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The iPhone Effect

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One of the most frequent "vision" questions I get from clients and industry experts alike is "Tell me about mobile ecommerce." Until recently, my answer was that I don't see any killer app from mobile commerce outside of ringtone downloads. But this was before the iPhone.

Before addressing the iPhone effect, I would like to share some hands-on experiences with mobile ecommerce. In 2000, when I was still running my last company (Intershop), we had several customers who experimented using WAP, or wireless application protocol. WAP, of course, is slow, text-only and the user experience wasn't engaging-it was barely tolerable. The consistency of the user experience between devices was, and still is, a major problem. As a result, the revenues realized through WAP were negligible and the cost of running this service more than eliminated margins on sold merchandise. Clearly, it was an idea whose time had not yet come. This has been my experience with countless other attempts by technology companies and startups-mobile ecommerce seemed to be applicable to only very narrow use cases such as ringtones, tickets and payments. The availability of GPRS, EDGE and HTML browsers on mobile phones did not change this at all.

With the advent of the iPhone, I believe the time for mobile ecommerce has come. We are looking at a perfect storm of mobile broadband availability, a shift in mobile customer behavior and the availability of the first user interface on a mobile device capable of delivering a stunning user experience beyond making calls. Let me address the individual points:

Mobile broadband availability: 3G (or UMTS as it's called in Europe) delivers data rates of up to 7.2 MBit/sec. This is as fast as your home cable or DSL modem. Forget WiMax; Wifi-like experience for mobile devices is coming to us from existing mobile operators who merely upgrade their transmission towers.

Change in mobile customer behavior: While mobile phone use was and still is the #1 application of a mobile device, it is quickly changing to the numerous modes of Internet communication-such as mobile email, chat, video, sharing pictures, listening to music and more. As these uses increase, a device's ability to access websites at high resolution and speed will be an important consideration. In other words, the phone function will be one of many features, but customers will-and often already do-expect more out of a mobile device.

Mobile user interface: Apple, for the first time, managed to crate a truly mobile user interface with the combination of a high-resolution touch screen and gestures. This is important because the type of visual interaction required to have a positive, exciting shopping experience is key to mobile ecommerce.

Price no longer a barrier to mass adoption: $199 for an iPhone, plus a monthly charge not significantly higher than other combined cell/data plans, will foster massive adoption.

Now, how will it work? Will the iPhone just be used as a browser to access existing ecommerce sites? I don't think so. I believe that purpose-built UIs for the iPhone and similar mobile devices will be much more exciting than simply compressing the pre-existing interface. I envision that the gesture-driven touch screen UI will be exploited to deliver a never-seen-before mobile and interactive experience. Some of these possibilities are already being exploited as the iTunes App Store now sells hundreds of applications to enhance functionality (eBay is already on board) utilizing all the iPhone gestures we know so well. This combination of convenience and user experience will make the difference and pave the way for true mobile ecommerce success.

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COMMENTS

Congrats on launching your blog, Stephan!

posted @ Monday, July 14, 2008 5:45 PM by brian halligan


Excellent blog, Stephan! Couldn't agree more that mobile commerce is right near the tipping point, really driven by the iPhone. (Have you played with the Facebook iPhone page and Pandora iPhone app? In my mind, their UIs are better on mobile than on desktop.) Within the next year, we are going to see a wave of e-commerce companies both experimenting and receiving excessive gains in the space provided they have the right entry strategy. 

posted @ Tuesday, July 15, 2008 10:56 AM by Ken Eisner


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