Bullish or Skittish on Wireless Data?

What's an antagonist without a protagonist? A yin without a yang? A bear without a bull? The monochromatic optimism now marking wireless data is gaining its share of critics lately. Leading up to this year, most projections surrounding the potential for wireless data have been universally positive. However, this summer, discontentment began to surface as at least one analyst said wireless data is composed of "dreams, delusions and fantasies." Herschel Shosteck, Herschel Shosteck Associates president, suggested that the wireless industry mistakenly believes its own propaganda. In Wireless Internet Content: Any Content, Any Device, Anywhere, Shosteck doesn't spare any part of the wireless-data market. Among his findings, he said most wireless turnkey portals will fail, content push services and deep-content menus will trigger subscriber rejection, service-provider-controlled personalization tactics will fail and that the generic message of Internet content anytime, anywhere, any device is meaningless.

But it's not only Shosteck, who is known for his often-pessimistic takes on new industry segments. Andrew Seybold, recognized as a data guru, also isn't delivering glowing reviews for wireless data, especially as NTT DoCoMo pushes forward without a WAP solution. He said the wireless Web is too much work, and the wireless browser is the last thing you reach for with a wireless phone.

So what is it about this summer's wireless-data release? After so many years of the "This is the year of wireless data" chant, why is the tide turning?

According to Adam Zawel, Yankee Group senior analyst, it's merely a "hiatus in the hype." He said there's nothing going on technically or marketwise to suggest a flop in the making. The Yankee Group continues to impart a positive preview of the emerging sector. In fact, he said Yankee still projects 16 billion wireless-data subscribers by 2005.

Zawel thinks the current reality check may be well-timed with the evolution of the data movement. He said there will be two waves. First, there will be a text-only, rather rudimentary form. After about five years, he said subscribers can expect service offerings complete with state-of-the-art devices featuring color and larger screens. He said this current hiatus likely will temper overselling the first wave to subscribers.

Gary Curtis, CMGI general partner, concurred.

"Like any other technology development, hype always precedes reality," he said.

Now that reality is setting in, it's time to pull the reins in on hype, he said. Otherwise, subscribers and investors will be disappointed.

Curtis said wireless data will get better. But during this more realistic period, the networks need to get better. He said it's essential for the networks to become more "coherent like the GSM network" in coverage and capabilities. Also, he said delivery of user-friendly interfaces will aid in the command performance.

Shosteck, for his part, isn't completely giving up on wireless data's potential. In fact, his gloom stems from what he sees as providers misunderstanding their roles in the value chain. He said providers need to focus on being the "pipes" for carrying wireless data as opposed to agents in e-commerce transactional revenue, advertising or content sales. He made AOL an example.

"It collects a monthly fee from its millions of subscribers," he said. "This is substantially more than it could have collected from any e-commerce fees."

- Frost & Sullivan: The compound annual growth rate for wireless data from 1996 through 2003 is projected to be 35%. The market is expected to grow to 10 times its current value and reach close to $2.5 billion by the year 2002.

- Gartner Group: The opportunity for wireless-data communications in the United States is huge, with 25.3 million of the 112.1 million workforce having a mobile job requirement, but growth will be slow and steady.

- The Strategis Group: Two million wireless-data subscribers existed in 1997, and the market is predicted to grow at an average annual rate of more than 40% through 2002.

- Ovum: By year-end, there will be more than three million users of data over GSM services in Western Europe, rising from a current installed base of around 300,000. In the United Kingdom, there will be 900,000 users of data over GSM services.