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802.11b and 3G Synergies for 2002

A Year of Decisions is Predicted for M-Commerce

If 2001 was a year of economic slowdown, retreat from technology and hunkering down, 2002 will be a time of sorting out. Wireless services will seek out new markets, embattled mobile companies will stem a tide of losses and new technologies introduced will begin to flourish -- or fail.

Will this be the year for m-commerce to come of age? You won't find many industry analysts with a definite answer. Instead, analysts like the Yankee Group's Sarah Kim point to a number of promising developments that will affect mobile commerce's success.

These developments include a more active role for carriers in m-commerce, the increasing use of SMS and location-based services, and surprising changes on the hardware front.

The Year of the Carrier
Carriers will be involved in the further introduction of several high-profile services during 2002, according to several analysts. Kim said carriers will take the lead in the growth of Wireless ISPs. Carriers will provide the necessary funding and motivation lacking during 2001.

As more carriers roll-out E-911 services, more location-based services will appear. Deloitte Consulting's Martin Dunsby believes the FCC mandate requiring 911 calls from cell phones be located will create a widespread demand for finding the nearest convenience store, movie theatre, or restaurant.

Yankee group analyst Kim also predicts that carriers will move agressively into SMS services, even giving away text messaging to attract subscribers. Peter Firstbrook of the Meta Group foresees SMS as "the lowest-common-denominator data capability" for the 20% of non-WAP-complaint phones. Firstbrook said SMS will remain the best way for businesses to provide limited wireless data until late 2003 when 2.5G mobile networks are in place.

Carriers will hedge their bets on next-generation networks by entering the 802.11b WLAN market. Look for Voicestream, Verizon, Sprint and possibly AT&T Wireless in 2002 to offer 802.11b indoor while supporting 3G outdoors. Why? Carriers feel that having customers becoming accustomed to 802.11b could provide an incentive to try mobile 3G services. Movement is underway on several fronts:

  • Sprint has joined the Wireless Ethernet Compatibility Alliace (WECA) trade group last year and is expected to offer 802.11b in airports in 2002.
  • Voicestream in November bought the assets of bankrupt MobileStar, known for getting 802.11b into Starbuck coffee shops.
  • Verizon and Ericsson demonstrated that 802.11b, CDMA 1x and Bluetooth can be integrated. Nokia has a commercial product that allows GSM subscribers to use their cell phone information to log onto 802.11b WLANs using laptops.

"2002 will be a good year for 802.11b and wireless LANs," predicts Kim.

So Where's 3G?
Carriers will continue rolling out 2.5G networks and Deloitte Consulting believes the packet-switched nature of next-generation networks will become an expected component of m-commerce. The Yankee Group's Kim said, however, that until CDMA networks such as Sprint PCS and Verizon go nationwide at the end of 2002, we won't see many data services in the U.S. CDMA is the dominant network used by the majority of the nation's wireless subscribers.

On the hardware front, Todd Kort and Ken Dulaney of the Gartner Group, are predicting Handspring and Palm -- now deep into a downward-spiraling price war -- will call a truce and merge.

In a market that went from 100% growth in 2000 to around 10% growth in 2001, the two PDA makers can not steal marketshare from one another while fending off advancing Sony and PocketPC vendors.

"While a merger of Palm hardware operations with Handspring would not grow the market," argue the two analysts, "it would relieve some of the pricing pressures and enable the combined entity a better chance of achieving financial health."

Some observers see 2002 as a time of picking up the pieces and catching a collective breath. The year 2002 will be the Chinese Year of the Horse. Whether that horse is a tame and predictable pony or a snarling wild m-commerce mustang, the ride will be interesting.