Mobile future under fire

A new study questions the plans of the mobile giants, as handset sales head for slower growth

The mobile phone industry's vision of a future founded on the wireless Internet was thrown into doubt on Tuesday, with a new study questioning the viability of mobile portals.

A separate report predicted wireless handset sales will slow in the coming year as the market reaches maturity.

Most companies interested in the the wireless Internet, including handset manufacturers, network operators, Web companies and independent startups, have so far focussed on the "mobile portal" -- a wireless version of popular online portals such as Yahoo! and MSN. Vodafone and Vivendi Universal are among the most prominent with their Vizzavi portal; AOL and Carphone Warehouse are joint-owners of the Mviva portal.

But the mobile portal will be a non-starter, predicts Tuesday's report from Forrester Research, driving little traffic and remaining too difficult to access via a handset. "On the PC-based Web, portals drive traffic because users need them, but in contrast, portals won't play the same role in the mobile Internet because user circumstances differ sharply," said Forrester analyst Carsten Schmidt in a prepared statement. "Mobile Internet users have no time, interest, or need to spend time surfing from WAP portals."

The report is the latest bad news for the mobile phone industry, which has struggled over the last year to generate interest in services such as WAP (Wireless Application Protocol). The next test for the industry comes later this week as handset makers unveil their latest wireless-Net gadgets at CeBIT.

So far, companies offering mobile data services such as shopping or weather information have assumed that an overarching gateway into the wireless Web would help drive traffic to their sites. Forrester believes, however, that a more successful model will be to group closely-related services together: for example, a site pushing football information to a mobile user could drive traffic to a ticket-sales service.

The key point, Schmidt said, is that users won't interact with wireless services in the same way they do with online services. Even with the coming of the era of GPRS (general packet radio service), with its always-on connection, Forrester sees users focussing on specific activities like booking a flight or checking stock quotes. The model is very different from the PC-based Web, with its broad-based services offering a variety of functions.

Underpinning speculation about the wireless Net has been the phenomenal growth of the mobile handset industry over the last few years, but that growth is beginning to slow, according to figures from Gartner Dataquest, also released on Tuesday.

Dataquest projects that worldwide mobile phone sales will top 506.5 million units in 2001, a 23 percent increase over 2000. While still strong, the growth rate is down from the heights of 2000, when sales grew 38 percent over the previous year.

Dataquest notes that supply has now surpassed demand, and while growth will continue, many handset manufacturers may fall by the wayside. "The rapid annual growth rates of the past several years concealed numerous operational and strategic weaknesses among global handset manufacturers. However, these deficiencies are now being fully exposed thanks to a more challenging business environment," said Bryan Prohm, senior analyst for Gartner Dataquest's worldwide telecommunications group.

Despite the slowdown, the market will see steady growth for the next four years, when worldwide sales will hit nearly 740 million units, according to Dataquest. The Asia/Pacific and Japan regions will surpass Europe this year as the largest mobile phone market and will keep the top position through 2005, with Western Europe in the number two spot.

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