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Mobile-Data Business Models December 2000 Authors:   David Alker Ed Christie Paul Di Senso Michael Gold Joe O'Halloran About This Report Table of Contents Download the full report About This Report The revenue (equipment plus service) stemming from the business of talking on the phone will exceed $1 trillion worldwide during 2000. Moreover, all the growth in voice-services revenue since 1996 has derived from the mobile sector. As this sector has developed, mobile industries have adopted business models that are distinct from those in the computer, Internet, and pay-TV industries. Now that wireless industries are expanding the menu of wireless offerings to include Internet, audiovisual entertainment, and transactions, business models must change in response to the demand for new services, competition from alternative providers, and the need to encourage development of high-quality content that can generate traffic on the mobile networks. Readers who want a brief review of this report's high points will find them in the Executive Summary beginning on page 1. This section also includes a two-page foldout table that presents a timeline for key industries. The report's next two sections—Business Rules in the Mobile-Data Market and Changing Mobile Business Models—describe how and why the models have changed. The following three sections—Challenges for Wireless Carriers, Revenue Schemes for Content Aggregators and Mobile Portals, and Advertising in the Mobile Environment—discuss possible strategic responses. The report's final section, The Impact of Mobile-Internet Business Models on Industry Sectors, examines the implications for eight industry sectors: Wireless carriers Dot-coms Infrastructure makers Brand-name electronics, computer, and peripheral makers Media and entertainment companies Retailers and vending-machine operators Retail financial services Automotive industries. We welcome feedback about this report and the program, and we encourage you to contact us with any questions or suggestions. For more information, please contact Michael Gold at telephone: +1 650 859 6354; fax: +1 650 859 4544; e-mail: mgold@sric-bi.com. We appreciate your support of our program and look forward to working closely with you as a Digital Futures sponsor. Table of Contents About This Report ii Executive Summary 1   Evolving Relationships in the Mobile-Data Sector 1   Impact on Industry Sectors 2 Business Rules in the Mobile-Data Market 7   The Arrival of Micropayments–on the Phone Bill 7   Demand for Made-for-Mobile Applications 8   The Critical Role of Pay-for-Placement Schemes 8   Location-Sensitive Services That Mitigate Channel Conflicts 9   Speech Interfaces That Satisfy Both Fixed and Mobile Needs 9   Services as Channels for Content, Not Gatekeepers 10   Toll-Free Mobile Services: A Competitive Advantage 11   Fixed-Site Solutions from Wireless Carriers 11   Wireless Internet Telephony and the Erosion of Per-Minute Pricing 11   The One and Only World Wide Web 12 Changing Mobile Business Models 13   Value Chains and Signal Chains 13   Content Delivery in Other Industries 14 Challenges for Wireless Carriers 19   Business Arrangements between Content Providers and Carriers 19   Business Arrangements between Enterprises and Carriers 20 Revenue Schemes for Content Aggregators and Mobile Portals 22 Advertising in the Mobile Environment 24 The Impact of Mobile-Internet Business Models on Industry Sectors 26   Wireless Carriers 26   Dot-Coms 27   Infrastructure Makers 28   Brand-Name Electronics, Computer, and Peripheral Makers 28   Media and Entertainment Companies 30   Retailers and Vending-Machine Operators 31   Retail Financial Services 32   Automotive Industries 33

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