Fast Company

What's So Wild About Wireless?

The wireless Web is going to be huge, right? But how much of its promise will actually materialize? Are we in the early stages of the next Internet fad? Here's how the most serious players around separate sense from nonsense.

Mention the words "wireless Internet" to anyone developing a Web strategy, and it's as if you had shouted "free beer" at a fraternity party. There's an outright giddy enthusiasm about the business opportunities that will arise as millions of Americans use cell-phones or other wireless devices to go online anytime. Look at Asia and Scandinavia, where wireless Internet use is the highest, the argument goes. Then imagine what could happen if the usage patterns in those regions were grafted onto the huge U.S. economy.

Consultants predict that revenue from wireless e-commerce in North America will soar from an insignificant base this year to $32 billion or more by 2004. Already it's impossible to read a newspaper, watch TV, or zip through the morning's email messages without confronting ebullient ads meant to drum up that growth. Sprint PCS, for example, has been buying full-page ads in the New York Times, showing office courtyards illustrated with black circles drawn around the unexpected places that people could use Sprint's wireless-Web connections. "Want to make your business more productive?" the ad reads. "Take your office with you."

Wireless-Web technology, like all great Internet breakthroughs, is surrounded by hype: roughly two-thirds sense and one-third nonsense. Companies such as Amazon.com, Microsoft, and Yahoo! are putting some of their brightest people to work on wireless-Web projects, on the belief that wireless technology will ultimately become a vital new way to use the Internet. Early consumer response is promising, they say. But there are also plenty of snags, unresolved issues, and -- most important of all -- signs that more than a few of the initial ideas about wireless-Web usage are just not going to pan out.

Haven't we seen this before? Just two years ago, prospects for dotcom retailing seemed so dazzling that every venture capitalist wanted to finance a dozen deals. Everyone that owned a funky domain name thought that they owned a million-dollar property. Every company that said it was going to start selling its merchandise over the Web could watch its stock soar. That all-out mania concealed a lot of sloppy thinking. As real as the potential was for consumer-oriented e-commerce, the opportunities weren't limitless. And all the basics of sound retailing -- inventory management, gross margins, customer service -- still mattered. Companies that understood this went on to thrive; those that didn't soon lost their allure and often ended up busted.

In the wireless world, Internet enthusiasts understandably are excited about the many implications of being connected anywhere at any time -- be it at a restaurant, in a car, or at the beach. Yet they tend to gloss over the severe limits of today's devices -- which even future improvements aren't likely to eliminate. Small screens make it impossible to display much data at once, which forces users to scroll down endlessly. And tiny keyboards turn even the most rudimentary amount of typing into an unpleasant chore.

Those drawbacks mean that the wireless Web is best suited for quick, urgent tasks -- not for wide-ranging projects that require 30 minutes online. "What you really want are tasks with an imbalance of input and output," says Terrell Jones, 52, CEO and president of Travelocity.com Inc., the Dallas/Ft. Worth - based online travel service. "You put in a little amount of data, and you get back a lot." Jones says that he likes to use a Web-enabled cell-phone to check plane flights, stock quotes, and movie listings. All those uses meet his criteria. But many of his other Internet-related activities just don't transfer to a wireless setting.

Similar distinctions are likely to emerge in wireless e-commerce -- which wireless-Web enthusiasts right now see as a can't-miss area. Seattle-based Amazon.com, the leading retailer on the Internet, has been trying its hand at wireless commerce since late 1999, both via cell-phones and handheld personal digital assistants (PDAs) such as Palm or Handspring devices. Amazon's guarded enthusiasm is instructive for anyone who has big dreams of booking orders over the Web.

"Over time, it's going to be a tremendous new channel," says Nayeem Islam, 37, the general manager of Amazon Anywhere. "But getting the user interface right is quite a challenging task. There just isn't that much screen real estate." To save space, especially on cell-phone display screens, Amazon leaves out product photos and detailed reviews, which have helped the company earn its cachet for great service among desktop-Internet users. Instead, users get a bare-bones listing and must click to access more information.

So far, Islam says, Amazon's wireless orders have tended to tilt heavily toward gifts and impulse purchases. That's fine, but it means that Amazon isn't getting the big 15-item orders that come from desktop users who are willing to spend 20 minutes doing some serious shopping. As a result, Islam says, the average wireless order is smaller than its desktop counterpart. He won't say by how much.

Microsoft, which can throw as many engineers at a problem as it wants to, is concentrating mostly on email services for wireless-Internet users and hasn't yet introduced a Web-shopping option for its MSN service. "We probably will do it at some point," says Sarah Lefko, 31, a Microsoft product manager. "But it needs to be secure and private. We need to make sure that it works. And we need merchants to support it. We don't want to introduce something way ahead of its time."

Also unresolved for Microsoft's team is whether there's any way to get meaningful advertising revenue from the wireless Web. In the desktop world, Microsoft is able to attract millions of dollars a year from stockbrokers, retailers, and others who want to reach users of the company's MSN service. But Lefko admits that it's difficult to imagine where an ad could fit on a cell-phone screen without disrupting a user's ability to do what brought him or her online in the first place.

Yahoo!, in fact, is stalling some of its advertisers that want to put their messages on cell-phone and PDA displays. Ordinarily, the Santa Clara, California-based company is happy to cash its advertisers' checks, and it has done spectacularly well selling ads that will reach desktop-Internet users. But, says Mohan Vishwanath, 33, a Yahoo! vice president in charge of wireless initiatives, "Our issue is whether users will accept it or whether they will get annoyed."

Vishwanath's job has global responsibility, and Yahoo!'s wireless-Internet crew is active in 23 countries, ranging from Japan and Singapore to Germany and Sweden. That gives him a unique perspective on what's similar -- as well as what's different -- about worldwide adoption patterns. Gradually, he says, he's come to believe that international habits won't all blend into one standard pattern.

According to Vishwanath, Japanese users look at an Internet-enabled cell-phone as a source of entertainment -- especially on train commutes. Americans drive to work and are more likely to talk on their cell-phones than to surf the Web. In the United States, he says, top uses for wireless-Internet connections are to check email messages, stock prices, or sports scores. "I've been telling people for a while that these are very personal devices, and they're going to be used in different ways around the world."

One crucial test of wireless-Internet acceptance will come from the financial-services industry. Merely using PDAs or cell-phones to send more email will likely generate a lot of traffic but won't likely mean much revenue -- except for the makers of specialized devices such as the BlackBerry wireless-email transmitter and receiver. By contrast, banking and stock trading have the potential to be big moneymakers if someone can migrate users to the wireless Web.

Aether Systems Inc., based in Owings Mills, Maryland, has been trying as hard as anyone to attract such users. Aether provides real-time wireless data to about 10,000 financial-services customers at brokerages such as Charles Schwab. Many brokers merely get news alerts and up-to-the-minute stock quotes, says Bill Hannon, 46, head of Aether's financial-services team. But a few of them trade as often as twice a day from a PDA or a BlackBerry device.

Aether is starting to make its services available via Web-enabled cell-phones too, but Hannon has limited hopes for that service until keyboards and screen sizes get bigger. "There are a lot of trade-offs involved," he says. "Inputting information using your fingers is tough. I think that this area is going to change rapidly, and eventually you'll have good speech recognition." But Aether's initial experiments with Web-enabled cell-phones are meant more as a learning exercise than as a belief that the right products already have come to market.

An especially wry view comes from Richard Jones, chief technology officer of Countrywide Credit Industries Inc., a leading mortgage company based in Calabasas, California. In the past year, Countrywide has developed technology that enables people to use a Web-enabled cell-phone or a PDA to look up the current market value of a home -- or even to get preliminary approval of a loan. Jones, 48, knows that countless real-estate brokers carry cell-phones everywhere they go, and he would love to be able to make those services halfway navigable on a cell-phone. But "they just aren't quick and easy now," he says. "They're slow and hard." The PDA version is more manageable, but few brokers carry such devices with them.

"The right solution would be something between a cell-phone and a PDA," he says. "You need a screen the size of a Palm's, and you need to collapse it. They're both just barely missing it right now."

George Anders (ganders@fastcompany.com) is a Fast Company senior editor based in Silicon Valley.

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