This is a sample chapter of Business Agility: Strategies for Gaining Competitive Advantage through Mobile Business Solutions (ISBN: 0-13-066837-0).
By Nicholas D. Evans
In this chapter, we cover the current state of the union within the mobile business community. This will provide a useful backdrop as we build from this starting point, the “as-is” situation, and explore enterprise strategies, case studies, and tactical action plans throughout the remainder of the book. It is important to note that the “as-is” situation has been driven in most part by the supply side of the equation: the wireless handset manufacturers, the wireless carriers, and the wireless infrastructure and software providers—i.e., those who stand to benefit the most from the market creation and adoption. The demand side has picked up mostly in unexpected consumer application areas such as text messaging and gaming. Meanwhile, mainstream enterprise patiently observes in the wings.
Mainstream enterprise adoption is most likely to occur in areas that provide strong business benefits and return on investment. Enterprise success stories around M-Business are appearing more and more frequently. Several success stories from early adopters of M-Business are covered in the chapters on Applications and Process Models for M-Business Agility and Industry Examples. Typical enterprise applications of M-Business have been within wireless enablement of employees: sales force automation and field force automation being two of the most prominent areas with strong returns on investment coming to light.
Of course, the current “as-is” state within the mobile business community is continuously in flux and continuously redefining itself. Analyst predictions for the growth of the wireless Internet and for M-Commerce are merely just that—predictions. They also vary widely between different analyst groups. But despite these variations in analyst predictions, we can still determine clear trends and plan our enterprise strategies accordingly.
Although markets can come and go, and in some cases never meet expectations in terms of potential size and ubiquity of products and services, the convergence of electronic business with telecommunications and other industries such as media, entertainment, and financial services will continue. The drivers toward adoption will become more powerful when compared to the barriers preventing adoption. As the market matures, innovative companies will create their own sub-markets within the industry; this will help to remove the current barriers to adoption for mobile business.
This chapter looks at some of the global trends behind wireless data adoption. In particular, the drivers and barriers to adoption, the telecom regulatory environment, the changes occurring within the telecommunications industry and within enterprise IT departments, the wireless Internet value chain, the wireless companies comprising the value chain, and finally some of the key applications of M-Business within the enterprise.
Many books have been written on the content of this single chapter alone. The aim here is to provide a high-level summary of some of these forces and then to move on to the strategy and implementation plans for leveraging M-Business within the enterprise for business advantage.
Much has been written about the global trends in the M-Business world. The United States is often cited as lagging behind the Asia-Pacific region and even further behind Europe in terms of its adoption of mobile businesssometimes cited up to two years behind. Much of this is owing to the fact that there are a number of competing wireless communications standards in the United States, versus the single standards in the rest of the world. This is actually just one of the factors that has led to Europe and the Asia-Pacific region becoming the early adopters. Other factors include cultural aspects, geographic aspects, political and regulatory aspects, pricing factors for Internet access, and the penetration rate of the wired Internet within these countries.
To understand the global trends in wireless communications and the growth of the wireless Internet, we need to start by understanding the growth of the Internet itself. Figure 2-1 shows the Internet penetration by region from a study by the ARC Group.
Figure 2-1 Internet User Penetration by Region. Source: ARC Group.
It is clear that the United States has dominated and will continue to dominate the statistics for the highest percentage penetration by region. Japan and Western Europe follow closely behind with the Asia-Pacific region and the rest of the world being further behind in penetration.
If we now turn to the penetration rates in terms of mobile data penetration (Figure 22), we see a different picture. The United States clearly lags behind Western Europe and Japan. Mobile data in this case includes access to data by cell phones, PDAs, and interactive pagers. At the current point in time, Western Europe is clearly the leader.
Equipped with these predictions, the questions still remain as to what services will see the most demand and how often subscribers will use the wireless data features of their devices even if they are subscribed.
Beyond looking at penetration rates by region for the Internet and for mobile data, we also need to look at the number of mobile handsets being shipped, the number of users accessing various forms of mobile data, and the number of users conducting mobile commerce.
Figure 2-2 Mobile Data User Penetration by Region. Source: ARC Group.
According to the research firm Jupiter, there will be 1 billion wireless Web devices in circulation by the year 2003. They also go on to say that companies must enable wireless extensions during the next 12–18 months, or risk losing customers to competitors that do.
The wireless data market has really been ignited by consumers, but it is likely that the eventual winners will be enterprises that leverage the technology within their enterprise to create substantial returns on investment. Because of this consumer-based origin of the wireless data market it is important to look, at least briefly, at some of the consumer statistics before continuing our main enterprise focus throughout the course of the book.
Table 2-1 presents more data points in terms of predictions for the number of users and revenues generated via wireless devices and M-Commerce transactions.
The analyst predictions provide some good quantitative data around the adoption of wireless data services and M-Commerce applications throughout the world. Consumers will gain access to Internet capable devices, will then begin to subscribe and use these services, and finally will become true M-Commerce users generating M-Commerce revenues.
|Table 2-1 Predictions for Wireless Data and M-Commerce|
|Mobile Internet Devices (Worldwide)||
|Wireless Internet Users (Worldwide)||
|Enterprise Wireless Enablement||
|M-Commerce Users (Worldwide)||
|M-Commerce Revenues (Worldwide)||
Searching for the Killer Application
An often-asked question within the wireless Internet community regards the killer application. Is there a killer application, and if so, what is it? The answer is that killer applications for the wireless Internet vary by culture, by country, and by individual user. In Europe, the killer application has been Short Message Service (SMS) text messaging, in Japan interactive games and pictures via the NTT DoCoMo i-mode service, in North America e-mail via 2-way interactive pagers such as the RIM BlackBerry plus WAP-based wireless data portals providing news, stocks, and weather information.
Undoubtedly, these so-called killer applications will take on different forms as the wireless networks mature, devices morph into better form factors and capabilities, and wireless carriers experiment further and build upon their lessons learned. What is certain is that the amount of content and applications available via these devices will proliferate and M-Commerce services will evolve along with the non-transactional services.
Evolution to 3G Networks
In our discussion of the global trends within the M-Business environment, one topic we will hear a lot about is that of so-called 3G or Third Generation Networks. This is a term frequently used by the wireless carriers in order to describe their next generation wireless networks for voice and data communications. In this section, I’ll provide a short definition of the characteristics of 3G networks when compared to older networks such as 1G, 2G, and 2.5G (Figure 2-3). This will equip us with some of the terminology that we need to understand when discussing trends in the telecom environment and how this will affect the enterprise moving forwards.
The main advantages of the move toward 3G networks are the increased bandwidth and the worldwide standardization that 3G will bring to the global telecommunications industry. As such, increased bandwidth will enable the mainstream use of multimedia applications such as streaming audio and video and large file transfers.
Figure 2-3 Comparison of 1G, 2G, 2.5G, and 3G Networks. Source: Nokia and 3G Newsroom.
Applications by Region
We’ll now take a look at Europe, the Asia-Pacific, and the North American market to understand some of the wireless data applications that have obtained traction with subscribers. Since many enterprises have a business-to-consumer focus, it is useful to know what types of applications are experiencing uptake and which others are maturing.
European countries have had the advantage of a single digital mobile telecommunication standard in the Global System for Mobile communications, or GSM. GSM is a 2nd generation digital standard that accounts for over 64% of the world’s wireless market. So-called 1st generation systems were the analog communications standards such as the Analog Mobile Phone System (AMPS).
GSM has international roaming capability and is supported in over 159 countries. It offers voice telephony services, including call waiting, call hold, call forwarding, and calling line identity (CLI), together with data services such as short messaging service (SMS), wireless application protocol (WAP), and general packet radio services (GPRS).
Short Message Service (SMS) has been the killer application in Europe, with over 50 billion global text messages sent within the first quarter of 2001 as reported by the GSM Association. In the UK, they report that customers generated 3.5 billion text messages in the first four months of 2001. The medium has proven popular not only for person-to-person messaging, but also as a response vehicle for television shows such as MTV that encourage audience participation. Additionally, brands such as Coca Cola and Budweiser have been leveraging the medium for targeted marketing campaigns.
The UK has also seen several M-Commerce trials and production deployments taking place. An example is the shopping service provided by the Safeway grocery chain that allows shoppers with Palm Pilot PDAs, provided by Safeway, to manage their shopping lists and submit orders to the store for picking and packing by store staff prior to customer collection. This program dates back to 1999, when Safeway offered their “Easi-Order” shopping service with Palm Pilots to 200 regular users of their “Collect & Go” home ordering service at a store near London. Safeway has since expanded the trial to more stores and customers and has plans for wireless access to the application functionality in addition to the current telephone dial-up access.
One of the biggest success stories for the wireless industry has come from the Asia Pacific region. The story and the success of the NTT DoCoMo i-mode service has been played back time and time again. NTT DoCoMo is Japan’s largest mobile operator and has 24 million customers using the i-mode service. The i-mode service employs packet data transmission. Communications fees are charged by the amount of data transmitted/received rather than the amount of airtime.
Some of the services available include mobile banking, travel reservations, restaurant/town information, message services for news, I-mode compatible Web sites, e-mail, entertainment sites such as Disney and Universal Studios, and downloadable ring tones. DoCoMo provides certain content for free and provides premium content and applications for a monthly fee that ranges from 100 to 300 yen per month per offering.
One of the most interesting things about the I-mode service has been the speed with which consumers have adopted the service. The service started on February 22 nd 1999, hit the 5M subscriber mark around the 1st year of service, and the 20M subscriber mark around the 2nd year of service. The adoption rate and revenues generated have been the envy of wireless carriers around the world.
The introductory phase of the company’s “FOMA” 3G rollout was heavily over-subscribed with applications for nearly 150,000 mobile phones with 4,500 actually given out. Of these 4,500 mobile phones in trial, 1,200 were “visual” phones equipped with a video screen. FOMA is NTT DoMoCo’s name used in Japan for their W-CDMA services and stands for “Freedom Of Mobile multimedia Access.”
As 3G trials and rollouts move forward with the Asia Pacific region and within Europe, carriers within the United States are able to gain an early view into the adoption patterns for these types of services and adjust their strategies accordingly.
In North America, we have witnessed the popularity of the Sprint PCS wireless Web together with similar offerings from AT&T Wireless, Cingular Wireless, and Verizon Wireless among others. Sprint PCS passed the one million subscriber mark for wireless Web customers within the first year of its service.
In addition to access to the Internet via WAP-enabled cell phones, which is still a maturing application in the United States, one of the big trends in the U.S. has been the use of RIM wireless handhelds for receiving and sending corporate e-mail. The RIM 950 and 957 wireless handhelds manufactured by Research In Motion (RIM) provide an always-on service for wireless e-mail using the DataTAC and Mobitex wireless networks. Network operators for these services include Motient Corporation and Cingular Interactive in the United States and Bell Mobility and Rogers AT&T Wireless in Canada. Revenues for the operators of these services are attractive with monthly charges of $30 for 100,000 character service fairly typical.
WAP Phone and RIM Pager Comparison
|In addition to regularly using a laptop and PDA, I have a RIM pager and WAP-enabled cell phone. When comparing the usage levels of wireless Web against interactive messaging, I personally find myself spending more time with my RIM pager than with the data features of my WAP phone. One of the reasons, I believe, is due to the ease of use factor, or as Forrester terms it, the task-to-device affinity.
The RIMs’ keyboard makes composition of e-mail messages very easy and much simpler than the equivalent process on a WAP phone. I tried sending e-mail over my WAP phone when I first obtained the phone and wanted to experiment. The process was so difficult that it took several minutes to compose a simple e-mail message and dispatch it. Conversely, I have found my WAP phone most useful for data access. Looking up stock quotes and news items and any tasks that do not require heavy text input. Even reading e-mail messages is acceptable on the WAP phonethe only limitation is really the data entry portion at present.
The task-to-device affinity issue is certainly a moving target. As cell phones and PDAs evolve into smartphones that combine the best of both worlds, the devices become more useable for a variety of functions including voice, e-mail, and Internet access. Today, WAP phones are good for data access, but not for all forms of data entry. Conversely, pagers are good for the single function of sending and receiving e-mail. The task-to-device affinity is an important topic especially for the enterprise since the ability to consolidate from three or four devices down to two or three can yield substantial cost savings in support costs.
A personal anecdote may be useful in explaining what Forrester Research has termed the task-to-device affinity for wireless devices. This may help to explain why certain applications have been so successful with consumers and business users.
Drivers and Barriers to Adoption
Drivers for Adoption
The drivers for adoption of mobile business within the enterprise and with consumers are numerous (Figure 2-4). They include the following: the increasing mobility of today’s workforce; the convergence of telecommunications and software industries; the increasing need for information and transactions anytime and anywhere; the new breed of wireless handsets coming on the market; the revenue opportunities created via location-based services and M-Commerce; the productivity improvements to be gained via wireless extensions to enterprise applications and processes; the improvements in bandwidth brought about by the migration from 2G to 2.5G and 3G networks; and the adoption of wireless standards such as WAP and Bluetooth, together with the cultural and regulatory drivers in various countries. If we distill these drivers into their primary forces, we see the forces of industry convergence, improvements in wireless technology and standards, together with cultural and regulatory effects as driving global adoption of mobile business.
Figure 2-4 Drivers for Adoption of Mobile Data.
Barriers to Adoption
Despite the strong forces that are driving adoption of mobile business, it also faces considerable barriers. There are two main types of barriers to adoption: business barriers and technology barriers. The primary driver for adoption of any new technology needs to be the business case. But even with a business case developed, if the technical obstacles are too high, deployment will be troublesome, if not impossible.
As technical obstacles diminish, they can actually help the business case by expanding the realm of possibilities. For example, accurate location determination techniques can create opportunities for location-based advertising.
Business management needs to be aware of both the drivers and the barriers to adoption of mobile business so that informed decisions can be made. Acting too early or too late can have significant consequences. An entry into mobile business that is premature or incorrectly targeted can distract scarce resources within the enterprise without achieving significant results. An entry that is too late can be even more dire and lead to lost revenues, lost productivity, lost competitive advantage, and even lost customers.
The major business challenge for mobile business is simply the business case. On a macro scale such as the creation of an entirely new business, the following standard questions may apply: Can a business make money by using this model? What is the nature of the product or service being offered? Who are the customers and how will they benefit from this product or service? What is the point of pain that is being removed? What is the size of the market and the differentiation from the competition? What is the pricing strategy and how will the service be delivered? What channels will be used to promote the product or service? What should the branding strategy be? Are end users ready for this service? These are all fairly classic questions for any business. They apply equally to the M-Business arena because the market still has to be created and moved from early adopter status to the mainstream. Often, in addition to a compelling value proposition around M-Business, one still needs to educate and influence consumer and enterprise behavior in order to drive adoption. The new way of doing business needs to be compelling enough and simple enough in order to change user behavior.
On a smaller scale, such as a new business initiative within an enterprise, the following questions may apply: Will end-users accept the technology and process change? Will it provide enhanced customer service or improved employee productivity? How will this be measured? How will end users transition from prior processes into this new process? What is the return on investment? What is the learning curve for end-users? What training is required? What support services are required? What service level agreements need to be in place? How critical is this new application to the business?
The case studies in the industry examples chapter of this book will serve to illustrate how some of the enterprise early adopters have answered these questions and have achieved true business benefit and return on investment.
The technical barriers to adoption of wireless technologies are numerous. They include diverse standards for applications and networks, spotty coverage, low bandwidth, perceived lack of security, diversity of devices, slow response times, primitive user interfaces, and numerous other factors.
In a December 2000 survey of 101 IT and business managers, Internet Week found the following distribution of wireless Internet concerns (see Table 2-2).
Table 2-2 Wireless Internet IT Concerns. Source: Internet Week.
|2||Lack of Reliable Standards||69%|
|3||Lack of Web or Enterprise Integration Products||61%|
|5||High Costs of Technology||49%|
|6||Quality of Technology||44%|
The concerns are similar to those of the wired Internet about four years ago. Typical concerns back then included the primitive graphical user interface of the Web browser versus the richer user interface of client/server applications, the lack of security, and the low bandwidth. Enterprises were not convinced that the Internet technologies were robust enough for their critical applications. In fact, I remember many meetings with enterprise clients as a consultant where the stakeholders questioned the need for applications such as extranets and quite rightfully asked about the return on investment. Since ROI calculations had not been extensively developed in those early days, we tended to talk about the soft benefits of enhanced customer satisfaction and improved communications.
Moving back to the present day, as the industry continues to evolve, innovative technology companies and wireless carriers are providing solutions to these technology obstacles—thus helping to drive adoption. What is clear is that the enterprise cannot afford to wait. Mobile business strategies should be crafted today in order to target quick wins and to drive the process change within the enterprise toward mobile business.
Even with a lack of reliable standards, inadequate bandwidth, incomplete coverage, and a wealth of devices and software on the market, it is possible to design and implement highly effective applications within the enterprise that provide a good return on investment. Applications can be implemented that support multiple devices, multiple carrier networks, and can handle incomplete coverage by offering online and offline capabilities. Typically, during offline usage where the carrier network cannot be accessed, the applications use the onboard database of the device and store data for later synchronization when the wireless network becomes available or when a standard dial-up connection or cradle connection is available.
In addition to the major global carriers, handset manufacturers and software companies creating the market for mobile business for the enterprise, the global regulatory environment is also helping to chart its course. Regulations such as the Telecommunications Act of 1996 and the Enhanced 911 (E911) mandate from the Federal Communications Commission (FCC) within the United States have helped to bring about major change in the telecommunications industry.
The FCC was established by the Communications Act of 1934 as an independent United States government agency directly responsible to Congress. The FCC is responsible for establishing policies to govern interstate and international communications by television, radio, wire, satellite, and cable.
In the United States, the Federal Communications Commission’s E911 mandate made automatic location identification a requirement for the wireless carriers to implement within their networks. The following is an extract from the FCC Web site:
|“In a series of orders since 1996, the Federal Communications Commission (FCC) has taken action to improve the quality and reliability of 911 emergency services for wireless phone users, by adopting rules to govern the availability of basic 911 services and the implementation of enhanced 911 (E911) for wireless services.”|
The basic 911 rules required wireless carriers to transmit all 911 calls to a Public Safety Answering Point (PSAP) without regard to validation procedures intended to identify and intercept calls from non-subscribers. Phase I of the enhanced 911 (E911) rules, required carriers to provide to the PSAP the telephone number of the originator of a 911 call and the location of the cell site or base station receiving a 911 call. Phase II of the E911 implementation required wireless carriers to provide Automatic Location Identification (ALI) beginning on October 1, 2001 in order to provide emergency services with greater accuracy for call origination. The ALI accuracy requirements were as follows:
- For handset-based solutions: 50 meters for 67% of calls, 150 meters for 95 percent of calls
- For network-based solutions: 100 meters for 67% of calls, 300 meters for 95 percent of calls
This Government mandate has helped add fuel to the location-based services industry as a subset of the M-Business market. According to Strategy Analytics, the market for location-based services will reach $6.5 billion in the United States and $9 billion in Europe by 2005. Some of the potential applications of located-based services include tracking services for locating and tracking people and assets, and location-based advertising. The business models and potential applications for location-based services will be explored in further detail later in the book.
Telecommunications Act of 1996
The Telecommunications Act of 1996 was the first major overhaul of telecommunications law in almost 62 years within the United States. The goal of the law was to let anyone enter any communications business—to let any communications business compete in any market against any other.
|“To promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies.”Telecommunications Act of 1996|
The main thrust of the law was to force the Bell Operating Companies to open up their local loops to competitors in exchange for providing them the ability to enter the long distance market. The Telecom Act has done a lot to create a competitive environment in the telecommunications industry and has resulted in a large increase in financial investments in the telecom industry.
The allocation of spectrum, the various frequencies for radio transmission, is also subject to regulation. Radio spectrum is the part of the natural spectrum of electromagnetic radiation lying between the frequency limits of 9 kilohertz and 300 gigahertz.
The International Telecommunications Union (ITU) in Geneva is responsible for worldwide coordination of both wired and wireless telecommunications activities. Frequency planning is conducted by the ITU Radiocommunication sector (ITU-R), which has divided the world into three broad regions.
In the United States, responsibility for radio spectrum is divided between the FCC and the National Telecommunications and Information Administration (NTIA). The FCC administers spectrum for non-Federal government use and the NTIA, which is an operating unit of the Department of Commerce, administers spectrum for Federal government use.
One of the biggest costs, in addition to physical infrastructure building, for the wireless carriers in moving toward 3G networks has been the bidding on spectrum auctions. According to Nokia, over 80 3G licenses were granted in 2000 and several hundred more will be granted over the next few years.
The U.K. government auction, which ended on 28 th April 2000 after seven weeks of bidding, raised nearly 22 billion pounds from five operators—TIW, One2One, Orange, Vodafone, and BT Cellnet. The German auction, which ended on 5 th September 2000 after fourteen days of bidding, raised $37 billion from six operators—T-Mobil, Mannesmann, E-Plus-Hutchison, Viag Interkom, MobilCom, and Group 3G. According to 3G Newsroom (http://www.3gnewsroom. com), the five most expensive auctions were Germany, Britain, USA, Italy, and South Korea with a total of over $100 billion spent within these five countries alone.
Other countries such as Norway and Finland have adopted a beauty content approach and have given away spectrum licenses for free or for reduced prices when compared to auction pricing. Due to the high fees paid out by the wireless carriers in buying these 3G licenses, companies such as BT and Vodafone have actually started to talk about teaming in order to share the costs of the 3G buildout in terms of network infrastructure such as mobile masts.
With this much money invested in 3G networks, it will be interesting to see how quickly the wireless carriers transform their business models, products and services, and target both consumers and the enterprise in order to attempt to recoup these massive expenditures.
One of the major trends in the telecom industry is that the wireline and wireless carriers are seeking to leverage data services as a new value-added service offering, a new revenue stream, and a differentiator from the competition. With data services, these companies have the potential to increase average revenue per user (ARPU) and reduce customer churn. With voice service becoming increasingly competitive and commoditized, these companies are moving into data services with the same zeal as enterprises that have adopted E-Business over the last several years. In effect, they are transitioning themselves into a totally new class of service provider—often termed the next generation communications service provider or CSP.
The following figure from the ARC Group shows how large the problem of declining voice revenues is becoming. The next year or two will be critical for the communications companies to transition their business model and their products and services in order to capture the market for data services before it is lost to the competition.
Value-added data services can help communications companies not only increase ARPU but also to reduce customer churn and to increase customer loyalty. Consumers, small businesses, and enterprise customers are far more likely to stay with a given service provider if they depend upon them for not just their “pipe” (the connection) but also productivity increasing communications services. Such services include unified messaging and e-mail, content services that are personalized to their needs, and applications such as personal information management, Internet and intranet access, time and expense reporting, dispatch/scheduling, equipment monitoring, sales force automation, and field force automation.
Figure 2-5 Predictions for Increase in Value-Added Data Services in Order to Raise Carrier ARPU. Source: ARC Group.
Today’s communications companies could end up becoming the M-Business providers of tomorrow. Owning the network, they are in a powerful position to become the ultimate owner of the customer— financial services providers, retailers, content companies, and software companies need to pay close attention to the strategies and movements of some of the leaders in this industry.
In fact, we appear to be moving into an era of vertical integration. Wireless companies are attempting to become full service providers within the industry. They are beginning to do this by providing the network, the applications, and the integration services for their enterprise customers. An example that comes to mind is the merger of Motient Corporation, a provider of two-way mobile and Internet communications services, with Rare Medium, an Internet professional services firm. This vertical integration model is reminiscent of the early decades of the computer industry, wherein companies such as IBM, HP, and Digital provided complete solutions from hardware to software.
Wireless Data Services
One of the first data services, after two-way interactive paging, provided by the wireless carriers was the well-known “wireless Web.” This service provided access to Internet sites over a cell phone equipped with a micro-browser via the Wireless Application Protocol or WAP. The WAP standard defines a set of technical specifications for delivering Internet communications and advanced telephony services on digital mobile phones, pagers, personal digital assistants, and other wireless terminals. The initial work on WAP started back in June 1997; this was done by a consortium that included Ericsson, Motorola, Nokia, and Unwired Planet. (Since that time Unwired Planet changed its name to Phone.com and later merged with Software.com in order to form Openwave.)
Thus, the first generation of wireless Internet data services provided by the carriers was focused on consumers and provided access to Internet Web sites via the Wireless Application Protocol. Carriers formed partnerships with multiple content providers in order to build closed-content portals often known as a “walled garden.” Users were confined to the content providers listed within the portal and had little or no way of getting out to any other sites on the Internet. Given the “walled garden” situation, it has made a lot of sense for content providers to form relationships with the wireless carriers in order to get placement on their WAP portals and better visibility for their wireless services.
The story of how wireless carriers came to focus on horizontal wireless data applications for enterprise customers is an interesting one. According to Paul Reddick, VP of Business Development, Sprint PCS, the company was already looking at enterprise applications for wireless data as early as 1998. They initially talked to enterprise customers to understand the killer applications for various vertical markets such as the insurance and real estate industries. Their discussions with customers revealed that, although vertical market applications did not warrant heavy investment at that time, there appeared to be a universal need for more horizontal applications on the mobile phone such as e-mail, and personal information management (PIM) such as contacts, calendars, schedules, as well as customer relationship management, corporate directories, and sales automation. Sprint PCS adjusted their strategy and delivered these horizontal applications with a set of industry partners as part of a suite of products known as the Wireless Web for Business in September 2000. They are now moving into the vertical applications space as described in the next section on wireless application service providers. According to Reddick, part of mission of the Sprint PCS Clear Wireless Workplace is to make people more productive. The natural extension to this is to allow their customers to access information in addition to people. This is true whether one is dealing with consumers or with enterprise customers. Thus, the migration from voice to data services has been a natural evolution, as well as a fundamental part of their mission statement.
The next logical step after wireless data services such as wireless Internet access is for the wireless carriers to facilitate M-Commerce transactions over their networks. Many pilots and trials have been adopted worldwide, with some carriers such as NTT DoCoMo already having production implementations. We have seen this earlier in the section on global trends. Examples of some of the trials that have occurred include the NetCom trial with the M-Commerce software company MoreMagic, the AT&T Wireless trial with QPass, and the DirectBill service offered by Cingular Wireless.
The trial conducted by Norwegian mobile operator NetCom used the MoreMagic payment transaction software to pilot four M-Commerce service offerings: a popular Norwegian daily soap, a pizza delivery service, an online newspaper archive, and a location-based service. The MoreMagic transaction platform is described in Chapter 8.
Outside of the wireless carriers, other players are also engaging in pilots. Palm has been testing M-Commerce payments using the Palm PDA as the holder of digital wallet information; such information can be beamed over the IR port to merchants with Palm-compatible terminals for payment.
Since M-Commerce is still in its infancy, business models have not yet stabilized. It remains to be seen who the eventual winners will be. The main players are the wireless carriers, the portals and content aggregators, the financial service institutions, and the merchants themselves. How the value extracted from M-Commerce transactions will be shared between these players is still to be determined. What is likely is that a significant portion of the percentage of the revenues will shift from the wireless carriers toward the content and application service providers.
Who will own the M-Commerce consumer is also an open question. The carriers, as we suggested earlier, may be one possibility. They control and operate the network and the portal interface presented to the user. But the financial services institutions, who can be carrier network agnostic, may also be able to extend their customer relationship from the credit card world to the M-Commerce world, that is with digital wallets. The digital wallet is an important item to own from a provider standpoint, because it can contain customer payment choices and shipping addresses, as well as customer preferences and a link to the customer’s transaction history and buying habits.
One aspect of M-Commerce transactions that the wireless carriers have seemed reluctant to own is the billing for third-party products and services. The issues around billing relate to the legality of billing for non-telecom-related changes, the issue of collecting payment, and the issue of customer care and dispute resolution.
The winning strategy for the wireless carriers may well be to outsource the billing and collection aspects around M-Commerce transactions, but to own the customer profile, preferences, and the digital wallet. This builds in switching costs for the consumer, owing to the time required to activate a digital wallet, and the level of personalization and ease-of-use that it provides. Yet this still frees the wireless carrier from the burden of handling or providing all the costs associated with post-transaction customer care and billing.
On the other hand, merchants may become less willing to share revenues if all the carrier provides is the channel to the customer. As closed wireless carrier portals give way to open portals with free access to any Internet URL, the carriers may find themselves dis-intermediated from M-Commerce transactions with merchants who already have a strong brand name and customer loyalty. To stay in the loop, they need to provide more user-friendly, efficient, and secure M-Commerce mechanisms than the merchants provide by themselves. This may include digital wallet services, one-click transactions, ease of navigation, security, and context-relevant services that enhance the value proposition for both the merchant and the consumer. This model of value-added services in order to stay a key component of the value chain is similar to the strategies of distributors in the supply chain of the business-to-business electronic commerce world.
The action item for the enterprise contemplating their M-Commerce strategy is to continue to observe the various business models and revenue sharing arrangements that are occurring worldwide. Moreover, enterprises need to be prepared for when this channel becomes significant. Eventually the M-Business channel will be just as important as the wired Internet channel to customers that you have today. Today, there are few consumers making M-Commerce transactions, so the incentives for the enterprise to invest in and roll out M-Commerce solutions are reduced. However, it is prudent for the enterprise to plan an overall M-Business strategy that considers customers, employees, suppliers, and business partners. The evolution and adoption of M-Commerce within those user constituencies must be a consideration in an enterprise’s future endeavors. Be prepared to migrate from wireless communications and content to wireless commerce as your customers begin their adoption. Providing simple non-transactional M-Business services to customers today can also help to pave the way to transactional M-Commerce interactions with your customers in the future.
|Wireless Data Example|
|As an example of a wireless Internet offering provided by a major carrier, we’ll take a look at the Digital PocketNet Service offered by AT&T Wireless. In addition to access to WAP-enabled Web sites, this service provides e-mail, address book, calendar, alerts, and to-do functionality for the cellular phone. The e-mail account has the format [email protected] and users can customize the settings of their wireless data services either directly on the cellular phone or via the AT&T Web site at http://www.att.com/mypocketnet. Updates to the preferences made on either the cell phone directly or via the Web site are reflected immediately in the service. For example, the Web site can be used to enter favorite links to Web sites or favorite phone numbers. The personal Web site provided by AT&T Digital PocketNet Service is powered by InfoSpace. Additionally, FoneSync software from Openwave is used to provide synchronization capabilities between the PocketNet Service and a user’s Personal Information Management (PIM) software, i.e., Microsoft Outlook, Lotus Notes, Lotus Organizer, Symantec ACT!, and Goldmine.|
|Figure 2-6 shows some of the menu options and partner content available from the “Web Sites” section of the PocketNet service.|
|Figure 2-6 Sample of Content Providers on the AT&T Digital PocketNet Service.
Wireless Application Service Provider Platforms
The next generation of wireless Internet data services provided by the wireless carriers has started to focus on the enterprise. One of the major trends has been for the wireless carriers to provide wireless application service provider (or WASP) services to enterprise customers. This gives an enterprise wireless access to a variety of applications and content. In 2001, almost every major wireless carrier in the United States announced plans to provide these WASP services to the enterprise by teaming with systems integrators and software companies.
It should be noted that prior to the wireless carriers entering the market, many wireless software vendors had been providing their technology as a hosted service to the enterprise; this had initially created the wireless application service provider market. Such companies included 2Roam, Aether Systems, Air2Web, and JP Mobile.
As examples of wireless carriers entering the WASP market, Sprint PCS announced a relationship with Compuware to deliver applications such as wireless meter reading, real-time tracking for the transportation industry, mobile phone applications, enterprise resource planning and customer relationship management tools. AT&T Wireless announced a relationship with Accenture to wirelessly enable applications such as corporate e-mail, customer information management, sales force automation, and inventory management. Cingular Wireless announced a relationship with Siebel Systems to offer Siebel eBusiness Applications across their network and a Corporate E-mail PLUS service to give enterprise employees wireless access to their Microsoft Exchange or Lotus Notes-based corporate e-mail systems.
Many business challenges still exist for the carrier versions of these wireless application service providers to become a hit with the enterprise. Their go-to-market strategy has to make sense for the enterprise buyer from both a business and technology standpoint. The business buyer needs to feel assured that the wireless application service provider understands their business and has a solution that can add real value. Business buyers may feel a little uncomfortable buying services from a wireless carrier who is unfamiliar with their industry and business processes. IT buyers need to feel assured that the offering provides all the required levels of security, performance, reliability, and scalability, in addition to contract flexibility and the breadth of the service and support offerings. When faced with selecting a single wireless carrier for wireless access to enterprise applications, the issue of coverage will also be very important.
Finally, the wireless application service provider will need to have smoothed out all the internal partnerships that need to occur to provide an end-to-end service offering for the enterprise. This will typically include relationships with systems integrators and a number of software vendors. One of the fundamental challenges is that wireless carriers do not typically understand enterprise needs in terms of application solutions. If wireless carriers can successfully cross over this hurdle, they will be well on the way to becoming valuable service providers for the enterprise and will have successfully broadened their data services from a consumer focus to an enterprise focus.
As we have discussed in Chapter 1, the IT department is also changing rapidly. Why are changes to the IT department important to an executive considering his or her business strategy for mobile customers, partners, or employees? By understanding the dynamics occurring within these departments, the business executive can have a better set of expectations around what can be delivered, how quickly, and how the progress of an initiative can be tracked and measured.
IT was under an increasing amount of scrutiny from the business side during the slowdown in the economy in mid- to late-2000. At the same time, IT departments were becoming increasingly complex in terms of application portfolio, technical architectures, hardware and software configurations, departmental skill sets, best practices, methodologies, standards and guidelines, and development lifecycles. The ratio of boxes (servers) to IT staff has been increasing and many enterprises and service providers have evolved to the “thousand server environment”where literally thousands of computer servers are required to run the business.
Why was IT never scrutinized over the past couple of years? Mostly because the economy had been so strong that IT spending was questioned, but not scrutinized. The downturn in the economy in late 2000 and early 2001 caused IT business management practices to be improved and IT expenditures to be more justified. The total cost of computing and return on investment is being more accurately tracked, reported, and articulated to the business.
It is important to note that if we look at the changes within the IT department on a longer time scale (that is, in terms of decades), we find that this scrutiny in terms of costs and justification for projects is actually a return to normalcy. In fact, the anomaly was the couple of years during the Internet and E-Business era of the mid to late 90s, where spending was increased and the race was to capture the market and stay ahead of the competition.
These forces of increasing scrutiny from the business side, together with increasing complexity and the evolution of IT from a cost center to a strategic partner, have meant that mobile business initiatives and other initiatives are now becoming more carefully designed, developed, and deployed. Moreover, IT is now equipped with additional, if perhaps rudimentary, tools for the calculation of total cost of computing and the return on investment for IT initiatives.
IT has also shifted some of its focus from revenue generation activities and applications toward applications that can help to improve productivity and reduce costs for the enterprise. It is here that M-Business initiatives can have their first impact upon the enterprise. Later, as the technologies mature and consumer acceptance and penetration increases, M-Business initiatives can play an equal role as a source of revenue generation.
When looking at the relationship between IT and the business side, it is worth noting the top ten problems that customers have reported with their IT organizations. The following top ten list is taken from a report by the Giga Information Group:
- The value of IT is not understood
- Projects are not executed properly
- Project selection is wrong
- IT means business prevention
- IT cannot maintain a robust infrastructure
- IT leadership does not contain costs
- IT is not business savvy
- IT does not establish and maintain an effective dialog with the rest of the business
- Results need to be reported better
- IT people are not customer oriented
The takeaway for the business executive considering the potential of mobile business for his or her employees, customers, suppliers, and business partners, is to ensure a strong dialog and relationship with IT. The dialog should be built around the goal of creating enterprise value through the leverage of IT resources.
Wireless Internet Value Chain
When looking at the current state of M-Business, it often helps to view the entire value chain in order to see how companies are positioning themselves within their markets. The wireless Internet value chain appears to be a lot more complex than the E-Business value chains that have preceded it. There are more moving parts and more players involved. As we migrate from 2G to 3G wireless networks, the value chain complexity increases even further, as more application and content providers take advantage of the higher capabilities of the networks.
Another part of the complexity of the value chain is owing to the number of standards and technologies involved. Not only do we have Internet hardware and software vendors to contend with, as was the case in the E-Business value chain. Now we are dealing with device manufacturers for PDAs and cell phones, carriers for wireless networks, various standards such as WAP and WML (Wireless Markup Language), and a host of other complexities—including coverage, security, bandwidth, provisioning, billing, and both voice and data applications.
As mobile business extends the enterprise to any-location and any-time access, we now start to see how established industries can play a more integral part in the value chain. For example:
- A commercial real estate property owner can gain revenue by placing wireless technologies that boost cellular carriers’ signals inside a building. Inner Wireless is an example of a company that provides passive cell tower technologies to the commercial real estate industry. The technology has been in field tests. It has proven successful not only within office spaces, but also within the parking garages and elevators of said properties. This technology solves a large problem cellular signals just one foot inside a building are often 100 times less than those just one foot outside the building with a corresponding effect on the service quality provided to the end user.
- Airline carriers can provide wireless LAN capabilities in their lounges and at the gate. Using the MobileStar service in several airports in the United States, American Airlines has rolled out wireless LAN service to gates and Admirals Club lounges. This is being done in New York (JFK), Newark, San Francisco, Chicago (O’Hare), and Baltimore/Washington.
- Automotive manufacturers can build in telematics services as a value-added technology within their luxury cars. Telematics services from companies such as ATX Technologies provide drivers with emergency services (such as automatic collision notification,emergency response, and roadside assistance). They also provide navigation and information services, such as routing assistance, traffic, weather, news, financial information, and sports information—all of which can be defined and customized from a personalized Internet page.
- Coffee shops can provide wireless LAN capabilities. Starbucks, along with its partners Compaq and MobileStar, is starting to offer wireless LAN capabilities to customers. Customers provide their own laptops or PDAs, but are able to use the Starbucks wireless LAN access point. Pricing models for these kinds of services appear to be evolving, but can either be an hourly rate or a flat rate per month.
Value Chain for Enterprise Wireless Data
Figure 2-7 shows a typical M-Business value chain from the network operator to the enterprise customer.
Figure 2-7 M-Business Value Chain for the Enterprise.
In this sample value chain, we can imagine the case of an enterprise giving wireless access to e-mail, Internet, and intranet content to their employees. In this case, we can truly see how extensive any given value chain can become. The network operator may be a wireless carrier such as Sprint PCS. The network infrastructure provider may be a networking equipment provider such as CISCO. The middleware/gateway provider may be a wireless middleware vendor such as Brience. The content aggregator may be a wireless vendor such as InfoSpace. The application provider may be a wireless application service provider such as JP Mobile. Finally, the device manufacturer may be a handset manufacturer such as Ericsson.
In this example, the enterprise customer might access a WAP-enabled Internet site via InfoSpace, his or her e-mail on Microsoft Exchange (enabled for wireless access by JP Mobile), and an enterprise application on the intranet via wireless middleware from Brience.
The major components of the value chain include the networking components (both the networks themselves and the operators of those networks), the communications software components (including infrastructure software such as wireless middleware and gateways), content and application services, and the end user devices.
If we add the physical location component to the equation, that is to say the physical point of access to the applications and services, the value chain changes. This category could be included within the application provider section of the value chain or perhaps within a new category labeled access provider.
Players within this application provider or access provider category could be the physical access providers, such as airlines and hotels, together with the located-based services companies who provide the location information for end users, target destinations, or assets that need to be tracked.
Value Chain for Consumer Wireless Data
Figure 2-8 shows a simplified mobile business value chain for the consumer.
Figure 2-8 M-Business Value Chain for the Consumer.
The main difference between the consumer-focused value chain for M-Business when compared to the enterprise-focused value chain is that the consumer value chain focuses more on external retailers and content providers. It has less to do with the internal wireless middleware and enterprise applications that characterize the enterprise space.
The value chain becomes more complex as network operators work with any array of retailers, financial institutions, content providers, and advertisers to assemble their wireless data portals for the consumer population.
Key Wireless Companies
Some of the key players who are shaping the mobile economy include the device manufacturers, equipment manufacturers, wireless carriers, wireless service providers, telematics providers, and wireless software companies. Table 2-3 shows a sample listing of some of these players. Since the market is moving so quickly and smaller players often merge, are acquired, or go out of business, this table simply shows some of the current players in the space at the time of this writing. It is certainly not to be considered an exhaustive list.
Publicly-Traded Wireless Vendors
Companies in the wireless sector have enjoyed the same roller-coaster ride in terms of their stock price as the rest of the technology industry. Some of the major players are worth studying. By doing so, we may better understand the market dynamics and the interdependencies that the various players have on one another in the value chain.
A downturn in economic outlook for the wireless carriers has a ripple effect for the telecom equipment manufacturers and the handset manufacturers. This filters down along all aspects of the value chain. The drivers of the market can be considered the telecommunications providers—both wireline and wireless. The telecom equipment manufacturers follow after them, with the software companies focused on carrier-specific wireless applications and the wireless application service providers close behind.
M-Business magazine’s M-Business 50 Stock Index presents a good sampling of the major players within the mobile economy. It tracks 50 public companies, ranging from the global telecom giants to mobile startups. Table 2-4 presents an alphabetical listing of these players together with their respective stock symbols.
Table 2-3 Key Wireless Companies in the Wireless Internet Value Chain.
|Device Manufacturers||Wireless Middleware/Gateways||Wireless Carriers|
|Symbol||Cyneta Networks||BT Genie|
|Wireless Applications||Wireless Applications||Wireless Applications|
|Operating System & Browser Manufacturers||Wireless Equipment Manufacturers||Wireless Application Service Providers|
Table 2-4 M-Business 50 Stock Index. Source: M-Business Magazine.
|AT&T Wireless Group||AWE|
|Boston Communications Group||BCGI|
|Leap Wireless International||LWIN|
|Research in Motion||RIMM|
|Sprint PCS Group||PCS|
Since this list is subject to change, I recommend you visit the M-Business magazine Web site, http://www.mbusinessdaily.com, for the latest list of companies in the Index and the latest stock prices. The Index serves as a useful barometer for the wireless and mobile industry and can be compared with the NYSE, Dow Jones, and NASDAQ indices.
Applications for M-Business within the enterprise can be broken into those that affect employees, customers, suppliers, and business partners. This short introduction to wireless applications within the enterprise will serve as a sampling of the subject matter. This matter will be treated in much greater detail throughout the rest of the book, in case studies and in the exploration of applications including business intelligence, customer relationship management, sales force automation, field force automation, and supply chain management.
Analyst surveys in the U.S. and Europe have shown that employees will benefit first from wireless enablement of the enterprise. M-Business applications will be used to increase employee productivity and will be followed by applications that are offered to customers, partners, and suppliers.
Thus, the broad categories of wireless enablement within the enterprise can be listed as follows:
- Wireless Enablement of Employees (B2E)
- Wireless Enablement of Customers (B2C)
- Wireless Enablement of Partners & Suppliers (B2B)
The B2B category includes supply chain management, enterprise resource planning, and electronic marketplaces. The B2E category includes the sales force and field service workers in addition to executives, managers, and office workers.
It is important that a holistic strategy is adopted for these categories of wireless enablement. For example, employees may well need to gain access to the same applications, processes, and information as customers or partners. Additionally, as we shall discover in some of the case studies such as ADC Telecommunications, M-Business initiatives targeted for customers often turn out to be highly desirable for internal employee access as well.
All three of these categories of wireless enablement are briefly discussed in this section with a focus on some of the areas of opportunity and their benefits to the enterprise.
Wireless Enablement of Employees
Wireless enablement for employees is basically about giving employees the access to the information and transactions they need in order to perform their work-related activities. Wireless enablement can take the form of an extension of existing enterprise applications into the wireless domain. Or it can take the form of entirely new applications built from the ground up (either package or custom) specifically for use in a wireless or mobile scenario. These applications can have a profound productivity improvement for employees, the sales force, the field force, and for executives within an enterprise.
The following table (2-5) presents some of the areas of opportunity for wireless enablement of employees and the benefits that may be realized:
Table 2-5 Opportunities and Benefits for Wireless Enablement of Employees
|Personal Information Management (PIM):
||Delivery of Time-Sensitive and/or Location-Relevant Information|
||Reduced Asset Downtime|
|Sales Force Applications:
||Reduced Resource Costs (such as phone, fax, printing, mailing)|
|Field Force Applications:
|Enterprise Resource Planning Applications||Knowledge/Decision Making|
|Enterprise Dashboard / Business Intelligence Applications:
||Improved Executive Reporting and Decision Making|
|Improved Data Capture and Accuracy||Delivery of Time-Sensitive and/or Location-Relevant Information|
Wireless Enablement of Customers
Wireless enablement of customers can take many forms: branded cell phones or pagers to increase customer loyalty; access to hotel and airline reservations and information; telematics services for emergency location and assistance; M-Commerce transactions for wireless purchases such as stocks; wireless access to order status information; product and service information via wireless enablement of a corporate Web site; alerts and notifications on items of interest; locationbased services for marketing; unified messaging for customer support; wireless gami
The challenge on the business-to-consumer side for the enterprise is to use wireless technologies and applications in order to deepen the relationship with the customer. This needs to be done while providing applications that are easy-to-use, fulfill a need on the customer end, are actionable or informational, and support the diverse set of devices, networks, and standards in use by consumers and business customers.
Table 26 presents some of the areas of opportunity for wireless enablement of customers and the benefits that may be realized:
Wireless Enablement of Partners and Suppliers
Wireless enablement of partners and suppliers can take on many aspects based upon the role of the partner or supplier. Partners may be resellers, value-added resellers, distributors, wholesalers, suppliers, OEMs, industry associations, and electronic marketplace participants. A taxonomy for the various roles of partners is very much needed if one is not yet in existence. In this section, we take a look at partners in the traditional supply chain and also within electronic marketplaces.
The supply chain can benefit from wireless enablement in almost every process, including purchasing, manufacturing, distribution, and customer service and sales. Mobile technologies have long been used within the supply chain and have typically consisted of bar code scanners for improved data capture and asset management. New devices such as ruggedized handhelds from Symbol supporting both Palm OS and Windows CE operating systems, and additional means of connecivity including wireless LANs and wireless WANs mean that supply chain operations have a full range of alternatives for how, where, and when information is captured and acted upon. Information, goods, and funds flows between partners in the supply chain can now move in real-time versus near real-time or nightly batch operations.
As various industries buy and sell products and services through public or private electronic marketplaces, there is a need for continuous communications with these marketplaces in order to gather pricing information, news and events, order status, bid status, approval requests, and sales histories.
Table 2-6 Opportunities and Benefits for Wireless Enablement of Customers
||Ability to Enter New Markets|
||Ability to Offer New Products and Services|
|Customer Relationship Management:
|Increased Customer Satisfaction|
|Increased Customer Loyalty|
Extending these public or private electronic marketplaces with access via wireless devices can provide a solution to this need for continuous information and transactions. One of the most simple examples is that of being alerted to bidding events such as an outbid notification during an online auction. The time criticality of the auction process means that wireless access to the marketplace is an essential tool for many participants.
The following table (2-7) presents some of the areas of opportunity for wireless enablement of partners and suppliers and the benefits that may be realized:
For more details and examples about M-Business application functionality, scenarios and benefits for the enterprise please see the M-Business Applications and Processes section within Chapter 4, Process Models and Applications for M-Business Agility. This chapter goes into detail on categories such as business intelligence, sales force automation, field force automation, customer relationship management, and supply chain management. Additionally, you can find numerous real-life case studies in Chapter 5, Industry Examples.
Table 2-7 Opportunities and Benefits for Wireless Enablement of Partners and Suppliers
|Supply Chain Management:
|Electronic Marketplaces||Revenue Generation:
|Real-time personalized alerts based on trading events:
Business Agility Lessons
- The killer application for wireless Internet consumers varies by country, by culture, and by individual user.
- Drivers for market adoption include industry convergence, improvements in wireless technology and standards, and cultural and regulatory forces.
- Barriers to market adoption include business barriers related to business model and revenues, together with technology barriers related to security, product maturity, standards, usability, bandwidth, and cost.
- Since M-Commerce is still in its infancy, it remains to be seen who the eventual winners will be. The contenders in the battle for the consumer include the wireless carriers, financial services providers, content providers, and retailers.
- Faced with declining voice revenues, wireless carriers are looking toward value-added data services as a way to increase ARPU and to reduce churn.
- The wireless data market has been ignited by consumers, but it is likely that the eventual winners will be enterprises that leverage the technology within their enterprise to create substantial returns on investment.
- Carriers moving into the wireless application service provider space will need to form relationships with software companies and systems integrators and smooth internal partnerships in order to become a hit with the enterprise.
- Business executives should ensure a strong relationship with their IT departments in order to be most successful in their M-Business initiatives.
- The M-Business value chain is complex and involves more players than the traditional E-Business value chain.
- M-Business can be applied within the enterprise for employees, customers, suppliers, and business partners. Employees are one of the prime targets for M-Business applications.
- Enterprise benefits from M-Business include increased productivity, reduced cycle times, reduced costs, increased revenues, increased customer satisfaction and loyalty, competitive advantage, and improved decision-making ability.
This is a sample chapter of Business Agility: Strategies for Gaining Competitive Advantage through Mobile Business Solutions (ISBN: 0-13-066837-0). For the full text, visit http://www.phptr.com
©2001 Pearson Education. All Rights Reserved.
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