November 29, 2000

WAP market getting WAPPED

Author: JT Smith

-By Jack Bryar -
Open Source business -
If the pessimism in the "new technology" sector wasn't bad enough
already,
doubters about wireless Internet services are starting to come out of
the
woodwork. And some of them are blaming it all on the Open Source
phenomenon.
If the "wireless Web" becomes a reality in the near term, it will be
due
to an underlying technology called WAP. WAP is short for wireless
application
protocol, and is a family of tools for providing a vast array of
potential
services over wireless telephones. The idea behind WAP is to simplify
the
process of delivering text and graphics over wireless devices, in a
manner
not much different than the today's World Wide Web.

A wireless web sounds pretty exciting.

Not long ago, wireless telcos were suggesting that WAP and the wireless
Internet
market was going to grow at rates that would rival the growth the Web
enjoyed
over the last few years. IDC, that
always-optimistic market forecaster, suggested that WAP subscribers
would
grow by 75% a year in mobile-phone-crazy Europe, for example.

This was good news for developers who wanted a fresh start in a market
where
Microsoft hadn't overwhelmed its competitors. Developers invested
heavily
in new products and services. Last year, Comdex was absolutely awash in
wireless
devices.

This new market has also attracted a rapidly growing body of "Open
Source"
WAP programs and information, most notably Kannel, and
OpenWAP.
A WAPUniverse Palm browser is
being
built in Open Source. Several firms like 3G
Lab
, SourceGear, and
Wapit,
Ltd.
are structuring their offerings based on Open Source
technology.
Even mainstream vendors like Nokia have been opening up elements of
their
programs.

The only problem has been the reality of wireless-based services. There
are
real differences in the kind of graphics, text and transactions that
can
be handled on a computer screen with an ISDN or ADSL connection, and
what
can be managed on a tiny monochrome telecom device using a fraction of
the
bandwidth.

The market research group BMI-T
analyzed
its local WAP market recently. BMI-T talked to heavy mobile users with
WAP
service. These were people who used the mobile phones almost
constantly.
Yet, better than a third of them had never used their WAP service.
Those
who had used it only about once a month, and they were generally using
it
to pull down the same kind of headline or stock ticker services one can
get
from a cheap pager. Only around 6% of WAP users ever did any sort of
e-commerce
over the service. Most WAP users weren't very impressed overall; the
survey
asked respondents how they ranked the service on a scale from 1 to 10.
The
average response was well under 4. Markets like this don't grow very
fast,
if they grow at all.

Some companies have scaled back their manufacturing and marketing plans
as
demand has failed to meet expectations. Firms like the telecom
developer
Sagem have been severely impacted. Sagem's stock price dropped a third
recently
as investors began to panic about the prospects of the technology.

What happened? Why did so many invest so heavily in a technology that
suddenly
seems so unpromising?

The oddest explanation being given for the problems with the WAP
marketplace
was put forth by the Wall Street Journal. In a truly remarkable stretch
of
logic, the Journal suggested that the industry standards group, the WAP
Forum
was to blame, and so was the Open Source development
model!

According to The Journal, when "the forum made WAP open-source ... it
fueled
the mis-marketing of WAP." The Journal suggested that without
proprietary
code to hide behind, developers "could only differentiate themselves
through
packaging." By this line of thinking, Open Source was responsible for
the
hype that stampeded investors and developers into creating a technology
that
wasn't ready for prime time.

Other more rational analysts suggest the problem lies in the fact that
most
WAP applications ... suck.

There's an absolute glut on the market of WAP "mobile office" programs
such
as those developed by firms like ThatWeb.com, a subsidiary of Aztech
Systems,
or Norweb Telecom. These products provide services like WAP access to
email
lists or provide employees wireless access to their appointments
schedule.
The Brazilian airlines company Varig spent some of its investor's
money
on a program that would allow their customers to check the number of
frequent
flyer miles they had accumulated. It may be me, but these don't seem
like
"killer applications" that will do much for demand. As Charles Cousins
of
Psion put it, "People want useful WAP. At the moment they just get
useless
WAP."

Telecom pioneers like Sir Alan Sugar have been downright dismissive of
WAP
technology. He recently said, "WAP is a bit of a joke. The actual
product
is useless. It's slow and cumbersome, a small mobile phone with a small
screen
-- it doesn't take a brain surgeon to work out that there's not much
you
can read on it ... Why would Mr. Average have a WAP? For paying his
electric
bill? Why does he have to be out in the street to do it? He can do that
at
home. "

BMI-T did identify an application that was cause for optimism. Like
several
other research groups elsewhere, it found that there was a
potentially
promising market for highly localized services such as local traffic
and
weather alerts, and possibly other, similar "location-based services,"
such
as local movie times, or finding the nearest ATM machine. Some observers
think
that bundles of such localized services may be the application that drives
widespread
adoption.

But even that discourages some analysts. The research firm Analysys is
suggesting
that such services make for a very fragmented market and provides
little
chance for vendors to scale their services very efficiently. They warn
that
it will be nearly impossible for the WAP marketplace to generate any
new
Yahoo or AOL-type firms. While they join the optimists about the size
of
the market -- they see a billion subscribers by 2005 -- they think the
telecoms
and established Web vendors are the only ones with deep enough pockets
to
make any money along the way.

Right now the biggest generator of demand seems to be
gambling. Bookmakers like
bluesq.com and
Cantor are betting their
clientele
can't stay away from the action if a WAP service is available. For
those
more focused on a more white-collar form of gambling, firms like
Barclays
Stockbrokers are launching WAP services for those who want to engage in
day
trading wherever they go.

But this type of business seems unlikely to generate the kind of
infrastructure
that will carry an entire industry. Already major wireless providers
are
choking on the costs associated with acquiring the needed
"3G"
 spectrum licenses being reserved for broadband digital
transmission.
3G broadband is needed to provide anything like useful
services
to consumers or business. Some licenses have been auctioned off in
parts
of Asia and Europe recently, and the cost escalated wildly beyond
anyone's
original projections, in part because of all the hype.

The result has beggared some of the vendors in Europe, and panicked
others,
especially as the as the bad news about WAP demand has begun to filter
into
corporate boardrooms. Many wireless providers have begun to
dramatically
scale back , either in terms of their interest in the spectrum, or
because
they've gone broke in the process of purchasing it, they're scaling
back
on infrastructure, on purchase on new, next-generation wireless
consumer
equipment, etc.

The wireless Internet is a great idea. It will probably happen sooner
or
later. But if it's too much later, the wireless Internet won't be based
on
WAP architecture. And many of the smaller, Open Source Vendors who have
bet
on WAP might not be around, either.

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