China's e-commerce future goes mobile

By STEVEN SCHWANKERT

(Virtual China News -- Mar. 6) If Ericsson believes the future of e-commerce is mobile, and Ericsson's largest market is China, does that mean the future of e-commerce in China is mobile?

That was the premise of a presentation titled "Building The Mobile Portal" given by Christian Testman, Ericsson Radio Systems's director for mobile e-commerce. The talk was part of a recent "E-commerce In China" conference in Shanghai.

Testman's hypothesis is a logical one: with cellular phone penetration and growth rates at least four times higher than those of PC penetration and growth, ISPs, content providers, and electronic merchants should be attempting to reach users via the Wireless Access Protocol, or WAP, rather than computers.

WAP, the Killer App

This theory is similar to one espoused by proponents of set-top boxes as the way around low PC penetration: hundreds of millions of Chinese own televisions and subscribe to cable TV, so use those devices to provide Internet access. Despite marketing efforts by MyWeb and Shanghai WebTV, however, set-top box sales have yet to catch fire in China.

With approximately 163 million mobile subscribers in China predicted by the year 2004, Testman said that the ultimate e-commerce device will be the cell phone, and WAP the killer app.

Testman went on to demonstrate WAP e-commerce services that are available in Ericsson's home country of Sweden. Some are adaptations of other phone-based services, such as banking and ticket purchases. WAP and a modified SIM card (required for GSM phones, unlike the CDMA system in use in the US; WAP also works with CDMA) can provide not only a graphic interface, a step up from touch-tone services, but also secure credit card transactions.

Testman provided a demonstration of online movie ticket purchases in Sweden, similar to the US Moviefone and Hong Kong's Cityfone systems. Users have the choice of paying via credit card, debit card, or can pre-pay for such services. Also demonstrated was WAP-based horse betting, which while legal in Sweden would most likely be prohibited in China.

Willing Technology, Weak Service

WAP-enabled phones provide greater opportunities for personalization and are far more portable than laptops, making them the e-commerce tool of choice for the future, Testman said.

Half-joking, Testman said that one of his friends said he believed WAP stood for "Where are the phones?" In China, this is still the case. Only one WAP-enabled phone is currently available on the market in China, the Nokia 7110 Communicator. And while the technology is willing, the service is weak.

Like the set-top box proponents, the missing link between the cutting edge and hundreds of millions of potential users is the equipment. The burden is currently on the user to upgrade his or her phone to one that is WAP-enabled--which means moving away from the trend towards smaller, lighter handsets. Also, with many cell phones now available in the US$250-300 range, purchasing a WAP phone pushes the user to the top end of the market. Testman said that Ericsson's WAP model, the 324, has gone into mass production, but did not indicate when it will be available in China.

Service Providers

Another barrier is service. WAP phones in China might as well be SETI-enabled: "China will start WAP as part of a pilot program later this month," Testman said. In other words, right now, phones only connect people to one another via voice.

WAP's biggest obstacle in China is neither the equipment or the availability of WAP, but the service providers. Testman stated that while he believes in the convenience and benefits of WAP e-commerce, Ericsson only sells the systems, it doesn't implement them, and that the service providers will control the timing and extent of services.

To reach Steven Schwankert: steven@virtualchina.com