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A Two-Year Lag in Mobile Commerce?

Carriers in Europe and the United States are making a critical mistake by failing to learn from Japan's mobile commerce success, says a new industry report.

In fact, it will take Western competitors two years to reach the $400 million of mobile commerce revenues generated in Japan today, says research firm Jupiter Research.

Only the carriers that execute effectively will be in a position to profit from a global m-market that is expected to reach an estimated $7.6 billion in 2003, Jupiter said.

The new research, presented at Jupiter's Global Wireless Forum in Stockholm, shows that by the end of 2000, the number of wireless subscribers with Internet-enabled handsets will reach 6 million both in the U.S. and Europe, versus 30 million in Japan.

Jupiter said that it estimates that revenues generated from mobile commerce in 2000 will amount to $10 million in the U.S. and $15 million in Europe, against almost $400 million in Japan. As the market begins to reach critical mass in 2003, the number of wireless subscribers with Internet-enabled handsets will jump to 115 million and 254 million for the U.S. and Europe respectively, with mobile commerce revenues of $600 million in the U.S., $1.7 billion in Europe and $3.5 billion in Japan.

Jupiter says carriers in Japan provide the models for best practices in the mobile commerce space.

"The notion that the success of mobile services in Japan is wholly attributable to cultural factors is a handy cop-out by carriers in other regions," said Seamus McAteer, a research fellow with Jupiter Research. "In launching iMode, NTT DoCoMo set a good example: It adopted an open platform and ensured that consumers' preferred services get primary placement. This open approach, giving the consumers what they want, characterizes the type of transparent business model that others should adopt."

Jupiter said Japan's success in mobile interactive services is largely built around four key elements:

  • An adequate supply of handsets optimized for data delivery.
  • The implementation of a packet data network to facilitate economic delivery of interactive services.
  • Equal opportunities for content providers that spur innovation and drive third-party advertising that builds buzz about the platform.
  • A billing infrastructure upgraded to support charges for premium services.

Carriers in the U.S. and Europe have struggled to find profitability even in the face of an increasing user base, Jupiter said.

Jupiter Research is a Jupiter Media Metrix company that provides comprehensive views of industry trends, accurate forecasts and reports on best practices.