COMP 7880 EBusiness Strategies Mobile Commerce Dickson K

COMP 7880: E-Business Strategies Mobile Commerce Dickson K. W. Chiu Ph. D, SMIEEE, SMACM, Life MHKCS Jelassi & Enders: Chapter 12 1

Our Roadmap Mobile e-commerce strategy E-business strategy Strategy implementatio Strategy formulation n 12 Strategic analysis 3 External analysis 9 5 Internal organisation Strategy options Opportunities/ threats Strengths/ weaknesses 4 Internal analysis 6 Sustaining competitive advantage 8 7 Exploring new market spaces Creating and capturing value 10 13 Interaction with suppliers Implementation 11 Interaction with users/customers COMP 7880 -IC-2

Defining m-commerce (Elliott, Phillips, 2004 ) n Mobile commerce (M-commerce) is concerned with the use, application and integration of wireless telecommunication technology and wireless devices within the business systems domain. n n n Location independent connectivity Mobile Internet Mobile E-commerce Mobile phone, Mobile device (PDA, wireless vending machines, wireless LAN, …) Ramifications for wireless design: ’E’ ‘M’ (Venkatesh, eds. , 2003) M-Commere Strategy 3

The M-commerce Systems Environment (Elliott, Phillips, 2004 ) Wireless Vending Devices (M-Wallet capable) Voice, Picture, SMS, And Data M-Commere Strategy 4

1 G: Analog Communication (Elliott, Phillips, 2004 ) n n n Only in certain environments, particularly in government agencies and the military 1946 AT&T Bell introduced the first commercial mobile phone 1960 s AT&T Bell developed the IMTS (Improved Mobile Telephone Services) Late 1970 s and early 1980 s, microprocessor technology and improvements in cellular network infrastructure led to the birth of 1 G, wireless telecommunications systems 1980 s n n n Nokia in Finland Ericsson in Sweden Motorola in USA Sweden, Japan, and USA developed their own standard Roaming was extremely difficult M-Commere Strategy 5

2 G: Based on Digital Technology (Elliott, Phillips, 2004 ) n n n 1 G, lack of security and the proliferation of different wireless network standards 2 G occurred in early 1990 s GSM (Global System for Mobile Communication) n n n More global compatible telecommunication network European-Centric development Less costly Roaming was possible Fully specify the complete network structure As well as voice communications, 2 G mobile phone can send and receive message n n SMS (Short Messaging Services) Mobile Internet Browsing, via the WAP (Wireless Applications Protocol) M-Commere Strategy 6

2 G Phone connection to the Mobile Internet Source: Kavassalis et al. , 2003 M-Commere Strategy 7

2. 5 G: Digital With Package Switched (Elliott, Phillips, 2004 ) n n One significant drawback to 2 G GSM network – primarily voice-centric with limited data transmission characteristics GPRS (General Packet Radio Service) n n Developed in late 1990 s and early 2000 s Higher transmission rates and always-on connectivity E-mail can be received on a mobile phone handset without the need to dial-up WAP content can be accessed at a quicker rate M-Commere Strategy 8

3 G: Third generation wireless communication (Elliott, Phillips, 2004 ) n n n 3 G technology is aimed at providing a wide variety of services and capability in addition to voice communication, such as Multimedia data transfer, video streaming, video telephony, and full, unabridged Internet access Providing Data Centric Services with enhanced voices and multimedia capabilities UMTS (Universal Mobile Telephony Systems ) n n n A new Network service replacement for the GSM 3 G is to provide an economically viable and technologyenhanced PCS portal First introduced to Japan in 2001, and spread to Europe and USA in 2002 Life Style Portal Location dependent information M-Commere Strategy 9

3 G: Third generation wireless communication source form: 3 GPP TS 23. 228, 24. 228, 23. 102 M-Commere Strategy 10

from: http: //www. medialab. sonera. fi/workspace/Jukka 4 G M-Commere Strategy 11

Current Development i. B 3 G n 4 G n Pervasive Computing n M-Commere Strategy 12

i. B 3 G: Combining the best of both dual-mode handset n Cellular n n n Source form: 余孝先, 2004 n Coverage Mobility Billing System Roaming Widespread 2 G/2. 5 G, HS, 3 G, B 3 G WLAN n n n M-Commere Strategy Bandwidth Cost Multimedia Services Always Connected Easy to Setup 802. 11 a, 802. 11 b, 802. 11 g 13

4 G: 4 th Generation Wireless System source from: BWN Lab, http: //users. ece. gatech. edu/~jxie/4 G n Reasons to Have 4 G n n n Support interactive multimedia Wider bandwidth, higher bit rates Global mobility and service portability Low cost Scalability of mobile networks n What’s New in 4 G n n Entirely packetswitched networks All network elements are digital Higher bandwidth and lower cost (up 100 Mbps) Tight network security M-Commere Strategy 14

Pervasive Computing source from: IBM Web Site n Pervasive Computing n n Enabling information access anywhere, anytime, on demand Pervasive Computing delivers mobile access to business information without limits- from any device, over any network, using any style of interaction. It give people control over the time and the place, on demand. M-Commere Strategy 15

Pervasive Computing for a Nomadic Lifestyle Lessons Learned from MIT’s Project Oxygen, Zue 2004. n Some System-Level Challenges n n n n n Pervasive: Be available everywhere, at anytime, for anybody Nomadic: Allow people and devices to move around freely Embedded: Live in our world, sensing and affecting it Human-centered: Understand respond to human intent; solve real problems Non-intrusive: Preserve privacy while ensure security Adaptable: Provide flexibility in response to change Eternal: Must never shut down or reboot Organic: Allow applications and services to be added easily … Question: What are the opportunities? M-Commere Strategy 16

Integrated multimedia nature of 3 G domainthe PCS (Personal Communications Service) (Elliott, Phillips, 2004 ) M-Commere Strategy 17

M- Commerce Applications n n Delineating the effects of M-commerce: A space-time matrix M-Commerce applications are categorized along three dimensions: n n Location sensitive Time critical Controlled by information receiver or provider EC vs. MC M-Commere Strategy 18

Delineating the effects of M-commerce: A space- time matrix Balasubramanian et al. 2002 M-Commere Strategy 19

Delineating the effects of M-commerce: A space- time matrix Balasubramanian et al. 2002 M-Commere Strategy 20

Taxonomy of M- Commerce Applications Balasubramanian et al. 2002 n n n The extent to which the applications is location sensitive The extent to which the applications is time critical The extent to which the applications is controlled by the information receivers or by the providers Dimension 3: Controlled by the Information Receivers or by the Providers M-Commere Strategy Dimension 2: Time Critical Dimension 1: Location Sensitive 21

Mobile information assets: location sensitive Rao, Minakakis, 2003 ; Balasubramanian et al. 2002 n Deploy Mobile Internet services based on the various benefits of mobility n n Information that is provided on a geographical locations Information that tracks an individual user (via their mobile phone) to determine their specific geographical location anywhere in the world n n n GPS (Geographical Positioning Systems) Support location-based services (LBS) Location-tracking services are encouraged by both business and national government n e 911 in USA: 999 in UK; 119 in Taiwan M-Commere Strategy 22

Locations Assets (Elliott, Phillips, 2004 ) Location-based services information Location-based product Retailing Location-based Products Location-based Access Location-based Maps (directions) M-Commere Strategy 23

Time Critical n Applications vary along the dimension in terms of the degree to which they are time critical n n n Flight departure Information that quickly depreciates in value n n Participation in a virtual auction (+) Mobile access to digital libraries (–) It will involve the exchange of information related to a scheduled n n Balasubramanian et al. 2002 A stock price Information that is required to address some emergence n A roadside assistance M-Commere Strategy 24

Controlled by the information receivers or by the providers Balasubramanian et al. 2002 n Applications controlled by an information receiver n n n Relates to more random, unforeseen needs A call for service after an automobile breakdown Applications controlled by an information provider n Tend to be marketing “broadcast” activities n n Coupon announcement Maintain on an ongoing basis by service providers or coordinators n Monitoring of truck fleets using on board sensors M-Commere Strategy 25

M-commerce vs. E-commerce (Elliott, Phillips, 2004 ) n n E-Commerce is concerned with data and information transfer, and with Internet access, via wired technology M-Commerce is concerned with data and information transmission, and Internet access, via wireless technologies and various portable devices M-Commere Strategy 26

Comparison between E-commerce and Mcommerce (Elliott, Phillips, 2004 ) Factor E-Commerce M-Commerce Product or service focus Product focus Service focus Product or service provision Wired Global access Wireless Global access Product or service assets Static information and data Dynamic locationbased data Product or service attraction Fixed non-timeconstrained access Mobility and Portability of access M-Commere Strategy 27

Comparison between E-commerce and Mcommerce Barnes And Huff, 2003; Elliott, Phillips, 2004 Factor E-Commerce M-Commerce Personal Devices PC: Medium Mobile phone : High Network Operators can determine the services No Yes, like a gatekeeper Usage and Applications will charge No standard way to charge; PC is essentially free Users seem prepared to pay a ‘mobility premium’ User’s Location Hard to find Network Operator know who you are, where you are, can direct you to the portal of choice, and can charge you money Reverse Billing No Yes, in which services are charged directly to the user’s phone bill Display Screen Size and Medium Memory Small Click through rates for PC Less than 0. 5% 3. 6%; 24% banner AD and e-Mail (i M-Commere Strategy -mode) 28

M-Commerce Value Chain Emerging Industry Structure (Bane, Bradley, and Collis (1998)) Shopping Digital Wormhole Phone Televisi Comput on er Voice Video Data Terminal Shop at home Facilitating Technologies Entertainment Transactions Education Pornography Gambling Hardware Fileservers CPU Software Computing Algorithms Digital Signal Processing General Magic ATM Publications Transmission Manipulation Packaging Content = Industry size (relative) M-Commere Strategy 29

M-Commerce Value Chain European Commission 1996 (Barnes, Stuart J. 2002) M-Commere Strategy 30

European Mobile Portal & Media Value Chain Source: http: //www. medialab. sonera. fi/workspace/Jukka. Helin 3 Gin. Japan. Oct 2002. pdf M-Commere Strategy 31

i-mode and Media Value Chain Source: http: //www. medialab. sonera. fi/workspace/Jukka. Helin 3 Gin. Japan. Oct 2002. pdf M-Commere Strategy 32

Mac. Donald, 2003 M-Commere Strategy 33

M- Commerce Business Models Mac. Donald, 2003 n n n n Brand Building or Media Mix Customer Relationship Management Online Retail Premium Content Aggregation B 2 B Advertising M-Commere Strategy 34

Mac. Donald, 2003 9% M-Commere Strategy 35

Sources from: http: //www. medialab. sonera. fi/workspac M-Commere Strategy 36

Sources form: http: //www. medialab. sonera. fi/workspace/Juk ka. Helin 3 Gin. Japan. Oct 2002. pdf M-Commere Strategy 37

Sources form: http: //www. medialab. sonera. fi/workspace/Juk ka. Helin 3 Gin. Japan. Oct 2002. pdf M-Commere Strategy 38

Obstacles to M-commerce (Elliott, Phillips, 2004 ) n Efficient and fast wireless telecommunications services are often focused within specific area n n West Europe, the USA, Japan Not available in low population area Many developing countries has led these countries to adopt wireless telecommunications Wireless Mobile Internet access more costly than wired Internet access n n 3 G technologies and devices often deliver data content that are indistinguishable form those available on the wired Internet Mobile Internet users are accustomed to paying for Internet and correspondingly expect to pay for certain levels service and reliability M-Commere Strategy 39

Obstacles to M-commerce (2) (Elliott, Phillips, 2004 ) n n Concerns over privacy and security still pervade the wireless data transmission world n 3 G technology is inherently more secure than 2 G n Many government and business organizations banned the use of 2 G mobile phone for private or secure conversations Many individuals and organizations still harbor concerns over the health issues of wireless technology n With regard to microwave radiation emission levels n Up to the year 2000 the studies remain inconclusive n Many government are requiring mobile phone devices manufacturer to publish health evidence M-Commere Strategy 40

The development of M-commerce n In Europe and Japan n Focus on delivering to the customer technology, such as internet –enable mobile phones, and the provision of Mobile Internet services Europe view: Lifestyle consideration In USA n n Focus on the use of palm computers, other mobile devices (e. g. the Black. Berry mobile E-mail devices), and other wireless technology to improve the effectiveness of business systems process USA view: Support mobile working M-Commere Strategy 41

The growth of spread of M-commerce (Elliott, Phillips, 2004 ) n Innovations: n n Adoption: n n Developments in mobile wireless application and technologies Proliferation and use wireless technologies by (potential) customers Increased competition: n Desired by organizations to expand markets and added value to products and services M-Commere Strategy 42

Mobile e-commerce value network outlines the key players Provider of enabling technologies Infrastructure equipment vendor Content provider Service area Source: Adapted from F. Müller-Veerse et al. (2001), p. 23. Portal provider Mobile device manufacturer Application area Technology area End Consumers Mobile network operator Application developer/provider

m-Commerce consumer services and applications Information Communication News m-Advertising Weather m-Health Catalogues SMS/MMS . . . … Transaction Entertainment m-Banking m-Games m-Tailing m-Gambling m-Payment m-Music . . . Source: Adapted from F. Müller-Veerse et al. (2001), p. 80.

M-SCM M-CRM m-Inventory m-Tracking . . . m-Services m-Sales . . . Internal External m-Commerce business services and applications Source: Adapted from F. Müller-Veerse et al. (2001), p. 80. m-Workforce m-Office m-Fleet tracking . . .

Characteristics of m-commerce Ubiquity This characteristic means that users are able to use their device at any time and in any location. Ubiquity increases the immediacy of communication and is equally valued in consumer and business markets. Convenience Mobile content is inferior to other media in terms of screen size and downloading speed. However, it is superior to other media in terms of convenience and ease of use. Localisation of devices and their users is based on the portability of wireless devices and the knowledge about a person’s location. It enables location-based services. Personalization in mobile is higher than in wired ecommerce. When calling a mobile phone, users call the number of a person and not the number of a location as in the case of a fixed-line phone. Personalization Privacy and security Device and network limitations Source: See also D. Steinbock (2005). Privacy and security are decisive prerequisites for all wireless transactions. Users need to be in control of their data, especially if it comprises information about their geographical location. Due to slow transfer rates, limited connectivity, small screens and tiny keyboards of the handset, a user’s wireless Internet experience can be very restricted.

Impact of wireless technologies on the value chain Firm Infrastructure • Mobile financial and ERP systems, incl. legal and government information • Mobile investor relations (e. g. information dissemination, broadcast conference calls, alerts) • Voice-to-data conversions: mobile forms-based applications, multimedia cellular and wireless broadcast • Mobile services: rich voice (image, video), Internet (intra/extranet), messaging (SMS, MMS, LBS) and content • Mobile access to e-mails, personal information management Human resource management • Mobile activities in recruiting, hiring, training, development and compensation • Mobile self-service personnel and benefits administration, incl. mobile time and expense reporting • Mobile sharing and dissemination of company information • Mobile services via HRM: voice guidance, messaging (SMS, MMS, LBS push or pull), internet and infotainment Technology development • Mobile teams, distributed collaborative product design across locations and among multiple value-system participants • Knowledge directories accessible from any location • Real-time access by R&D to mobile sales and service information Procurement • Mobile demand planning and fulfilment • Other mobile linkage of purchase, inventory, and forecasting systems with suppliers and/or Mobile buyers SCM Mobile CRM and Source Adapted from Dan Steinbock (2005), p. 260. • : Mobile direct and indirect procurement via marketplaces, exchanges, auctions, buyer/seller matching

Impact of wireless technologies on the value chain Operations Mobile activities associated with transforming inputs into final products/service s Outbound Logistics Marketing and sales After-sales service Inbound Logistics Mobile activities with Mobile activities in associated with means for buyers to associated with receiving, storing collecting, storing andpurchase products/ providing service to and disseminating distributing services and inducing enhance or inputs to products/services to them to do so, incl. maintain the value products/services buyers of product/services advertising, promotion, sales • Mobile order • Mobile support force, channels, scheduling, information processing and of customer pricing shipping, exchange, scheduling service reps (incl. warehouse/dem scheduling • Mobile delivery voice guidance, • Mobile sales and decision vehicle operation SMS, MMS, channels, e. g. management making in in • Mobile LBS, e-mail, websites, and planning house plants, customer/channel billing, comarketplaces and scheduling contract access to product • Mobile access to browse, chat, across the assemblers, development and Vo. IP, video customer company and its and distribution status streaming) information, suppliers components • Mobile channel • Mobile customer product • Mobile suppliers management, incl. catalogues, order self-service via distribution • Mobile information portals and entry across the available-toexchange, mobile service • Mobile company of real promise warranty claims, request product/service -time inbound information to contract processing, configurators and in-progress sales force management billing, shipping • Mobile push/pull inventory data and channels (versioning, etc. advertising Mobile SCM Mobile CRM field process control) • Mobile surveys, Source: Adapted from Dan Steinbock (2005), p. 260. service access opt-in/opt-out

Impact of wireless technologies on the industry’s five forces Barriers to entry Bargaining power of suppliers Rivalry among existing competitors (+) Increases barriers to entry by elimi waste and contributing to efficienc (+/–) Mobile applications are difficult to keep proprietary from new entran consolidation favours incumbents (–) A flood of new entrants has come into many new industries Bargaining power of channels and end users (+/–) Procurement using mobility (–/+) Reduces differences among tends to raise bargaining power competitors as offerings are (+) Complements (–) Shifts over suppliers (e. g. Wal-mart and RFID), powerful difficult to keep proprietary, but increases though it can also give suppliers access bargaining the potential for efficiencies to more customers power to (+/–) Mobility provides a channel (–/+) Migrates competition to price, but can channels and can improve end for suppliers to reach end users, increase potential for differentiationconsumers reducing the leverage of intervening (–) Widens the geographic market, bargaining (+/–) companies, but it may also provide a direct increasing the number of competitors Increases/decreases channel to industry rivals and thus disswitching (–) Lowers variable cost relative to fixed power over intermediate channels traditional costs cost, increasing pressure for price (+/–) Mobile procurement and mobile channels markets tend to give all companies discounting equal access to suppliers, but they can also (+) By making the overall industry be used to create privileged access to some firms more efficient, Mobility can (+/–) Mobility can gravitate procurement to standardised expand the size of the market products that reduce differentiation, but it can also Threat of substitute (+) The proliferation of mobility be deployed to diversify products/services, which products or services approaches increases differentiation Source: Adapted from Dan Steinbock (2005), p. 266. creates complementary opportunities,