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The M-Business Evolution

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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 ManufacturersWireless Middleware/GatewaysWireless Carriers
CompaqGatewaysNorth America
EricssonEricssonAT&T Wireless
HandspringIBMCingular Wireless
MitsubishiNokiaQwest Wireless
MotorolaOpenwaveSprint PCS
Palm724 SolutionsKDDI
SymbolCyneta NetworksBT Genie
 JP MobileTIM
 MicrosoftVirgin Mobile
  KT FreeTel
  LG Telecom
  China Mobile
  China Unicom
Wireless ApplicationsWireless ApplicationsWireless Applications
E.piphany724 SolutionsBaltimore
SiebelMore MagicVeriSign
@HandTrintechATX Technologies
Antenna SoftwarePortalsOnStar
Envoy WorldwideCell-Loc 
Operating System & Browser ManufacturersWireless Equipment ManufacturersWireless Application Service Providers
MicrosoftAmerican Tower2Roam
 NECJP Mobile
 Nortel NetworksSeven

Table 2-4  M-Business 50 Stock Index. Source: M-Business Magazine.
Company NameSymbol
Aether SystemsAETH
AT&T Wireless GroupAWE
Boston Communications GroupBCGI
British TelecommunicationsBTY
Cisco SystemsCSCO
Comverse TechnologyCMVT
Deutsche TelekomDT
Extended SystemsXTND
Interdigital CommunicationsIDCC
i3 MobileIIIM
Leap Wireless InternationalLWIN
Nextel CommunicationsNXTL
Nortel NetworksNT
Novatel WirelessNVTL
Openwave SystemsOPWV
Research in MotionRIMM
SBC CommunicationsSBC
724 SolutionsSVNX
Sierra WirelessSWIR
Sprint PCS GroupPCS
Symbol TechnologiesSBL
Telecommunication SystemsTSYS
Telefónica MóvilesTEM
U.S. CellularUSM
Verizon CommunicationsVZ
Vodafone GroupVOD

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.

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This article was originally published on August 14, 2002

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