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.