Tsunami: Here Comes Wireless ecommerce

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1 Tsunami: Here Comes ecommerce Introduction ecommerce. communications. The worldwide market for these services has experienced unprecedented, paradigm-shifting growth in the 1990s. Billions of dollars in new revenue were realized as customers signed up in droves to shop and do business on the web or untether their voice conversations, often taxing the limits of the supporting infrastructure. Corporations have invested billions of dollars on Internet-based technologies to improve data communications between employees, vendors and customers. Annual expenditures for wireless voice services, likewise in the billions of dollars, is intended to keep ever more mobile employees and families in touch with each other. To this point, these technologies have been on separate paths the Internet with its data, wireless with its voice. As the 21st century unfolds these worlds will intersect, moving voice communications to the Net, and bringing wireless Internet-based data communications to the mass market. While voice communication on the Internet is fundamentally about lowering costs, wireless data promises to produce new opportunities to create revenue streams, attract and retain customers and differentiate from competitors. Major industry analyst groups have forecast enormous growth in e- commerce as mobile phone and PDA users acquire the ability to execute purchases and other transactions on their mobile devices. In fact, the Gartner Group predicts mobile and wireless technologies will be the main driver in ecommerce solutions over the next few years. With these opportunities come challenges. Through the 1990s, companies spent millions to create a presence on the Web as a way to strengthen their relationships with customers. Next generation wireless ecommerce solutions must strengthen rather than undermine these relationships. In order to do so, business managers must ensure that their wireless Internet channel is integrated with the rest of their Web presence. Overreliance on carrier portals will undermine this goal. IT managers must ensure that wireless Internet is well-integrated into their mission critical architectures to ensure that it can respond well to anticipated customer demands and so that wireless does not become an unsupportable resource burden. Through this white paper, TANTAU hopes to educate business and IT managers to the potential of wireless data, help prepare them to best deal with the coming tsunami and take advantage of the opportunities it offers. Driving to the Intersection data communication, some twenty years old, was originally developed to meet the needs of specialized, vertical applications. Targeted business functions included fleet management, telemetry (remote monitoring), inventory control and point-of-sale. IBM, Federal Express and UPS, in fact, built private wireless data networks to improve the efficiency of their field service personnel. The information available for wireless dissemination, as a result, was very specific to the task at hand. Since those initial applications, widespread use of wireless data communications failed to develop due to: - 1 -

2 1. The lack of easy access to internal and external business information and transactions that is of use to a broad population of employees, vendors and customers 2. The absence of a large body of information or transaction capability that is of general interest and use to consumers With the explosion of the Internet and corporate intranets, the necessary precursor for dealing with issues 1 and 2 has been accomplished an enormous body of information once locked up in difficult-to-access databases and business processes is now available for the taking by both business people and consumers. The Internet infrastructure including standardized web browsers, servers and a host of other hardware and software makes this all possible. As they exist, however, the software tools used to retrieve Internet-based information do not lend themselves to access from small, highly portable wireless devices with limited memory and small screens. Rather, they are designed for use with personal computers or workstations retrieving information over a wired connection. Even with all its attendant problems, the enormous potential of unlocking the Internet to people on-the-go was identified several years ago by the major players in the wireless industry. They became aware of the latent demand of mobile workers and consumers for Web-like data interactions. What s more, it was also realized that wireless access would open up many new application opportunities. The wireless and computer industries could almost taste the Internet revenue. WAP is born Rather than each company going off on its own developing proprietary wireless services (the death knell for wide-spread acceptance), the industry leaders came together in the summer of 1997 to form the Application Protocol (WAP) Forum. Its primary goal was to bring together companies from all segments of the wireless and computing industry value chains and get behind a single set of content and application standards to ensure product interoperability. The result of this successful undertaking is WAP, an open, global specification for delivering Web content to handheld wireless devices. Although some early wireless vendors initially followed a proprietary or semi-proprietary path for example, Palm currently offers a proprietary Web clipping service for the Palm VII they are now all behind the new WAP standard, and the momentum is here. WAP has become the de facto global standard for providing Internet communications on digital mobile phones, pagers, personal digital assistants and other wireless terminals. It is an enabling technology that will bridge the gap between the mobile world and the Internet, bringing sophisticated solutions to mobile users. Markup Language (WML), created expressly for WAP content, makes optimum use of small screens and limited bandwidth and allows easy navigation with one hand. It has built-in scalability from two-line text displays through to the full graphic screens on smart phones and communicators.to assure seamless integration with enhancements in Web technologies, the WAP Forum has formed a relationship with the World Wide Web Consortium (W3C), the standards body for the Web, to define next-generation Web specifications that support the full participation of wireless devices on the Web. They are working together to develop a common process of producing next-generation, XML-based Web specifications, define testing and implementation processes, and promote these specifications to the industry at large. They also have working relationships with the European Telecommunication Standards Institute (ETSI), Telecommunications Industry Association (TIA), the Internet Engineering Task Force (IETF) and the European Computer Manufacturers' Association (ECMA). WAP has successfully galvanized the efforts of industry leaders and demonstrated broad-based consumer demand for these services. This is clear! So, what is the future for WAP? WAP may continue to be the single critical standard for wireless Internet. It may become one of several key standards, including standards based more closely on standard HTML and XML. What is important is that business managers begin to implement their wireless strategy now while maintaining flexibility for the many changes that are sure to come

3 The Basics of WAP There are three basic elements to the WAP architecture: 1. The microbrowser - a software element that resides in the handheld device and is analogous to a standard Web browser. 2. The WAP Gateway - This is the device that communicates with the microbrowser and serves as the translator between its WML code and the standard HTTP 1.1 requests used by existing Web servers. Much of the browser s processing demand is handled here, offloading this computing task from the handset. The Gateway can also be used to track usage and bill for WAP services. 3. The Origin Server - This is the same application platform accessed today by standard PC-based browsers over wireline connections. Next generation wireless platforms incorporate functionality like content conversion and user profiling which support the integration of wireless and wired access. WML WAP Gateway HTTP Origin Server Handset To enable rapid, widespread acceptance, the WAP standard was designed to integrate with existing Web technology with little, if any, changes required of the existing infrastructure. The WAP architecture allows standard, off-the-shelf Internet servers to provide services to wireless devices, and offers many of the same features available in PC-based Web products: WAP is network-independent - it works with almost all wireless air interfaces: TDMA, CDMA, GSM, CDPD, PDC, PHS, FLEX, ReFLEX, iden, TETRA, DECT, DataTAC, Mobitex, SMS and the upcoming third generation (3G) systems (3G systems - IMT- 2000, UMTS, W-CDMA, Wideband IS-95) WAP is device-independent - applications can be developed using a single standard that will work across a variety of devices Handset manufacturers can use the same software in all their product lines. WAP is operating system-independent - since WAP is a communications protocol and an application environment, it can be built on any operating system including Palm OS, EPOC, Windows CE, FLEXOS, OS/9, JavaOS, etc. WAP provides secure data communication - uses a wireless version of the Internet s Secure Socket Layer protocol (SSL) known as WTLS From the perspective of content providers and end users, WAP also offers an easy transition to wireless access. With minimal effort, content providers can reach mobile customers with existing applications. It utilizes standard Internet markup language (XML) and converts it into a form suitable for transmission over wireless networks (WML)

4 Applications At its core, the WAP application strategy involves taking existing wireline services and tailoring them to be useful and easy-to-use with a handheld device. data users will not use their handsets to surf the net as powerful as the devices will become, their restricted screen size will detract from that kind of use. Rather, it is expected that users will focus on small, limited-information tasks that need to be accomplished quickly. The applications best suited for WAP-enabled devices are 1) exchanging limited amounts of information, and 2) ecommerce transactions. Examples abound: Exchanging limited amounts of information Scanning or reading selected Receiving news, business, sports or information services Air, rail and other travel schedules Online address books ecommerce transactions Credit card purchases Money transfer Book travel reservations Message notification Mapping and locator services Driving directions Weather and traffic alerts Directory services Online banking Stock trading Mobile users, be they employees, vendors or customers, will be able to access Internet- and intranet-based, business-critical information and services. Information will be available in a push and pull mode, with the ability for users to interact with services via both data and voice interfaces. Because of the limitations of screen size and input devices on wireless handsets, personalization is critical. Internet users have limited tolerance for irrelevant information and difficult navigation on browser-based Internet services. They will have no tolerance for it on a wireless device. This parallels what has happened on the Internet where value-added transactions and services have become the core driver of site traffic and transaction revenues. If you want to see what the U.S. market will look like in the next year or so, look to Europe now. The following October 99 summary of European activity appears on the Data Forum Web site: Europeans, instead of surfing the Net with a PC, which remains expensive, are going to their mobile phones. They don t want to surf they want quick access to the one or two pieces of information that will make their lives easier right then and there like flight times, weather reports, and directions. WAP wireless application protocol - the hottest new mobile technology in Europe is predicted to do to wireless what Netscape did for the Internet. Scandinavians have taken the lead they've already developed WAP services for travel bookings, banking, and movie-ticket purchasing. In Helsinki, police in test groups are using mobile handsets to check license plate numbers, and ambulances are sending emergency rooms wireless info on a patient's condition before they arrive at the hospital. The rest of Europe hasn't quite reached the Finnish standard, but Italy, Germany and Britain are catching up. Right now, wireless data accounts for 1 percent or 2 percent of most providers' business. In a few years, that number will likely increase to 20 percent. Nokia began shipping the first WAP-enabled phones to Europeans last week. Other manufacturers like Ericsson are following. Asia and North America will see mass deliveries of WAP phones within the next few months, too. Users of TIM, or Telecom Italia Mobile, Europe's largest mobile service, send about three million messages a day. And Telecom Italia president Roberto Colaninno announced his goal to lure a third of the Italian population onto the Internet wirelessly. Graham Howe, the deputy CEO of Orange, says that ultimately, his company will get more of its business from data than from voice. We shouldn't even be calling it a mobile phone anymore, he says. We should call it a multimedia device

5 Issues for Business Managers The Gartner Group predicts mobile and wireless technologies will be the main driver of ecommerce solutions over the next few years. So what does this mean for the commercial enterprise whose employees, vendors or customers will be demanding wireless access to its systems and data? It means it s time to make some decisions. As of the beginning of 2000, smart wireless devices are just hitting the market with full force in the US and reaching beyond the road warrior early adopter in Europe. This is actually good news. Given typical IT planning and budget cycles, now is the opportune time to build a wireless strategy so that when the market is ready, you will be, too. Some have already begun. It is telling that the following businesses have anticipated the coming wireless-based demand and become members of the WAP forum: WAP Forum E-Commerce Participants Amazon.com Arthur Andersen At Home Corporation Barnes and Noble Charles Schwab & Co. Inc. Deutsche Bank AG Fidelity Investments MasterCard International Inc. Merita Bank Plc Ogilvy Interactive Worldwide Visa International It is important for the business manager to understand the basics of the wireless architecture because the chosen implementation that is, location and control of the wireless platform can have a tremendous impact on business and technology results such as customer ownership, security and ubiquity of access. These issues need to be purposefully addressed. For the enterprise, there are three basic ways to provide wireless Internet service. hosts wireless gateway and platform In this model, the user reaches the company s wireless Internet service from his handset by actually dialing an external number (such as a toll free number). The user sets his preferences for navigation, authentication, alerts, etc. through the company s Web site. Behind the scenes, the mobile carrier functions as a pipe, sending the wireless data call down to a landline. The advantages include: Clear control of the customer relationship down to the access number in the customer s mobile phone list; i.e., MYBANK1. This is currently the only solution for end-to-end security from the handset to the corporate data center. Ubiquity and uniformity of access. The user can access the company s site wherever there is a data network. Gateway Platform Internet and Applications - 5 -

6 The disadvantages are 1) the company must maintain a RAS Server and modem bank for direct connection to a landline and 2) some carriers may attempt to block access to the company s wireless gateway. That said, the first European adopters of wireless banking Merita NordBanken, Handels Bank and Deutsche Bank have all taken this approach citing customer ownership and security as concerns. hosts wireless platform only In this model, the user accesses the company s wireless Internet service by bookmarking a URL such as in his handset s microbrowser. The user sets his preferences for navigation, authentication, alerts, etc. through the company s Web site. Behind the scenes, the carrier hosts the WAP gateway, which converts the request so that it can travel on the Internet Protocol (IP) and passes it to the company s URL on the Internet. Gateway Platform Internet and Applications Network Operator This solution is a fairly good compromise. The company maintains ownership of important customer data like the user profile for use in tailoring the Internet experience and drives the user to its Web site to change his profile. Also, the company hosts the WML content and can therefore maintain good control over the look and feel of the site on devices of various screen sizes and graphics capabilities. The disadvantages include sacrifices in security and ubiquity of access. It also may be too difficult for some users to learn how to bookmark URLs with the limited alphanumeric keypad of most wireless devices. The company will also be at a disadvantage to competitors who have obtained space on the front page of the carrier s portal. For example, on the Sprint PCS Web service, Amazon.com is option number three on the first menu screen. Were Barnes & Noble to offer a competitive wireless service, the user would need to scroll down to the go to option and enter a URL with his keypad. In addition to carrier gateways, wireless ISPs will begin to emerge to serve as the gateway host for this model. uses carrier portal In this model, the company s service shows up as an option in the carrier s microbrowser menu. Behind the scenes, the carrier hosts the gateway and most wireless platform functionality including the user s profile and preferences. The company might host some WML content, but the carrier controls how it is accessed and how it looks on different devices. The carrier may also take on other important functions such as user preferences and billing. In fact, some major carriers see direct billing of retail transactions to a user s telephone bill as a major source of revenue (similar to a bank s debit card revenue)

7 Gateway Platform Internet and Applications Network Operator The advantage of this approach is that, even for an unsophisticated user, it is very easy to find the company s service. It is also possible for the company to ride on the carrier s marketing of its portal. Besides the security disadvantage discussed above, there are two major disadvantages to this approach, however: First, the carrier effectively becomes an intermediary in the enterprise s relationship with its customer. The mobile user may identify himself as a user of the MobileCo portal rather than the MyBank trading service. If the carrier decides to displace the enterprise from the portal in favor of a competitor or the carrier s own competing service, there is little recourse. Second, ubiquity and uniformity of customer access become major issues. The service would be available only to MobileCo subscribers. In order to reach other carriers subscribers, the enterprise would have to do separate deals or set up a service via one of the first two models as an alternate. All three models will make sense for a subset of companies. Many companies will choose to pursue more than one. This is analogous to what has happened on the Internet. For example, Charles Schwab maintains a site on AOL s closed portal community. They also have an Internet trading site open to anyone with a browser and a direct dialup service for customers and brokers with high quality of service (QoS) and security requirements. In the end, the WAP standard will evolve to allow users to switch transparently between carrier, portal and enterprise gateways depending on their needs. For now, business managers need to make a decision on which model(s) make sense for them based on their needs for security, ubiquity and uniformity of customer access and control of the customer relationship. A Note on Security WAP communication over the air interface and HTTP communication over the Internet are both secure because of the WTLS and SSL security protocols respectively. However, conversion of WAP to HTTP requires de-encryption of the messages. When an external gateway is used, such as the gateway at a carrier or wireless ISP, the potential for eavesdropping or tampering exists. Although this problem may be fixed in future versions of the WAP protocol, companies, which require highly secure wireless transactions such as those in the financial services industry, often choose to host the WAP gateway in their own trusted environment. Issues for the IT Manager Once access issues get resolved, wireless transactions will hit the enterprise network like a tidal wave. There will be similarities with the Internet. Traffic patterns will be difficult to predict and prone to spikes in demand. The user interfaces will need to be simple and intuitive. Personalization of the user experience will be important. In some ways, the challenges will be greater. Sessions will be shorter and more frequent. Users will expect connect and responses times much faster than the eight second average on the Internet. There will be a large number of different device types and access protocols, which must be tied together by a common presentation and business logic layer. In analyzing potential solutions, the IT manager should consider three requirements: Internet must run like mission critical software. It must support scaling, availability and manage

8 ment features common to other types of critical Internet and enterprise software. It must deliver even at very high volumes. It must fit with the rest of your investment in hardware, software and people skills. Platform and standards support and backend integrations are crucial. It must foster the creation of integrated solutions from multiple wireless and wired protocols, allowing for example a single application to use and HTML Web browser for account set-up, a WAP gateway for transactions and an SMS center for text alerts. It must allow you to re-purpose Internet content for different wireless devices. Internet offers huge opportunities to companies who begin to prepare now. With unprecedented wireless ecommerce demand in the offing, it offers greater and greater challenges to those that don t. Did someone say tsunami? TANTAU WAP Membership and Activity As of this writing, there are over 150 members of the WAP forum, representing terminal and infrastructure manufacturers, operators, carriers, service providers, software houses, content providers, and companies developing services and applications for mobile devices. Handset manufacturers representing 95 percent of the world market have committed to shipping WAP-enabled devices, while carriers, representing more than 100 million subscribers internationally have also joined WAP. These commitments will assure tens of millions of WAP-browser-enabled products are in consumers hands by the end of Current members include: Technology Vendors Alcatel Ericsson Fujitsu Software Corp. Hewlett Packard Hitachi Ltd. IBM Corporation INTEL Corporation Lucent Technologies Matsushita Microsoft Mitsubishi Motorola NEC Corporation Nokia Nortel Networks Oracle Corporation Palm Computing Philips Communications Phone.com PIONEER Corporation QUALCOMM Inc RSA Security Samsung Electronics SHARP Corporation Siemens AG Sony International Sun Microsystems Sybase Inc. TANTAU Software, Inc. Toshiba Corporation Unisys Corporation VeriFone VeriSign Inc. Carriers AT&T Services Bell Atlantic Mobile BellSouth Cellular Deutsche Telekom Mobilnet GmbH Cable & HKT France Telecom Nextel NTT Mobile One 2 One Orange Comm SA Rogers Cantel SBC Communications Sprint Spectrum L.F. Vodafone TANTAU Software, Inc. World Headquarters 108 Wild Basin Road Suite 110 Austin TX USA Tel +1 (512) Fax +1 (512) TANTAU Software, Inc. Silicon Valley Business Center N. Tantau Avenue CAC-14 Cupertino, CA USA Tel +1 (408) Fax +1 (408) TANTAU Software International, Inc. European Sales Office Fountain Court 2 Victoria Square Victoria Street St. Albans Herts, AL13TF United Kingdom Tel Fax TANTAU Software International, Inc. European Headquarters Max-Plank-Straße 36 D Friedrichsdorf Germany Tel Fax TANTAU Software International, Inc. Asia-Pacific Operations 29 Newton Street Alexandria, N.S.W Australia Tel Fax