The Year of Wireless Data -- Finally?

When the history of wireless and the Internet is written, Flannery O'Connor's "Everything That Rises Must Converge" ought to be the title. Indeed, the usual mood of skepticism about wireless data's potential seemed entirely absent at Wireless 2000, where attendees packed keynotes seeking advice from Bill Gates, Steve Case and others who've made a buzz or a buck with the Internet.

A shining example is NTT DoCoMo's i-Mode data service, which already has 4.5 million subscribers since its February 1999 launch. That growth comes despite charging by the packet, an approach that many analysts have long argued confuses subscribers, who then limit their usage. Although Keiji Tachikawa, NTT Mobile Communications Network president, conceded that customers might not understand packets, "they understand that it's cheap." Statistics back him up: i-Mode subscribers spend an average of $25/month, and churn is less than 1%/month.

"We've all known that wireless data is going to be good, but there was always this frustration because it was more gut feel than anything else," said Andrew Cole, Renaissance Worldwide principal. "This is a real-life example of the power of wireless data and why it will be the new revenue model."

The icing on the cake is that data also drives voice usage: i-Mode subscribers spend an average of $12/month more on voice than the rest of the company's 28 million subscribers. That fact wasn't lost on Chris Gent, Vodafone AirTouch CEO, who argued that investors also overlook how short-message service drives voice usage.

Gent — and much of the standing-room-only crowd at the opening-day keynote — was clearly impressed by i-Mode's success, which is due largely to its partnerships with more than 5,900 content providers. For those that charge, usually around $1/month, NTT DoCoMo handles the billing, for which it takes a 9% cut.

Most speakers seemed to agree that alliances that allow partners to play to their individual strengths are key to any wireless-data strategy.

"If you can't partner effectively, you're in trouble," said Michael Capellas, Compaq president & CEO, who predicted that the winners wouldn't be the ones who own it all, but those who can form alliances.

Gent is one who's willing to do business with Internet portals, but he stressed that any deals wouldn't come at his brand's expense. "The first icons that people will see will be those associated with our Internet branding rather than somebody else's," Gent said. "I'd like to support my market cap rather than theirs."

Any nagging concern that alliances mean giving up ownership of the customer might be moot because the Internet provides an endless array of choices.

"The customers own themselves," said Jeff Bezos, Amazon.com CEO. That frank assessment might not be cause for concern: "This is such as big pie," Bezos said. "There's room for everyone to do well."