electronic Data Systems.

However, the concept of "m-cash," or using a mobile phone to buy small items electronically, such as sodas from vending machines or transit tickets, has grown on consumers. And the reason for that may be because most of them haven't tried it yet, said Paul Collins, the study's lead author. A.T. Kearney surveyed 5,600 mobile phone users in Asia, the United States and Europe, in conjunction with the University of Cambridge.

The only new mobile application that appears to be tried and true is SMS, or short text messaging, which has shown rapid growth in some countries.

In the past four surveys--which A.T. Kearney does twice a year--consumers' intent to make purchases using cell phones has fallen by about two-thirds. In the first study, done in June 2000, 32 percent of cell phone users planned to make purchases; as of the current survey, done in January 2002, the number is only 1 percent.

"The more they've used it, the less they've liked it," Collins said.

Part of the problem seems to be that there just isn't much content out there that is formatted for wireless devices. After a burst of optimism and huge investments in upgrading wireless networks, European telecommunications companies have been sorely disappointed with the usage of WAP technology.

That problem is reflected in the divergence of the number of people with an Internet-enabled phone and the number of people that have actually accessed the Internet using their phone. According to the survey, 41 percent more respondents have an Internet-enabled cell phone than six months ago. However, the number of people accessing the Internet with their phones remained flat.

But cell phone customers are excited about other new applications.

Forty-four percent of those surveyed said they would like to use their phones to purchase small items using m-cash. Pepsi and Coke have both teamed up with mobile phone makers for trials in Japan and Scandinavia that will let people point their phones at a vending machine, press a few buttons and charge a soda to their phone bills. However, less than 2 percent of cell phone users have actually tried this.

"With m-cash, no one's really used it, but they seem to like the idea," Collins said. "The number could come down quite rapidly if they try it and don't like it," he added.

Meanwhile, SMS continues to gain satisfied customers. The feature is being used at least once a month by 80 percent of mobile phone users in some European countries, according to the survey. Twenty-five percent of respondents in Europe said they used "texting" more than once a day, as did 24 percent of respondents in Asia.

The United States still lags; 89 percent of U.S. respondents have never sent a text message.

Still, SMS is the most popular in the fastest-growing category of cell phone users: those under 25. Fifty percent of people in that group surveyed globally said they use SMS at least once a day. That should help adoption grow rapidly, according to the report.

Advertisers are also swooping in quickly to take advantage of a growing market. The rise in SMS use has led to a veritable explosion in advertising since the last study, Collins said. Thirty-one percent of respondents in the 14 countries report they have received some sort of advertisement via their mobile phones, up from 1 percent in the June 2001 survey.

SMS advertising is most prevalent in South Korea, where around two-thirds of cell phone users have received an ad. Conversely, only 8 percent of cell phone users in the United States have received an ad.

"It is becoming increasingly clear that m-commerce is more about multimedia messages and using the mobile phone to make payments," Professor Chong Choi of Cambridge University said in a statement.

Trends that A.T. Kearney expect to pick up in its next survey include the use of cell phones as a "mobile wallet" and the effects of new payment methods--such as charging people for volume of data, rather than time, Collins said.