With the downturn in the equity markets and the slowdown in 3G it's understandable why the only real upswing out there is the level of cynicism among companies operating in the mobile space. Granted mobile data hasn't yet fulfilled expectations, but it may be that the operators are as much to blame as the technology.
Accustomed to selling minutes and SMS messages to a mass market, operators have had little experience dealing with customers on an individual basis. But with mobile penetrations reaching near saturation levels and the consumer market predominantly populated by high maintenance pre-pay subscribers, mobile operators can no longer sell one-size-fits-all products. They have to make a play for high revenue users - and this means building a service and, more important, a relationship that keeps customers coming back for more.
Considering millions are already using mobile devices to access content ranging from information to music, the next step for the industry is to keep these customers interested and loyal. Thus mCRM is poised to take the spotlight in the mobile space.
mCRM = mobile Customer Relationship Management
While the precise definition of mCRM is a topic of debate, Datamonitor, an independent technology consultancy in the UK, has split the market into two sectors: business-to-enterprise (B2E), which encompasses wireless access to applications that support sales, service and marketing, and business-to-consumer (B2C), which covers wireless access to sales and support services offered by a given enterprise.
Although B2E applications will dominate the market, Datamonitor believes the B2C space will be the fastest growing sector over the next five years. "New technologies such as location-based services and Personal Area Networks (Bluetooth) will provide the building blocks for one-to-one customer relationships," notes Robin Goad, Datamonitor technology analyst and author of the report "mCRM: Why B2C is hype and B2E is the reality... for now."
Datamonitor predicts the global market for mCRM will grow at a CAGR (compound annual growth rate) of 86% - skyrocketing from $118 million by the end of this year to nearly $1.7 billion in 2005.
The sustainable business model
But who is going to benefit from this market opportunity? In the B2E space, where business users demand wireless access to their existing business applications, the winners circle will certainly include those mobile players that strike partnerships with well-known systems integrators and software companies.
"This is the most sustainable business model," notes Richard Molloy, a principal within Booz Allen & Hamilton's global Communications and Health Practice headquartered in New York. "Business users will want any mCRM service they buy to be integrated into their existing apps and that means a tight fit with the Siebels, the SAPs, the IBMs and the Oracles of this world."
According to new research from Ovum Ltd, a technology consultancy based in the UK, mobile operators may have the upper hand when it comes to services to individual subscribers - but WASPs (Wireless Application Service Providers) rule in the enterprise market because they know the market and command mature distribution channels. Put simply, since what the content WASPs are delivering is basically software, it's clear that software companies will rise to be the brokers in this new business model.
However, neither the mobile operators nor the WASPs can do it alone. Partnerships are key, between these two service provider types and also a third, new type of service provider: the WAIP. WAIPs are companies that develop, host and manage the glue that holds the wireless data solutions together in the first place.
By providing "bridging" solutions that provide wireless access to the functionality of applications, both those run in-house by enterprises and those hosted by WASPs, it's a given that WAIPs are also going to be crashing the party. But there's enough of the cake to go around. Ovum believes market will soon undergo tremendous growth. By 2006 revenues from enterprise subscribers to WASP services will be $12.1 billion in the US alone, with revenues from individual subscribers totaling a further $6.5 billion.
The message is loud and clear - but most operators aren't listening. "They're worried that by partnering (with third parties) they're going to lose a slice of the revenues and slip down a few notches on the value chain," notes Minerva Tantoco-Hobbs, Director, Advanced Technology and Media Lab at Answerthink, Inc., a US-based systems integrator specialized in wireless. "But what they are forgetting is that every time there has been a limitation on the carrier side of the equation there has been a software response."
Hobbs, also nicknamed the "Queen of Wireless" warns that the market is crowding fast with software companies, WASPs and WAIPs (Wireless Application Infrastructure Providers) lining up to take first mover advantage. "It's about deployment - and this is where mobile operators need to wake up." (See Hobbs' mCRM Checklist)
Corporate and consumer markets
One company raising its profile is Siebel Systems, a leading provider of e-business applications software. Over the last months the company has announced strategic alliances with several mobile operators including Sprint PCS, Cingular Wireless and AT&T Wireless to jointly market and provide wireless access to Siebel eBusiness Applications. Siebel expects to "replicate this success" in Europe and Asia Pacific with announcements timed to its next release which is scheduled to ship at the end of this year.
"Mobile operators are part of a new mobile ecosystem," notes Brian Stone, Director of Product Marketing, Siebel Mobile Solutions. "Operators used to sell voice and now they're learning to sell data. Together we're learning to sell mobile solutions in an evolving market."
By teaming up with an operator a software vendor can "come at the enterprise from two levels," Stone explains, "which means a wealth of cross-sell and up-sell opportunities for both parties that they ordinarily wouldn't have."
SAP, one of Siebel's competitors, has also taken the wraps of its agreement to cooperate on enterprise solution with Japan's NTT DoCoMo.
The consumer market, however, is tough to crack - one reason why mobile operators are conspicuously absent from the scene. The jury is out on what makes for a compelling mCRM offer, but Nick Graham-Rack, chief technology officer at Detica, a UK-based technology consultancy specialized in CRM, says a safe bet is to deliver any service that "either enables the consumer to manage his life better or helps him to enjoy it more."
Indeed, the focus of a compelling consumer service should be on fun or functionality - or a mixture of both, according to Detica. "There are no blueprints to follow there - but there are also no limits to what services operators can create," Graham-Rack says.
Indeed, he could imagine a mCRM service that links a mobile banking service such as Abbey National to a frequent-flyer loyalty scheme belonging to an airlines like BA and ultimately closing the circle with a premium gaming offer for customers to play while they wait to board the plane.
Using information wisely
"In the future wireless data apps are going to have to be more proactive," Graham-Rack says. Balance is also important. Too much information and you're up against the shortcomings of the technology such as small displays and low bandwidth. Too little information and there's no reason why the customer has to have it on the go in the first place.
"We don't know what the services will be, but without more cooperation between mobile operators and third parties it's going to be impossible to develop these relationship (mCRM) services further."
Against this backdrop it's time mobile operators got their act together. Rather than worry about whether or not to be just the pipe, they should recognize that (as operators) delivery will always be their core business.
However, the trick isn't to be a fast pipe or a cheap pipe - but to be a quality pipe. "The network operators hold some very powerful cards in their hand - even if they're not always playing them right," according to Answerthink's Hobbs.
Information the operator has about the end-user, his preferences, his location and his profile make it possible for operators to move far up the value chain, Hobbs says, provided the operator doesn't try to lock the user into the service.
"To play in this game you have to be open and not proprietary. If the mobile operator doesn't open up, then someone else will and that someone will have the edge (in mCRM)." And in the end the operator will have no one to blame but himself.
Peggy Anne Salz monitors the global telecoms markets and contributes regularly to Communications Week International. Her articles have also appeared in a number of daily and weekly publications including TIME, Fortune, The Wall Street Journal Europe and The International Herald Tribune.
In addition to her work in print, Peggy writes a bi-weekly newsletter posted at the web site www.mformobile.com and has headed several projects including a qualitative study for The Economist Intelligence Unit which looks at the impact of e-commerce on European businesses.