Mobile Commerce

The use of portable wireless electronic devices to conduct transactions through the Internet is commonly referred to as mobile commerce (m-commerce). Advanced wireless electronic gadgets such as mobile phones, personal digital assistants (PDAs), laptops, and smartphones are increasingly being used to access and execute electronic transactions through the Internet. M-commerce gadgets facilitate Internet access to customized news services, local maps, stock reports, and financial updates without the need for fixed plug-in accessories to Web servers.

Although m-commerce can easily be confused with e-commerce, the two electronic modes of transacting business are quite different; whereas m-commerce transactions can be accessed through wireless mobile electronic gadgets at anytime from any location, e-commerce transactions are limited to stationary computer networks. In a 2006 Internet article titled “Mobile Banking Stages a Remarkable Comeback,” Rajnish Tiwari and Stephan Buse note that m-commerce applications draw usability convenience from the following characteristics:

• Real-time access to information and data
• Authenticity
• Ubiquitous features
• Customized contents
• Multiple communication functionalities
• Round-the-clock access

M-commerce devices come with many advantages that enhance the convenience of conducting business through the Internet without having access to fixed power portals and Internet connections. In addition to providing users with the advantage of instant access to the Internet even when out of their work stations or homes, the ubiquitous nature of m-commerce devices also enables users to access personalized or customized content services. Moreover, the unique user identification code of each m-commerce devices can provide users with security advantage through authenticating information and tailoring content to desired degrees of privacy.

ACCESS TO THE WEB

Internet access via wireless mobile technologies is not an entirely new phenomenon in the communications market because modem-connected laptops with access to the Internet have been used ever since the Global System for Mobile Communications (GSM) network was unveiled in the early 1990s. The ability of GSM to support wireless application protocol (WAP) connections prompted handset manufacturers to introduce new generation WAP-enabled mobile devices with instant access to the Internet. Mobile Internet access was later boosted by the arrival of high-speed Internet infrastructures such as the High Speed Circuit Switched Data (HSCD) in 2000, General Packet Service Radio (GPRS) in 2001, and Enhanced Data Rates for Global Evolution (EDGE) in 2002.

Each preceding network infrastructure is characterized by advanced technological features and enhanced speed for displaying and relaying text-based data, in addition to instant access capabilities that are charged according to megabytes per second (Mbps) usage. The 2003 arrival of 3G, a third-generation broadband mobile network service which is supported by the Universal Mobile Telecommunications System (UMTS) has introduced much convenience in the m-commerce industry. The 3G broadband network facilitates the use of mobile devices to transmit high-speed video downloads and chat services in addition to relaying text-based data and instant Internet.

The concept of m-commerce is mainly based on the WAP technology. Mobile phones, PDAs, smartphones, and dashboard phones are equipped with standardized features tailored to accommodate small-screen data displays. The use of mobile devices to execute commercial transactions can be used in combination with other wireless technology applications such as the wireless-fidelity (Wi-Fi) mobile access, Bluetooth technology, and radio frequency identification devices (RFID), which transmit data between mobile electronic gadgets and service terminals without the need to swap card readers.

Wi-Fi technology enables Internet access through mobile devices in specially selected areas commonly referred to as “hotspots”. Hotspots are usually high traffic areas such as cities, airports, rail stations, and hotels. Internet access via Wi-Fi can be facilitated by equipping laptops with mobile chips which act as routers from hotspots. In the book titled E-Business and E-Commerce Management, Dave Chaffey confirms that Wi-Fi networks use the 802.11 a, b, or g standard protocol which provides an average speed of 11 Mbps, subject to the strength of the signal from service providers.

American Airlines is one example of a company that has taken the lead in the use of Wi-Fi technology to access the Internet via wireless devices. According to the American Airlines Web site, the airline launched its first ever in-flight Internet access via Wi-Fi technology in August 2008 in a bid to gain competitive advantage over its competitors.

Bluetooth wireless technology is particularly applied over short-distance data exchange between electronic devices to transfer or convert information from mobile devices to storage devices. Bluetooth technology relies on the capacity to beam commands and data information between wireless devices such as a wireless mouse and a computer, a wireless keyboard and a computer, a PDA and a computer, or a laptop and a printer. The increase in the use of Bluetooth-enabled mobile phones to connect to the Internet has prompted leading handset manufactures to increase the production of WAP-enabled smartphones such as Blackberry, which among many other technical features, are equipped with fax, phone, and e-mail capabilities.

M-COMMERCE BUSINESS APPLICATIONS

Just like e-commerce, m-commerce has eliminated the need for processing transactions through paperwork. Wide-ranging business transactions such as ticketing, content purchasing, banking, advertising, electronic payments, and auctions can be carried out through m-commerce devices.

M-Ticketing. Mobile ticketing is an m-commerce business application that uses advanced electronic technologies to deliver tickets to mobile phones, thereby providing customers with immediate and convenient access to their tickets by simply presenting their mobile phones to service vendors. This mode of ticketing is mainly used by car hire companies, public transport companies, airlines, events organizers, night clubs, cinema houses, and train stations. Trinity and bCode are some of the companies in the United States that offer mobile ticketing services to other companies.

M-Purchasing and Delivering Content. The use of mobile devices to purchase and deliver content rank among the most successful m-commerce activities in the mass markets, because it involves convenient transfer of services and products such as mobile phone ring tones, games, and wallpapers that are always sought by mobile phone users. The unprecedented success of sales volumes that Apple's iPods registered as a result of the rush for Apple iTunes serves as a testimony of how the use of mobile devices to purchase and download content has penetrated the mass markets. The impending upgrade of speed capacities of 3G broadband network to fourth generation (4G) will facilitate the purchase of video content such as movies through mobile devices.

M-Shopping. Mobile phones are used to purchase products and services from e-commerce sites such as Amazon.com and eBay.com and other sites that offer online shopping services.

M-Banking. Mobile banking enables bank account holders to access and track the trends of activities in their accounts using mobile phones. Individuals can use mobile phones to check balances, remit money to and from online sources such as PayPal, make bank transfers, and fund stock purchases from different stock exchange markets around the world. However, m-banking is characterized by security concerns because of phishing, sniffing, and theft concerns. Sniffers can easily intercept wireless communications by using appropriate software to break security codes. In an Internet article titled New E*Trade App Lets BlackBerry Users Wheel and Deal, Keith Regan notes that companies are adopting sophisticated software to guard m-commerce applications against probable security risks. The author notes the example of E*Trade Mobile Pro, a customized mobile service which was launched by E*Trade in June 2008 to enhance security of wireless access to the E*Trade Web site by limiting access strictly to BlackBerry smart phones, which are equipped with advanced user interface and security features for banking and trading services.

M-Marketing and Advertising. Mobile phones are gaining increased acceptance as effective tools for marketing and advertising. Token items such as newsletters, business vouchers, and coupons can be distributed to mobile phones and other mobile devices, especially in instances where a firm seeks to benefit from the advantages of target marketing. In the United States, for example, businesses use the vSnax mobile service to advertise by providing free video access to different services, such as news, weather, and stock updates, and attaching matching advertisements on them.

INDUSTRY TRENDS AND PREDICTIONS

Unlike e-commerce, the emergence of m-commerce did not register much enthusiasm and acceptance among the masses, a situation that led to low purchases and minimal use of WAP-enabled mobile phones for Internet content access during the introductory phase. This caused the collapse of many early m-commerce service providers in Europe, such as Sweden's M-box.

However, these trends are set to reverse with the rapid commercialization and widespread availability of the 3G broadband network as well as the introduction of upgraded network applications such as fourth generation (4G). This is because 3G broadband networks do wonders with suitable mobile access devices such as Black-Berry smartphones that facilitate the fast transmission of colored content and graphical images.

IDC statistics predict that the twenty-first century will experience an unprecedented surge in the use of mobile devices and applications in commercial activities to levels that will exceed the use of fixed Internet and PCs. This will result from the increased coverage of the 3G network and unveiling of the 4G broadband network. Designed to transmit wireless broadband services at a speed ten to twenty times higher than previous broadband wireless applications, 4G broadband will run on the Worldwide Interoperability for Microwave Access (WiMAX) network infrastructure. As such, the arrival of the 4G broadband network is expected to introduce new dimensions in visual entertainment applications by enabling users to download video images and movies using mobile phones.

A good example of how network structures with enhanced transmission capabilities for m-commerce devices can attract unprecedented levels of purchases is the enthusiasm with which i-Mode (a mobile accessory gadget that provides the platform for content subscription services and graphical display of colors) was received in the Japanese market immediately after it was unveiled. i-Mode registered unprecedented success through music and ring tone purchases as well as subscription services in the Japanese market.

Apple's iPhone, a phone that also doubles as a minicomputer, has registered tremendous success in penetrating the mobile phone markets because of its unique performance features and advanced user interface. For example, iPhone enables users to access advertised products in the market by simply pressing on the appropriate icons on the phone's screen to be directed to dealers.

Therefore, companies can achieve increased sales volumes of products and services by focusing on appropriate m-commerce strategies and technologies that enhance access to mass markets. The youth segment of the market is particularly known for having strong preferences for new mobile technologies and premier mobile content such as mobile phone games, ring tones, wall papers, and visual graphics. The fact that youths exhibit low sensitivity to prices allows vendors, distributors, and marketers of m-commerce devices to use the youth mind-set as a market penetration strategy for accessing the mass markets.

SEE ALSO Electronic Commerce

BIBLIOGRAPHY

Boudreau, John. “iPhone App Store: A beacon for Mobile Devs?” San Jose Mercury News, 17 June 2008. Available from: http://www.ecommercetimes.com/story/63424.html.

Chaffey, Dave. E-Business and E-Commerce Management. Pearson Education, 2007.

Emberly, David, and Eve Griliches. “Worldwide Telecommunications Equipment 2008-2012 Forecast”. IDC, August 2008. Available from: http://www.idc.com/getdoc.jsp;jsessionid=FA2IKAPBBBWB0CQJAFDCFFAKBEAVAIWD?containerId=213435.

Lysons, Kenneth, and Brian Farrington. Purchasing Supply Chain Management, 7th ed. Pearson Education, 2006.

Regan, Keith. “New E*Trade App Lets BlackBerry Users Wheel and Deal.” E-Commerce Times. Available from: http://www.ecommercetimes.com/story/m-commerce/63290.html.

Tiwari, Rajnish, and Stephan Buse. “Mobile Banking Stages a Remarkable Comeback.” Press Release, 2006. Available from: http://www1.uni-hamburg.de/m-commerce/banking/index_e.html.

Tiwari, Rajnish, Stephan Buse, and Cornelias Herstatt. “Mobile Services in Banking Sector: Role on Innovative Business in Generating Competitive Advantage.” The International Research Conference on Quality, Innovation, and Knowledge Management, New Delhi. (2007).