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Mobile start-ups dismiss 3G -- for now
Friday, March 08 2002
by The Register




Start-up companies operating in the mobile space say that a reliance on 3G is a
recipe for trouble. 

The way to mobile start-up heaven is through exploiting current technologies.
This is the main message that was disseminated on Wednesday night at a seminar in
the UK on the wireless market, organised by venture capital house 3i, writes
John Leyden



Based on a survey of mobile telecoms entrepreneurs and other market intelligence,
the venture capital house has published Wireless Untangled, a report which
highlights the expected delays in 3G rollouts. On the bright side, the hold-ups
will not cause irreparable damage to the industry. 



Four in five of the entrepreneurs quizzed by the Economist Intelligence Unit on
behalf of 3i said that the rollout of 3G services (expected in 18 months) was not
a prerequisite to success within the next three to five years. Conflicting
standards (CDMA and UMTS) for mobiles were seen as a problem by many of the
companies quizzed during the survey, with 64 percent of entrepreneurs reporting
that this had negatively affected their business. 



The key to reaching profitability is finding and reaching a customer base with
immediate revenue potential, leaders of start-up firms believe. Many mobile
start-ups are targeting the enterprise sector rather than consumers. 



Revenues from advertising and mobile commerce were not seen to be significant
over the medium term, but 87 percent of entrepreneurs quizzed were far more
positive about the prospect of consumers paying for entertainment services (such
as music or video). 



Games, gambling and girls 





3i invited along senior representatives from a number of wireless start-ups
(tools vendors, payment firms and the like) to the launch of the white paper. It
was noticeable how conservative their approach was after a difficult year for the
mobile industry. 



Carriers, particularly in the UK, have paid colossal amounts for 3G licences but
there is a marked lack of enthusiasm for the "games, gambling and girls (or
guys)" types of content which 3G promises. 



Voice is seen as a major revenue earner for carriers even after the introduction
of 3G, and there is uncertainty about how to ramp up data traffic. 



"The industry is scratching its head about how to introduce content," said
Chris Wade of CPS, a firm which develops mobile location technology.  "This
isn't a problem that will be solved easily or quickly," he added. 



There was talk of providing less obvious content, such as horoscopes, and
location-aware content that helped people plan their leisure time, but no firm
conclusions on how to drive more revenues from consumers were reached. 



For businesses high-speed access to corporate Intranets was seen as a huge
potential market, particularly in the US where the business market is seen as
stronger. In Europe, carriers tend to be more focused on the consumer market. 



The fragmentation of devices, with different user interfaces specific to
different countries is seen as an emerging trend -- based on different usage
patterns in, for example, the US (where pens and keyboards are popular) and Japan
(where devices that can be used with a thumb are all the rage). 



This has important implication for the development of smartphones. One individual
at the meeting observed that however smartphones develop they need to be reliable
and the last thing we needed was "Ctrl, Alt, Delete" buttons on every phone. 





The Register and its contents are
copyright 2002 Situation Publishing. Reprinted with permission.