Reference no: EM131234257

The picture gets brighter Few consumer technologies hold such promise and have been so high profile as the wireless Internet. For years the hype zoomed ahead of the reality and, except for Japan, a mass market for new data services failed to take root. However ‘after years of 3G promises, the pieces - the handsets, the features and applications, the bandwidth and the networks - are starting to come together to make next generation wireless a reality,' says Alex Slawsby, analyst at IDC. Business users will benefit from faster networks, but it is the huge potential of the consumer market that really sets hearts racing. Japan still leads the world - it has 75 million wirelesses Internet users including 1 million using Do Como's 3G services - but the big difference over a few years ago is that use of data services in other countries is now growing fast. Forrester Research predicts one in four Europeans will use wireless Internet services regularly in 2005. O2, the UK operator, forecasts that 25% of revenues will come from data by the end of 2004. Once, data meant mainly text messages (SMS), but that is changing as consumers buy the latest multimedia handsets. ‘Half our new data revenue growth is now coming from non-SMS services,' says Kent Textron, chief marketing and data officer at O2. O2's latest offering is a wireless music service launched in November 2003. Consumers download chart hits via their handset to a proprietary player, where the music is stored and played. Rights management software stops them sharing the file illegally, while fancy compression software reduces download times. ‘It is like iTunes for mobiles,' says Mr. Textron, comparing the service to Apple's successful Internet music service. The music industry sees great potential in wireless as a new delivery channel. Just ask 50 Cent, a popular US rap artist. More than 500,000 people have downloaded his ‘In Da Club' single to their phones, making it the top-selling ring-tone in US music history. Only 13% of US consumers will pay for ring-tones, according to Forrester Research. But those that do are the customers that operators love: trend-setting youngsters likely to spend much more on data services than their old-fashioned parents. Handset manufacturers are now keen to reach this youth market. Fans of Nelly, a hip-hop artist, can buy a phone customised with songs, video clips, ringtones and screen pictures of Nelly. The phone, from Korean manufacturer Curitel, uses ‘soft skin' technology from Wild Seed, a small software house, to personalise it. Upstart Asian manufacturers such as Curitel are making big waves in the handset industry. They are adept not just at exploiting new technologies but also spotting consumer trends - such as the popularity of the clamshell format. European manufacturers such as Siemens and Nokia have belatedly responded with their own clamshell phones. Nokia disagrees that innovation in handsets is inexorably shifting east. It cites its new N-Gage game-playing console, which lets youngsters download games or play them online, play MP3 files and listen to the radio. Oh, it can also make calls. Downloading games has huge potential as consumers are tiring of the standard games built into their phones. In Europe, Analysis predicts this market could grow ten-fold to be worth e3bn in 2008. The growth of Java phones makes it easier to develop games for different handsets. Nevertheless, device compatibility remains a big issue for developers of multimedia content who must contend with varying technical specifications and user interfaces. Compatibility issues are a notorious problem for video content. Singapore's M1 launched a video clips service earlier this year. But it initially limited the service to Sony Ericsson phones to reduce compatibility problems. LogicaCMG, a provider of messaging software, has developed ‘transcending' software that makes it easier for video clips and MMS messages to be viewed on different devices. MMS roaming is another issue the industry must address. M1 recently signed a roaming deal with China Mobile, allowing Singaporean tourists to send picture messages while holidaying in China to folk back home. Such deals are necessary because many messages today get lost owing to incompatibilities between networks. Christophe Causality, president for mobile applications at Siemens Mobile, believes these sorts of technical issue can be solved through standards bodies such as the Open Mobile Association (OMA). In 2004 there will be 1.4 billion mobile phone users worldwide but in mature European and Asian countries, the mobile phone has lost its novelty value and average voice revenues are declining. Hence Vodafone's lavish advertising campaign that uses football star David Beckham to promote its Vodafone live! Range of data services such as picture messaging, games and polyphonic ring-tone downloads. In the latest advertisement Beckham, currently with Spanish club Real Madrid, uses his phone to send MMS snaps of Madrid's sunny skies back to former team mates in rainy England. This growing emphasis on softer issues such as branding and marketing shows how the wireless industry is imitating the consumer and media industries. Another big change is the industry's closer ties with handset makers, content providers and software companies. To pump out games, music and video clips to millions of wireless devices, operators need not only fast networks but also clever software, good content deals and snazzy handsets. A far more complex and dynamic value chain is thus evolving in which network operators, hardware suppliers, content producers and software houses are jockeying for power. Today, it is far from clear who will win the biggest slice of the pie.

Question

1 Identify some of the ‘opportunities' created by these new technologies.

2 Identify some of the ‘threats' created by these new technologies.