M-commerce will flop - Forrester report

New Forrester report claims m-commerce won't catch on. But mobile Internet devices could still influence sales
Written by Matthew Broersma, Contributor

Buying online using mobile devices will not catch on according to analyst firm Forrester Research which still sees the PC as king of Internet commerce.

Such devices will indirectly drive a large amount of spending, however, and gadget makers are still lining up to produce mobile phones and handheld computers that access the Internet.

WAP phones, set-top boxes and PDAs (personal digital assistants) will only account for 19 percent of online retail sales by 2005, Forrester predicts. Only 0.02 percent will be from PDAs, with 3 percent from mobile phones. The remaining 81 percent will come from PCs.

Internet-connected PDAs and smart-phones that combine the functions of a wireless Web browser and an organiser are unlikely to catch on the way mobile phones have according to Forrester which predicts that sales in Europe will only reach 1.3m euros by 2005.

"There will be Internet-connected PDAs and smart-phones, but we don't think they will come anywhere close to the penetration of mobile phones," said Forrester analyst Carsten Schmidt, the author of the report. "If you look at the space for the last ten years, the most important piece of it has been for the devices to be smaller and lighter, never to have a bigger screen or additional applications."

WAP phones will be a more significant market, but will still remain a niche, Schmidt said.

The report comes as major online players such as AOL are busy trying to get into the mobile arena, and the same week that Psion (quote: PON) unveils a new, WAP-enabled PDA. It contradicts a recent report from IDC, which found European m-commerce would reach £25.6bn by 2004.

Despite the lack of direct m-commerce sales, however, wireless Internet appliances will have a greater indirect impact, Forrester says. By offering value-added services through wireless PDAs or WAP phones, companies can maintain customer loyalty and influence future purchases. Such services will influence 229bn euros in retail sales by 2005, Schmidt said.

So how does this affect companies such as Psion, with its Symbian smartphone joint-venture, who are counting on wireless Internet devices to take off? Schmidt believes companies like Psion and Palm, which are moving away from the hardware market into selling operating systems for third-party devices, will be able to continue to profit from the market.

Psion on Tuesday released its latest effort in the wireless Internet market, updating its consumer-oriented Revo organiser to include WAP. Revo Plus will allow users to access WAP information via any data-enabled, infrared mobile phone -- devices which currently have a far greater penetration than WAP handsets.

While Psion doesn't recommend making purchases over WAP, the system is a valuable add-on for people who are already in the market for a PDA, according to Revo product manager Harvey Roberts. "What we're offering is for a PDA user to have that up-to-the-minute information [that WAP offers]. We're expanding the uses of their PDA," he said.

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