Chapter 8

Mobile Commerce
1

Learning Objectives

Describe the characteristics and attributes

of
m-commerce
Describe the drivers of m-commerce
Understand the supportive technologies
and their capabilities
Describe the wireless standards and
transmission networks

Learning Objectives (cont.)

Describe applications of m-commerce to
finance, marketing, and customer service
Describe the applications of m-commerce
within organizations
Describe B2B and supply chain
applications of m-commerce
Describe consumer and personal
applications of m-commerce
3

Learning Objectives (cont.)

Describe some non-Internet mcommerce applications
Describe location-based commerce
(l-commerce)
Describe the major limitations
Describe some implementation
issues of m-commerce
4

NextBus: A Superb Customer Service

The Problem
Buses in San Francisco have difficulty keeping
to 20 minute schedule during rush hours
Posted schedule becomes meaningless

The Solution
Bus riders carrying Internet-enabled cell
phone or PDA helps:
Find estimated arrival time at each stop, digitally
in real time
Soon location-based advertisements will pop up
you have time to get a cup of coffee before the
bus arrivesStarbucks is 200 feet to the right

NextBus (cont.)
The Results
Passengers in San Francisco are happy
with the system
Worries about missing the bus are
diminished
May discover they have time for a
cup of coffee before the bus arrives

Bus company can:

Schedule better
Arrange for extra buses when needed
Improve operations

Exhibit 8.1
NextBus Operational Model

Mobile Commerce: Overview

Mobile commerce (m-commerce,
m-business)any e-commerce done in
a wireless environment, especially via
the Internet
Can be done via the Internet, private
communication lines, smart cards, etc.
Creates opportunity to deliver new services
to existing customers and to attract new
ones
8

Exhibit 8.2
Classes of M-Commerce Applications

M-Commerce Terminology
Generations
1G: 1979-1992 wireless technology
2G: current wireless technology; mainly
accommodates text
2.5G: interim technology accommodates
graphics
3G: 3rd generation technology (20012005) supports rich media (video clips)
4G: will provide faster multimedia
display (2006-2010)
10

Terminology and Standards

GPS: Satellite-based Global Positioning System
PDA: Personal Digital Assistanthandheld
wireless computer
SMS: Short Message Service
EMS: Enhanced Messaging Service
MMS: Multimedia Messaging Service
WAP: Wireless Application Protocol

11

Specific Attributes of M-Commerce

Attributes of m-commerce and its
economic advantages
Mobilityusers carry cell phones or other
mobile devices
Broad reachpeople can be reached at any
time

12

Attributes of M-Commerce (cont.)

Value-added attributes of m-commerce
Ubiquityeasier information access in real-time
Conveniencedevices that store data and have
Internet, intranet, extranet connections
Instant connectivityeasy and quick connection to
Internet, intranets, other mobile devices, databases
Personalizationpreparation of information for
individual consumers
Localization of products and servicesknowing
where the user is located at any given time and
match service to them

13

Exhibit 8.3
Characteristics of M-Commerce

14

The Drivers

Widespread
availability of
devices
No need for a PC
Handset culture
Vendors push

Declining prices
Improvement of
bandwidth
Explosion of EC in
general

15

Mobile Computing Infrastructure

Hardware
Cellular (mobile)
phones
Attachable keyboard
PDAs
Interactive pagers
Other devices
Notebooks
Handhelds

Screenphonesa
telephone equipped
with color screen,
keyboard, e-mail, and
Internet capabilities
E-mail handhelds
Wirelinedconnected
by wires to a network
16

Mobile Computing Infrastructure (cont.)

Unseen infrastructure requirements
Suitably configured wireline or wireless
WAN modem
Web server with wireless support
Application or database server
Large enterprise application server
GPS locator used to determine the
location of mobile computing device
carrier
17

Mobile Computing Infrastructure (cont.)

Software
Microbrowser
Mobile client operating system (OS)
Bluetootha chip technology and a standard that
enables voice and data communications between
wireless devices over short-range radio frequency
(RF)
Mobile application user interface
Back-end legacy application software
Application middleware
Wireless middleware
18

Mobile Computing Infrastructure (cont.)

Networks and access
Wireless transmission media
Satellites
Radio
Infrared
Cellular radio technology

Wireless systems
19

Exhibit 8.5
Delta Airlines Wireless System

20

Wireless Standards and Security

M-commerce supported by
Standards
Security
Voice systems

21

Wireless Standards
Wireless standards
Time-division Multiple Access (TDMA)
General Packet Radio Services (GPRS)
Code Division Multiple Access (CDMA)
CDMA One
Global System of Mobile Communication
(GSM)

22

Wireless Standards (cont.)

Wireless Application Protocol (WAP)a set of
communications protocols designed to enable
different kinds of wireless devices to talk to a
server installed on a mobile network, so users
can access the Internet
Subscriber Identification Module (SIM)
Wireless Markup Language (WML)
Voice XML (VXML)
Enhanced Data Rates for Global Evaluation
(EDGE)
Universal Mobile Telecommunications System
(UMTS)
IPv6

23

Security Issues
Viruses
Smart card security solutions
Voice communication can be intercepted by
hackers
One solution is an embedded biometric
add-on

Back-end security solutionspublic key

infrastructure (PKI) and M-CERT (mobile
certification)
24

Voice Systems for M-Commerce

Hands-free and eyes-free operations

increase productivity, safety, effectiveness
Disabled people can use voice data for
various tasks
Voice terminals are portable
2 times faster than typing
Fewer errors
25

Interactive Voice Response

Interactive voice response (IVR)a computer
voice system that enables users to request
and receive information and to enter and
change data through regular telephone lines
or through cell phones
Patients schedule doctors appointments
Users request pick-up from FedEx
Employees find information, select, or
change benefits packages
Electric utilities can respond to customers
reporting power outages
26

Voice Portals
Voice portala Web site with audio
interface, accessed by making a phone call
Request information verbally from system that:
Retrieves the information
Translates it into a computer-generated
voice reply
Tells you what you want to know

Helps businesses find new customers

27

Mobile Financial Applications

Wireless electronic payment systems
Mobile phones become secure, selfcontained purchasing tools capable of
instantly authorizing payments over the
cellular network for goods and services
consumed

Micropaymentselectronic payments
for small-purchase amounts
(generally less than $10)
28

Mobile Financial Applications (cont.)

M-wallet (mobile wallet)a wireless
wallet that enables cardholders to make
purchases with a single click from their
wireless devices
Bill payments directly from cell phone
via:
Bank
Credit card
Prepaid arrangement
29

Examples of Financial Applications

Swedish Postal
Bank
Dagens Industri
Citibank
Japanese banks

Hoovers wireless
(hoover.com)
ASB Bank (New
Zealand)
Bostons Faneuil
Hall Marketplace

30

Exhibit 8.6
Bill Payments by Cell Phone

31

Shopping from Wireless Devices

Buy.com allows shopping from wireless
devices
In 5-10 years most businesses will be
wireless
Online stores will become showrooms
View products
Purchase them using handheld devices
Possibly enhanced by bar code scanners
Customization may be possible
32

Exhibit 8.7
Mobile Shopping Supported by CRM

33

Targeted Advertisement
Personalization of services and
enhanced user interface for wireless
Web pages from barnesandnoble.com
Knowing user preferences or surfing habits
user-specific advertising messages to the
location of mobile users
Using GPS marketers can send locationsensitive messages can be sent
34

Targeted Advertisement (cont.)

Get paid to listen to advertisements
listen to a 10second ad before you dial
your cell phone, and get 2 minutes of
free long-distance time
Program flopped in the U.S.
SingTel of Singapore recouped its initial
investment from ad revenues in about a year

35

Targeted Advertisement (cont.)

Advertisement strategies and guidelines
Wireless Advertising Association
(waaglobal.org) is trying to establish
wireless ad guidelines
Opt-in ad programs involving mobile
message alerts
Addressing issues like spamming and
unethical strategies:
Confirmed opt-ins
Personally identifiable information
Push advertising

36

Wireless Advertising in Action

GPS helps target users from their location
Vindigo.complaces to go and things to do in
your area
GeePS.comlocation-based start-up sent
coupons to customers cell phones
Go2Online.comlocations-based Web domain
helps mobile travelers find anything (e.g., the
nearest oil change)
37

Supporting Customers & Business Partners

(Consumer Services)
Using voice portals in marketing and
customer service
Use vendors voice portal to check
status of deliveries to a job site
Service technicians provided with
diagnostic information, enabling them
diagnosis of difficult problems
Sales people check inventory status
during a meeting to help close a sale
38

Supporting Customers & Business Partners

(Consumer Services) [cont.]
Using mobile portals
Mobile portala customer interaction channel
that aggregates content and services for mobile
users
Portals charge for their services (per service or
monthly fee):
Public mobile portals (e.g., Imode in Japan)
Corporate portals
Serve a corporation s customers and/or
suppliers
E.g., major airline portals

39

Supporting Mobile Employees

Smartphones and hand-held devices
Wearable wireless devicesmobile
wireless computing devices for employees
who work on buildings and other difficult-toclimb places
Cameras
Keyboard

Screen
Touch-panel display
40

Wearable Devices for

Bell Canada Workers
Wearable technology
Powerful computer for pocket
Keyboard attached to the vest
Flatpanel display screen at the waist
Video camera attaches to his safety hat
Cell phone is attached and connected to
the computer
Battery pack against the back
41

Wearable Devices (cont.)

Wearable devices enable workers to
access:
Work orders
Repair manuals

This system was developed by

Xybernaut (xybernaut.com)
Problems with the technology are
weather related
42

Supporting Mobile Employees (cont.)

Job dispatch
Transportation (delivery of food, oil,
newspapers, cargo, courier services, tow trucks)
Taxis (already in use in Korea and Singapore)
Utilities (gas, electricity, phone, water)
Field service (computer, office equipment, home
repair)
Health care (visiting nurses, doctors, social
services)
Security (patrols, alarm installation)
43

Supporting Mobile Employees (cont.)

Sales force automation (SFA) tools
Integrate software aimed at mcommerce applications
Equipped with smartphones providing
easy access to customer data at the
central office
Contact management information
Product and spare part availability
Deal tracking
44

Non-Internet Intrabusiness Applications

Wireless networking used for item

picking in warehouses
Delivery and order status updates
Online dispatching
Online diagnosis support from remote
locations
Parts ordering/inventory queries
45

Non-Internet
Intrabusiness Applications (cont.)
Mobile shop-floor quality control
systems enable
Voice reports by inspectors
Data collection from facilities
Transmission to a central processor

Salespeople connect to corporate

networks
Remote database queries
46

Exhibit 8.9
Automated Wireless Workflow Applications

47

Internet-Based
Intrabusiness Applications
Applications implemented inside
enterprises, some examples:
Sonera (Finland): electronic funds transfer
(EFT) of paychecks
Chicagos United Center: inventory can be
taken in a matter of hours
FedEx : access Web, e-mail, databases,
intranets, etc.
48

Internet-Based
Intrabusiness Applications (cont.)
Bertelsmann AG: gives junior-level executives
wireless access to a company portal, JuniorNet,
accessible from almost anywhere
Kemper Insurance Company: lets property
adjusters report from the scene of an accident
U.S. Internal Revenue Service: equipping field
employees with mobile devices that allows
audits to be conducted anywhere, anytime

49

Exhibit 8.10
Intelligent Office Connected by Wireless LAN

50

Mobile B2B and

Supply Chain Applications
Both sell-side and buy-side of ERP
Unified messaging makes users device
less of an issue
Telemetry drives supply chain efficiency and
productivity through automation of:
Data capture
Improved billing timeliness and accuracy
Reduced overhead
Increased customer satisfaction

Collaboration among members of the supply

chain is facilitated by mobile capabilities
51

Mobile Consumer and Personal

Service Applications
Mobile gaming devices
PDAs (Handsprings Visor) with Flash RAM card
Nintendos Game Boy Advance
Sonys PocketStation
Segas portable device connected to Dreamcast
Mobile gambling
Germanys online lottery company fluxx.com
available via mobile terminals
Hong Kong, betting on horse races via cell phones
is popular

52

Mobile Consumer and Personal

Service Applications (cont.)
Mobile entertainment
Music
Videoreal-time streaming video
(packetvideo.com)

Hotelshotel guests equipped with

Bluetooth-enabled mobile devices are
instantly recognized
Intelligent homes and appliances
53

Exhibit 8.13
Intelligent Home Connected by Wireless LAN

54

Mobile Consumer and Personal

Service Applications (cont.)
Wireless telemedicineuse of mobile
telecommunications infrastructures and
multimedia technologies to provide medical
information and deliver health care services
remotely
Other services for consumers
Providing news, weather, and sports reports
Online language translations
Information bout tourist attractions (hours,
prices)
Emergency services

55

Mobile Consumer and Personal

Service Applications (cont.)
Non-Internet consumer applications
Smart cards used in transportation
Contactless cards (proximity
cards) used to pay bus and subway
fares and road tolls

Amplified remote-sensing cards have an

RF (radio frequency) of up to 30 meters
used for toll collection
56

Highway 91 Project (cont.)

Six express toll lanes along a 10mile
stretch in the median of the existing
Highway 91
Express lane system has only one
entrance and one exit, and it is totally
operated with EC technologies

57

Highway 91 Project (cont.)

The system works:
1. Only prepaid subscribers can drive on
the road
2. Large sign over the toll way tells drivers
current fee for cruising the express lanes
3. Sensors in the pavement let the toll way
computer know that a car has entered;
the car does not need to slow or stop
4. AVI makes radio contact with a
transceiver installed above the lane
58

Highway 91 Project (cont.)

The transceiver relays the cars identity to
the control center, where a computer
calculates the fee for that days trip
Surveillance cameras record the license
numbers of cars without AVIscan be
stopped by police at the exit or fined by mail
Video cameras along the toll way enable
managers to keep tabs on traffic
System accesses the drivers account and
the fare is automatically deducted from the
drivers prepaid account
59

Highway 91 Project (cont.)

System saves commuters between 40
and 90 minutes each day, so it is in
high demand
Use of the same AVIs for other
purposes:
Used in paid parking lots
Someday you may be recognized when you
enter the drive-through lane of McDonalds
and a voice asks you, Mr. Smart, do you
want your usual meal today?
60

Location-Based Commerce
Location-based commerce (L-commerce)ecommerce applications provided to customers based
on a users specific location
Location-based technologies
Global positioning systemsa wireless system
that uses satellites to enable users to
determine their position anywhere on the earth
Geographical information systems (GIS)
relates longitude and latitude of GPS into place
or address (mapinfo.com)
GPS on handsetsstand-alone units for
tracking applications

61

Exhibit 8.14
Location-Based Services Involving Maps

62

Exhibit 8.15
GPS System

63

L-Commerce Applications (cont.)

E-911Calls from cellular phones to providers of
emergency services
Wireless carriers must provide feature that allows
them to identify number and location of the user
Mobile 911 calls must be forwarded immediately
to the appropriate agency

Automatic crash notification (ACN)device

(now experimental) that will automatically
notify police of a vehicular accident
64

Telematics and Telemetry

Applications
Telematicsintegration of computers and wireless
communications to improve information flow using
the principles of telemetry
GM OnStar systemcellular phone and PDA are
integrated to provide personal information
management, mobile Internet services,
entertainment on the vehicle vehicle dashboard
Sophisticated text-to-speech and voice recognition
capabilities minimize driver distraction

65

Telematics and Telemetry

Applications (cont.)
Use as a remote vehicle self-diagnostics tool
Daimler-Chrysler and Volvo experimented with
installation of GSM chip sets in cars
Monitor performance and to provide an early
warning system for potential problems
Chip sends a message to the manufacturer
indicating what the problem is
Manufacturers system analyzes various
data and provides a fix (via a software tool)

Developing faults found before they become

critical and continuous operation of the car can
be ensured

66

Barriers to L-Commerce
The accuracy of some of the location
technologies
The cost-benefit justification
M-spam
The bandwidth of GSM networks

67

Limitations of M-Commerce
Usability problem
Usability of a site is critical to attract
attention and retain user stickiness
Effectiveness, efficiency, satisfaction
Some mobile devices are found to be
ineffective
Customers want to find exactly what they
are looking for, easily and quickly, not
possible in the 2G text-based environment
More and faster multimedia will be
available as 3G spreads
68

Technical Limitations
Lack of standardized
security protocol
Security methodology
needs to be
incorporated in
mobile
Customer confidence
is low

Insufficient bandwidth
Limits the extent to
which mobility can be
viewed commodity

3G licenses
Auctioned by
governments
Certain countries
cannot be served by
these devices

Transmission & power

consumption limitations
Multipath interference
Weather and terrain
problems
Distance-limited
connections

69

Technical Limitations (cont.)

WAP limitations
Speedin 2002 connections to WAP
sites are still too slow
Costfees for mobile phone users are
still too high
Accessibilityas of spring 2002, fewer
than 50,000 WAP-accessible sites
worldwide (must be written in WML)

70

Technical Limitations (cont.)

Potential health hazards
Fear of radiation
Unsafe to drive and use wireless phone
Cell phones may interfere with sensitive
medical devices (pacemakers)
Lawsuits relating to the potential health
hazards of wireless devices have already
been filedpublic is advised to adopt a
precautionary approach in using mobile
phones (earphone device)
71

Implementing M-Commerce
Revenue models
Basic (fixed) fees
Point-of-traffic
fees
Transaction fees
Content and
service charges

Payment clearing
Hosting fees

72

Implementing M-Commerce (cont.)

Consumer confidence and trust
Customers love free or inexpensive
services like those offered by iMode
Customers not willing to pay large amounts
of money for services unless they trust the
product/vendor
Confidence should increase with reliable
payment mechanisms
Research is being conducted in this area
73

Implementing M-Commerce (cont.)

M-commerce value chain
Involves many partners
Success depends on
Coordination among participants
Sufficient compensation for all

Use ASP to deliver m-commerce or

Large companies contract other vendors
to complement their services
74

Managerial Issues

What is our timetable?

Which applications first?
Is it real or just a buzzword?
Which system to use?

75

Summary
Characteristics and
attributes of mcommerce
Drivers of mcommerce
Supporting
technologies
Wireless standards
and technologies
Finance and
marketing
applications

Intrabusiness
applications
B2B applications
Consumer
applications
Non-Internet
applications
L-commerce
Limitations of mcommerce

76