M-commerce, where have you been?

Do you remember all those years when we (those of us who cared) used to think, maybe this year will be the year of mobile data, and it wasn't. And then, suddenly one year it was, and the next year was even better, and then lo and behold, in 2009 the wireless data is closing on $40B ($19.4B for far in h1 2009). See story below

[......
U.S. MOBILE DATA REVENUES ROSE 31 PERCENT in the first half of 2009 compared to the previous year, according to trade group CTIA’s latest semi-annual industry survey. Data accounted for more than a quarter of all wireless service revenues, ringing up $19.4 billion in the first six months of the year. CTIA also says that 740 billion text messages went across U.S. operators’ networks in the timeframe, double the number from 2008, and that there were 276 million mobile subscribers in the US at the end of June. Source
The bottom line: Mobile data revenues continue to grow, and are a bright spot for mobile operators among sinking voice spending. It’s also notable that given the U.S. recession, mobile data spending grew so strongly.]

So what was the year for mobile data? - arguably it was 2009 in the US in the sense that this became the year that it really became relevant, and in fact started to really scare the operators as they projected the implications on network stress. However, the year where it became obvious that this was a real category was maybe 2006 or 2007, and the year where data began was more like 2002.

I believe that 2010 will be the first year where M-commerce will start to happen in the US, Canada and the UK (it already is a meaningful market in Japan and Korea). My prediction is that it will represent maybe 1% of all US e-commerce transactions in 2010 - so roughly $1.5B to $2.0B (am excluding iPhone app sales from the category), quickly jumping to 2% in 2011, 4% in 2012, 8% in 2013, and so on. Could the ramp-up be even faster? Probably yes, but even if not, this represents a US market that is going from say $1.5B to $3B to $6B to $12B, and would probably be heading towards the $50B mark around the mid-teens (by which time e-commerce could comfortably be a $250B plus business). This is worth considering.

The trigger of this shift is primarily the improvement of mobile computing devices - especially the advent of the smartphone, especially the iPhone. The triggers in Japan/Korea were somewhat different, and arguably the bar was much higher in the US given the higher prevalence of Internet-based commerce.

The winners in this space will be the winners in e-commerce - in the parlance of Christensen, this is not likely to be a disruptive innovation, ushering in a new wave of challengers to the e-commerce incumbents, but a sustaining innovation, that will benefit incumbents. The reason is that for the most part the e-commerce guys are fairly aggressive organizations, and they have already developed a lot of natural capabilities that can be easily extended into mobile.

One interesting question is where the locus of the action is going to be: will it be through an app or will it be through an optimized browser experience. A cursory look at some of the top 30 or so e-commerce players in the US would suggest that maybe 50% of them have some sort of iPhone App and 50% have some sort of optimized browser experience, and 25% have both. A review of the top 30 in the UK would suggest that maybe 5 have optimized the web and 1 or 2 have done an iPhone App. The benefits of the App is that it can convey a sense of richness and immediacy, whereas the browser can have a slightly higher latency. The problems of Apps are the classical ones: need to design and update versions for all platforms (at latest count, maybe 10 versions to cover most popular smartphones), potential for interApp interference, and interference of apps with basic phone functionality, limitations in the range of content and experiences, and so on. The benefits of the browser are that you can design the experience once and it will work on any device; that you can integrate nicely with the existing web-assets; that you can explore through hyperlinks the entire WWW, and so on. This debate was nicely captured in an exchange between Google and Getjar. I am betting for Google and browser to win, but that's just me

http://venturebeat.com/2009/07/20/apps-or-browser-getjar-vs-google-on-the-future-of-mobile-services/

One of the interesting implications is that in 2010 we will start to see some serious investments by e-commerce companies in gearing up for the M-commerce waves starting in 2011. I don't believe there will be high expectations for M-commerce dollars in 2010, but there will be positioning to grab M-commerce eyeballs to be converted into major dollars in 2011.