Diminishing Mobile Portals
By Wendy M. Grossman, Wed Oct 10 00:00:00 GMT 2001

Independent and semi-independent mobile portals may be heading towards a meltdown.

Every new medium starts by imitating an old one. Because portals were big in the Internet world, where people tried with increasing desperation to navigate vast quantities of disorganised information, the WAP world has assumed portals would be the big thing in the wireless Internet.

It hasn't quite worked out that way, even aside from the slow takeup of WAP. On the fixed-line Web ISPs, the loose equivalent to network operators, generally aren't important in the portal business, MSN and AOL aside. On the Internet, the more experienced users are the less likely to use portals, and the people who use e-commerce sites are more likely to be experienced users. In general, search engines are more important than portals. But in the mobile world, no one wants to browse, no one wants to explore, no one even really wants to search much, either. All they want is something simple, relevant, and fast. Is that too much to ask?

In one sense, that ought to make the prospects better for mobile portals. Users are more desperate, more easily frustrated, under the gun of the clock ticking expensive airtime, and limited to an inadequate keyboard. A February 2001 report from Forrester showed that some 69 percent of visitors to WAP sites get there by clicking links on a mobile portal.

Companies spend, however, almost nothing on promoting their WAP sites - rightly so, the report notes, because the market is still so tiny. Nonetheless, the report still argues that mobile portals won't be the answer. Mobile sessions tend to be extremely short, users do not explore links to services, and most people rely on a tiny list of bookmarks. Users of Japan's DoCoMo, for example, typically subscribe to only one i-Mode service (out of 3,000 available).

Four types of mobile portals

There are essentially four types of mobile portals: operator-owned, semi-independent, independent, and Web incumbent. Operator-owned portals, like Orange, have the same advantage Netscape's home page did. It's the first thing subscribers see. Plus, those portals have the operators' existing revenues to support them.

Semi-independent portals like Vizzavi and T-Motion are joint ventures - Vizzavi is Vodafone and Vivendi Universal, and T-Motion is T-Mobile and T-Online (though all three belong to Deutsche Telekom). Independents are Carphone Warehouse's mViva and VNU's recently sold Tutch.

Web incumbents, like AOL, Yahoo! and Google, market WAP versions of their Web sites. Their advantage is that they're already established brands; WAP is an inexpensive add-on to their existing business; and they translate well for existing Internet users. However, operators can remove access ("walled garden").

Third-party portals and semi-independents are the two categories that face the big problems. They compete with network operators, who own the customers, control the revenue stream, control billing and accounting, and can finance their marketing through existing revenues and programs. Economically, network operators hold all the cards, and in terms of garnering users they hold most of the cards.

Unknown feature means no feature

Another difficulty for all portals is that people often don't understand the features. One of the most successful applications, for example, is email - it's immensely powerful for most people to find they can access their email via their phones while on the move. But people don't know how to set it up and don't realize the functionality is there.

Insiders say it's common for the use of this sort of service to go up after industry shows, where staff do personal demonstrations. Ease of use and consistency, therefore, count for a lot. T-Motion's claim that the value it gives its content provider partners, to apply common style guides so that all its services work the same way, is an important one.

Even when there is usage, it's not necessarily anything that requires a portal. Schmidt says, "If you look at, for example, Germany's Jamba, they tell you about increasing usage, but it's all SMS or downloading ring tones - it's not being used as a WAP portal."

However, T-Motion lists some WAP services as hits. During Wimbledon the company saw a twenty-fold increase as people checked scores during the men's Monday final. The company also points out the 12,000 hits its MusiWAP service got in the first month (you can access music charts, play clips, and forward them to friends), and its WAP chat rooms, where average use is ten to 12 minutes per session.

Misleading figures

However, this is not how the portals themselves tell it. Vizzavi claims it has amassed 4.2 million users and intends to hit 95 million across all the countries it plans to operate in. T-Motion claims 4 million and says not only did those users sign up voluntarily but about a third of them are active users, defined as anyone spending more than eight to ten minutes a month on the portal. Last April, the company's CEO, Nikesh Arora, told The Times the company had three million users and that they averaged 11 minutes of use a month.

Pinning those numbers down is tricky. Unlike Web sites, where Jupiter Media Metrix audits user volumes, the mobile world has no independent auditor. Carsten Schmidt, the research analyst who wrote the Forrester report, says it's enormously hard to get good numbers out of the portals.

"The problem is they've signed everyone up but they don't get usage numbers," he says. And even those numbers may be misleading. Users may visit once, be forced to register just to see what the portal is like, and stay in the database, adding to the numbers, even if they never return. Some customers are signed up without their knowledge when they buy a phone. A former employee of a portal says that usage actually dropped over several months this year (though that is not how the company portrays it).

Users do not need the middleman?

But the biggest problem is economics. The mobile world has an advantage over the fixed-line Internet world in that the culture of paying for airtime and services is well established. The question is how any of that revenue stream will get to the independent mobile portals. After the first visit, why do users need the middleman?

Semi-independent portals fall into the same trap. T-Motion and Vizzavi is going to deploy payment systems - for m-commerce service offerings - in the hope for revenues. Yes, users will want small-ticket items aggregated into a single bill, but the operators can do that; $500 airline tickets will go to the credit card company.

So, why did these semi-independent portals emerge? Evidently, they were set up as separate companies as a reflection of the stock market boom at the time (let's have an IPO!) and the belief that the wireless and fixed-line markets were so different. Now, maintaining a separate company is an expensive albatross - duplicated functions like human resources and accounting are just unnecessary expenses.

Operators, on the otherhand, resist schemes that would require them to hand over a share of their airtime revenues. Even if (eventually) carriers set up premium billing so that content providers have a charging mechanism, the carrier still controls access to that billing system (via the user's phone bill) and can charge for the service - charges which the carrier's own portal won't have to pay. Users who are asked to pay airtime, service charges, and then charges to the portal itself will say no.

Mobile operators still control the value-chain

Both T-Motion and Vizzavi are setting up premium subscription services. On November 1, T-Motion starts trialling a subscription service in Germany that for DM19.50 a month. The service will give customers up to nine free ringtones and 150 SMS alerts, along with access to live sports bulletins, financial news, fantasy share trading, a restaurant finder, greeting cards, and games (nGame's Alien Fish Exchange and DataClash among them). T-Motion says the company doesn't pay upfront for content but shares revenues so the content provider is rewarded for success.

But, mobile operators will have an even bigger lock on location-based services, where content providers can't get access to the location information without the operators' help, and interactive Java-based services, where security concerns will dictate what content providers are allowed to do.

It sounds promising, but even so an industry source dealing with these companies says flatly: "True independents are toast. They'll never survive long enough to get revenue scale." The Forrester report makes the same point, albeit more decorously: "Mobile portal pure plays will disappear." His reasons are the same.

Wendy M. Grossman is a freelance writer based in London, and author of net.wars. Her new book, From Anarchy to Power: The Net Comes of Age is out.