You Can't Meet All of Their Expectations

Why hasn't the wireless Internet taken hold with everyday people? Broken promises, clunky interfaces and immature services, for starters.

For quite some time, the wireless industry has been saying "any day now" as to when adoption of the wireless Internet is going to explode. Although current numbers show some growth, they are a long way from the expectations for the future.

The craze over NTT DoCoMo's i-mode service has set the standard by which all other wireless carriers are judged, and American carriers aren't grading out so well. As DoCoMo collects i-mode subscribers like teen pop stars sell albums (see Figure 1 on page 16), American carriers fall further behind the pace. Carriers have to remind themselves, according to Eden Zoller, Ovum senior analyst, that success in Japan doesn't guarantee anything anywhere else. American carriers are going to have to earn every subscriber.

So, to light the fuse of the wireless Internet, don't drool over other markets or the future, focus on what's holding it back right now.

Man Is a Social Animal

Wireless carriers, meet Joe. He's your average sort of guy. Joe commutes to work, watches SportsCenter, loves Napster and hangs out with friends on weekends. The part that most interests you: He loves his wireless phone. Between personal and business use, Joe makes the most of his 1,000-minutes-per-month plan. The wireless Internet? He tried that a few times, but hasn't been back since. What keeps Joe from becoming a wireless Internet junkie?

Think about why Joe bought a wireless phone in the first place: To communicate, of course. Checking restaurant menus or buying a Pepsi with his wireless phone weren't even considerations. Although Joe, and millions like him, may do those things eventually, the wireless phone is inherently about mobile communications. So what Joe needs is a wireless Internet application that fits that bill.

"It's a different experience and different medium (from the landline Internet)," Zoller said. "You need appropriate applications that play to the unique advantages of what it is to be mobile, and at the moment we don't have any."

Current applications, Zoller said, tend to be generic and have an abundance of alternative sources, most of which are cheaper or free. In the Ovum report, Wireless Portals: Business Models and Market Strategies, Zoller outlines four mobile attributes that wireless Internet applications should maximize: real-time/timeliness, convenience, location and fun.

Cingular is one carrier that's delivering fun with its wireless Internet service.

"If you look at what's made DoCoMo successful, I don't know if people want Pokemon here, but it's things to make your wireless device fun for you," said Steven Krom, Cingular vice president of marketing, Internet and data services.

Cingular already has launched downloadable ring tones as a part of its wireless Internet service. Krom also identified downloading icons and animation as future possibilities.

Messaging will be another focus of Cingular's wireless Internet service.

"You'll see Cingular talk about enabling people to express themselves and better communicate with people when it comes to messaging and data," Krom said.

Sprint PCS offers instant messaging, but the carrier never gave it much thought until a trip to Japan. Observing DoCoMo, Sprint PCS had a revelation.

"Even our colleagues in Japan had initially launched it (wireless Internet) as an information and transaction service, but they quickly found out that was only about a third of the market," said Scott Relf, Sprint PCS senior vice president of marketing. "About two-thirds of the usage was to other areas, one being entertainment and the other being messaging. The messaging (popularity) was a little bit of a `duh, they bought the phone to make voice calls to people, why wouldn't they send text messages in-between?'"

Curious Joe

Why did Joe try his wireless Internet service in the first place? He was curious after seeing several TV commercials for it. In one ad, a young couple checks movie times over their wireless phone, buys tickets, walks past the long line and the "Sold Out" sign, and enjoys the movie, smiling every step of the way. Joe's wireless Internet experience, however, didn't go so smoothly. Just trying to find a theater on his phone gave him a headache, so he gave up and bought a newspaper.

Through such exaggerated marketing, carriers might be tying their own nooses.

"Expectations are by far the most serious issue to deal with," Zoller said. "If they (carriers) pitch it the wrong way, there is a real danger that users will try these services and be disappointed. It's going to be very hard to win them back if you alienate them at this early stage."

Zoller added that the race to generate awareness prompts carriers to over-hype their services. Although that strategy may pull in customers, the key to retaining the subscribers is to make the hype reality.

Such ads won't drive consumers away permanently, but Krom said it's unfortunate that consumers have the perception that they can surf the Internet wirelessly.

"People are promising that it's the wireless Internet, and the reality is that it isn't," Krom said. "People are setting up the expectation that you are going to be able to surf on the Internet, and that's just really not the case at this stage, and frankly may never be for little hand-held phones."

Part of the problem with consumer expectations is the service's namesake. Say wireless "Internet," and consumers automatically associate the service with the glitz and flash of the PC-based Internet experience. Finding an alternative moniker isn't that easy though.

"It's a double-edged sword because if you don't market it as wireless Internet, then it's going to be hard for people to understand what it is because that's the mindset that we have in the United States," Krom said.

Sprint PCS never had the illusion that its Wireless Web service would replace the PC-based Internet, Relf said. The idea is for it to bridge between desktop capabilities and mobile necessities.

"It's filling in the spaces between connections on a landline, not substituting directly for it," he said.

Interface for Acrobats

Joe lacks the needed dexterity to navigate the wireless Internet. When his wireless phone asked him to input a physical address for a movie theater, Joe's first thought was "How?" Even if he had known the address, Joe suspected that typing with his keypad would be difficult. His second try with the wireless Internet proved that suspicion. That's when Joe tried to buy a book with his wireless phone. You try typing Who Moved My Cheese? with your keypad and see how long it takes. On top of that, the small screen forced him to constantly scroll and reload pages. Judging by consumer complaints, Joe is not alone. (See What Did You Expect? on page 16.)

David Friedman, U.S. Cellular vice president of marketing, summed up current wireless Internet interface challenges.

"It's difficult to search because you have to manipulate the small keypad; it's difficult to read because of the small screen; and it's phone based, so you are still in a very poor resolution kind of media," he said.

Ovum's Zoller concurred and said the lack of a quality interface creates a lack of compelling applications, and vice versa.

"Obviously, mobile devices are fairly unforgiving to Internet content," she said.

Sprint PCS' Relf tabbed screen limitations as the wireless Inter-net's most significant hurdle.

"The biggest factor constraining this from exploding in its appeal is there are limits to what a person can do tied to the size of the screen and whether the screen has color," he said.

One way to cut down on interface challenges is to personalize the content, according to Kathy Simpson, Openwave director of developer marketing. With customized and location-based content, users can save themselves the stress and time of information input. Furthermore, wireless phones are more personal devices than computers, consequently phones can better know their users.

"The phone is usually a single-person device, unlike the PC," Simpson said. "This gives an application developer opportunities to overcome some of the challenges that may be inherent in the device."

Perhaps consumers just need more time to grow accustomed to the interface.

"It's interesting that the two other major parts of the world that are doing this, their customers don't seem to have much of an issue with inputting stuff from a keypad," Cingular's Krom said. "People may grumble a little bit, but people will use the interface given to them. As interfaces evolve and we provide better ones, that's always going to be better for consumers."

There's No Such Thing as Free Wireless Internet

When Joe got the bill for his flirtation with the wireless Internet, his jaw dropped. He had no idea how expensive it was, nor how many minutes he actually had spent fumbling around on the Web.

Cost is another significant hurdle to adoption of the wireless Internet, according to Ovum's Zoller.

"Pricing is an issue, but in the sense that nobody really knows what customer tolerance is when it comes to pricing for the wireless Internet," Zoller said. "People don't want to pay for generic stuff they can get from half a dozen other service providers or that they can get for free elsewhere."

Sprint PCS doesn't agree that cost is an issue.

"That's an objection we heard primarily from the media and occasionally from the sales force because they are worried anytime they have to sell something if it has a price tag attached," said Sprint PCS' Relf. "We have found that when a customer is on the Wireless Web, a minute is the same as if they are talking."

A common complaint from consumers, however, is the lack of a timer that tracks their time on the Web.

Wireless Internet Novelty

So now where does Joe stand with the wireless Internet? That depends on which carrier you talk to. U.S. Cellular has yet to launch wireless Internet service, but the carrier is actively working on a service. Based on trials the carrier conducted last year in Medford, OR, curiosity drove early usage.

"The average person was using it as a neat little toy," U.S. Cellular's Friedman said.

The service, though, soon lost its luster.

"It becomes difficult after the novelty wears off to really use it for surfing, which is what most average Joes want to do," he said.

Location-based applications sustained their appeal throughout the trial.

"Localized content will drive more usage," Friedman said. "The issue of more is relative though. Is it a lot, or is it just more than a small number? Today, I think it's just more than a small number, after the novelty wears off."

From the outside looking in, it hasn't been harder for U.S. Cellular to compete with carriers that offer the wireless Internet. The carrier does have SMS services up its sleeve, but Friedman noted that 99% of U.S. Cellular's business still is generated by voice.

Sprint PCS is proud of itself these days. After inking a partnership with Palm and announcing that it had reached 1 million Wireless Web users, the carrier had reason to be optimistic.

"We've grown at a very good clip, approaching the same kind of growth rate that DoCoMo has in Japan," said Sprint PCS' Relf.

Ovum's Zoller advised taking those numbers with a grain of salt. Half of that million are customers who have the Wireless Web as a part of their plan, the other half use it occasionally, about once a week, according to Relf.

"There may be a number of customers out there, but the real question is how much money is being made off those customers?" Cingular's Krom asked.

Another statistical bias is in the number of Web-enabled phones. Many tout that such phones soon will outnumber online PCs. Just how many of those phones actually connect remains to be seen. (See Figure 2 on page 16.)

"Just because the phones are out there doesn't mean that the people who are buying them are aware of the service," said Openwave's Simpson.

Getting It Right

So, Joe isn't a fan of the wireless Internet just yet. That doesn't mean, however, that the wireless Internet is headed down a dead-end street.

"If you look at the DoCoMo model, when they got it right, the growth happened pretty quickly," said Krom. "It is really incumbent on the carriers to refine the product to make it something that is compelling to a broader audience. The burden is on us to do that."

If wireless carriers do that, they'll see Joe, and all his friends, on the wireless Internet later, rather than never.

What Did You Expect?

Judging by comments on Internet discussion boards consumers are feeling frustrated with the wireless Internet.

From epinions.com: - Download times can be measured in geological time! After the first few attempts, this gets dull - fast.

- If your service provider can handle it and you can find Web sites that are enabled for WAP, you can use this phone as a rudimentary browser. Forget for a minute that WAP is to the Internet what the Flintstones' foot-driven convertible is to a Ferrari.

- Many of the options don't work. After four months, I am still unable to log in to E superscript *Trade. Frankly, service plans aren't cheap, so dumping an extra $20 a month for a malfunction is added salt in an open wound.

- Who wants to surf the 'Net on such a small screen, and who needs to be on the Internet all of the time? Eliminating the Web capabilities might shave $50 off the purchase price and still leave the features that are useful.

- I found the mini-browser on the phone to be effective, yet somewhat troubling. The buttons on the phone are troubling to navigate through the Web program. If you really want to surf the 'Net, I just don't see how this type of browser competes with a desk machine, unless you factor in portability.

- Be mindful of how much time goes by when you use it ... what seems like two minutes may actually be 10! And there's no timer on the phone while you're connected to the Web either. Bummer.

- Content is limited to text only; graphics and video are still a pipe dream. All told, the Web access is nice to have in a pinch, but it's more of a novelty than anything else. Put it this way - I certainly wouldn't pay extra for it, but it's kind of fun for free.

From a Wall Street Journal discussion board:

- Wireless devices for e-mail are finding a big market in business, but as a mass-market device, their potential could be lower than what is being touted in the marketplace. Yes, if you go to Amsterdam, everyone is crazy about them. But they're crazy for Techno music, and you don't get a lot of requests for that on your local radio station.

- The wireless Internet will not be as successful in the United States as it is in Japan. First of all, the connection is too slow. Second, it has limited content. Third, it's too expensive. Why pay $40 a month for a slow connection when you can get broadband Internet access through DSL or a cable modem for about the same price? Web pages flip like book pages on these things.

- I think the PDA has many advantages over smart mobile phones. First and foremost, the PDA has a much bigger screen. Mobile phones have been evolving into smaller and smaller devices. It goes against consumer psychology for mobile phones to start getting bigger.