1. Mobile commerce IT Valley Fribourg 2001 Yves Pigneur University of Lausanne yves.pigneur@unil.ch (+41 21) 692.3416

2. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 2 Agenda Introduction –Wireless and internet penetration in Europe Mobile commerce & business DEMAND –Value proposition –Consumers –Companies Business framework OFFER –Product innovation –Infrastructure management –Customer relationship management Emerging scenarios –Operator (or manufacturer) integration –Market chaos –Portal syndication Conclusion

3. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 3 General context technology Electronic commerce Strategy Business models Industry IP strategy allows Levier to change Allows impact Intermediary Community standard infrastructure integration Brand Promotion Customer service Brand Promotion Customer service Costs Diffusion time Learning Costs Diffusion time Learning New products New channels New businesses New products New channels New businesses... improve reduce create Customer Relationship Customer Relationship Product Innovation Product Innovation logistics infrastructures logistics infrastructures Finance Revenue Finance Revenue [Bloch, 1999]

4. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 4 Cellular & Internet penetration in Europe [Durlacher, 2000]

5. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 5 19992000 0 1 2 3 4 5 Feb.Apr.Jun.Aug.Oct.Dec.Feb. i-mode service 0 5 10 15 20 25 30 million Launch 22. Feb. NTT DoCoMoi-mode Growth of i-Mode services (Japan) The i-mode service subscribers are now about 10 million. By end of 2000, all the mobile phones of DoCoMo would be provide with the I-mode service Source Nikkei Sangyo Shinbun & ADL

6. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 6 Value proposition - examples Facilitate research –and reduce transaction costs Speed up distribution –particularly digital goods (written, music, image, software) Improve the quality of service –by personalization, for example Improve facility and experience of buying –capitalizing on game aspects Improve the transparence of information –by opening up your information system Develop a sense of community –and improve the diffusion of knowledge and contacts Bind complementary products Mobile commerce Mobile commerce

7. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 7 Payment Illustrations YesterdayToday [McKinsey, 2000] Sonera offers wireless payment applications

8. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 8 Auction 12 Snap offers wireless online auctions through Cell Broadcast and SMS in Germany in cooperation with D2 and Nokia Illustrations YesterdayToday [McKinsey, 2000] 15,000+ customers registering with the service in the 1st month

9. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 9 Movie ticketing Ericsson and Telenor launched a service to buy cinema tickets using mobile phone Illustrations YesterdayToday [McKinsey, 2000]

10. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 10 Trading W-Trade offers a complete solution for wireless stock trading Illustrations YesterdayToday [McKinsey, 2000]

11. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 11 Purchasing CHL offers the first SMShop for ITC goods in Italy Ads for discounts on ICT goods on newspaper with promotion code and purchase via SMS Illustrations YesterdayToday More than 10’000 SMSshop subscribers in 2 weeks [McKinsey, 2000]

12. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 12 Check-in Swissair introduced check-in via WAP Illustrations YesterdayToday

13. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 13 Advertizing MobileAttitude offers promotion, reminders, snow zones … Illustrations YesterdayToday

14. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 14 Voice Internet WAP Portail Omnitel 2000 offers a wireless portal Illustrations YesterdayToday [McKinsey, 2000]

15. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 15 SkiRando early proposed a WAP connection and a GPS facility Illustrations YesterdayToday Security

16. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 16 Logistics Frito Lay introduced checking stock with handheld computer it’s now possible with a Palm Pilot with a bar code scanner Illustrations YesterdayToday

17. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 17 Tracking UPS introduced handheld computer for tracking and tracing And now using PalmPilot Illustrations YesterdayToday

18. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 18 Mobile sales force AstraZeneca equiped each member of the sale force with a PDA or WAP phone directly connected with the ERP system Illustrations YesterdayToday

19. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 19 1991 la révolution 1991 la révolution Oticon adopted a paper-less organization and nomadism way-of-work Illustrations YesterdayToday Nomadism and tele-working

20. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 20 M-applications 1998199920002001200220032004 SMS TOOLKITGPRSEDGE E-SalaryE-Bill Telemetry Information Provisioning Banking UMTSSMSWAP TicketingReservation Payment Telematics Broking ShoppingHealth Care Job DispatchCRM WASP Auctions AdvertisingMusic Supply chain integration Video Games SMS E-mailPIM Customer Care I. messaging Chat U. messaging M-Commerce Applications M-Commerce Enabling Applications SecurityInformation Management [Durlacher, 2000]

21. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne 10 3 14 16 44 5 4 7 8 8 9 6 6 4 16 20 23 22 26 25 14 11 15 2 2 7 3 010203040506070 Text information services Local information services Accessing Web sites Cellphone banking E-mail notification Sending/receiving e-mail Sending text messages Downloading music Buying goods or services Interest in Mobile Phone Services: Germany Percent of Adults Already use Very interested Quite interested Source Gartner Research 2000 [Gartner, 2000]

22. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne Level of Interest in New Services (Europe) 1.6 1.7 3.4 3.3 2.8 3.2 2.2 2.8 3.0 2.0 2.2 11.522.533.544.55 Horoscopes Lottery results Cinema booking Event booking Very interested Not interested Mean interest rating Sports results News Banking Share dealing Music downloads Restaurant booking Traffic information Source Gartner Research 2000 [Gartner, 2000]

23. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 23 Willingness to Pay for New Services (Europe) 9 8 61 64 43 49 24 25 44 33 28 0%10203040506070 Percent of Respondents Horoscopes Lottery results Cinema booking Event booking Restaurant booking Traffic information Sports results News Banking Share dealing Music downloads Source Gartner Research 2000 Preferred payment mechanism: Pay-per-use (Vs Subscription) [Gartner, 2000]

24. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 24 Innovation produit Gestion des relations-clients Gestion des infrastructures Aspects financiers Business model Financial aspects Financial aspects HOW MUCH? What is the revenue model? the profit model? designed to last? WHO? How to manage relationships with customers, satisfy them and generate revenues to be on the winning side? Customer Relationship Customer Relationship WHAT? What is the scope of products and services, its value (its benefits) for the customer, the attitudes to deliver them in an innovating way? Product innovation Product innovation HOW? How to organize the infrastructure, its resources, the knowledge and the structure of resulting costs, manage the value chain and processes, build alliances to achieve performance? Infrastructure logistics Infrastructure logistics Business framework Business framework

25. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 25 Framework Product Customer Infrastructure Payment Communication Access Platform Network Device Marketing Relation mgmt Personalization PRODUCT INNOVATION Conceive of attractive new services and contents, and figure out how best to bring them to market INFRASTRUCTURE MANAGEMENT Build and manage facilities for high volume, repetitive, operational tasks CUSTOMER RELATIONSHIP MANAGEMENT Identify, attract, and build relationships with customers Telecom operator Device manufacturer Internet player content provider

26. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 26 Product (payment) «a killer attitude, no killer application» Product Customer Infrastructure Communication Platform Network Device Marketing Relation mgmt Personalization Payment Access Existing credit card Nokia/VISA agreement France Telecom’s ItiAchat using Motorola’s StarTAC-D phone Phone operator provides credit Sonera Mobile Pay in Finland „Dial-a-Coke“ New virtual credit/debit card Paybox.net in Germany

27. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 27 Low cash transaction value [McKinsey, 2000] EUR 300 milliards (Europe) Vending machines, Parking, Movie tickets Public transportation, Tolls, Laundry, Fast food Smart airport, Gambling Smart card barriers: Need of recharge (ATM dependent) Lack of information feedback (e.g., remaining balance) Dedicated & complex hardware (wire-lined POS & confirmation machine) Need of recharge (ATM dependent) Lack of information feedback (e.g., remaining balance) Dedicated & complex hardware (wire-lined POS & confirmation machine) Credit card barriers: Smart phone advantages: ATM independent Visual real time feedback Standard & common device (no wire line connection required, no confirmation machines required) High penetration of mobile phones Tailor-made solution for micro-payments Multifunctional Automatic identification control Relatively low penetration among users and merchants/ vendor machines Inefficient in transactions lower than $10 Mono-functional (payments only) Difficulty for customers & merchants to verify each other Relatively low penetration among users and merchants/ vendor machines Inefficient in transactions lower than $10 Mono-functional (payments only) Difficulty for customers & merchants to verify each other Estimate

28. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 28 Product (communication) Product Customer Infrastructure Payment Platform Network Device Marketing Relation mgmt Personalization Communication Access SMS E-mail Instant messaging Unified messaging nomad

29. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 29 Product (access) Product Customer Infrastructure Payment Communication Access Platform Network Device Marketing Relation mgmt Personalization InformationMultimediaTransaction News Alerts Sports Financial Entertainment Program Travel Guide Find me services Yellow pages Dictionary Traffic FINANCIAL Banking Broking SHOPPING Retailing Ticketing Auctions Reservations Travel Betting MEMBERSHIP Loyalty programs Medical records ENTERTAINMENT Gaming Music TV Characters IN-CAR ELECTRONICS Music Traffic GPS Anytime Anywhere Time/location-sensitive services WAP

30. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 30 Infrastructure Product Customer Infrastructure Payment Communication Access Platform Network Device Marketing Relation mgmt Personalization WAPmiddlewareaggregator UMTSPKIGPS Operating systemSpeech recognitionBluetooth battle for standards

31. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 31 Customer Product Customer Infrastructure Payment Communication Access Platform Network Device Marketing Personalization – to identify and attract customers – to generate economies of scope – to build customer loyalty and trust – to understand their attitudes and needs – to customize usage of services and content – to provide the customer with the right content PUSH information has to be relevant and timely to avoid being rejected PULL information has to be easily accessed and relevant to generate usage Relation mgmt battle for customer ownership

32. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 32 1 2 3 AB CD ? Clear-enough future forecast Traditional toolkit Alternate futures Discrete options Game theory Decision analysis True ambiguity No basis for forecast analogies Pattern recognition Range of futures No natural option Scenario planning Levels of uncertainty: [Courtney, 1997] Scenario planning SIMULATE Emerging scenarios Emerging scenarios

33. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 33 Three scenarios Market chaos Operator integration competition cooperation Portal syndication product Infrastructure customer [c-qential, 2000]

34. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 34 Operator integration BUNDLED The operator leverages its control of the network and its ownership of the customers to extend its role Product Customer Infrastructure Payment Communication Access Platform Network Device Marketing Relation mgmt Personalization – subscription, airtime charges and pay-per-use from customers – commission fee (for processing, billing …) from content providers – derived from sale of devices through operators – margins from selling content traffic could be a device-centric in place of an oprator-centric scenario …

35. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 35 “Unbundling the corporation” Product Customer Infrastructure EconomyCultureCompetition Speed is the key to be the first on the market Employee centeredBattle for talents, low barriers to entry, many small players thrive Economies of scope are key to acquire a large number of customers Highly service oriented customer comes first Battle for scope, rapid consolidation, big players dominate Economies of scale are key for reducing cost in managing large volumes Cost focused stress on standardization efficiency Battle for scale rapid consolidation, a few big players dominate [Hagel, 1999]

36. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 36 Market chaos UN-BUNDLED A marketplace where customers have distinct relationship with device makers, operators and content providers Product Customer Infrastructure Payment Communication Access Platform Network Device Marketing Relation mgmt Personalization – subscription and airtime charges from customers – sales of content and services: pay-per-use & subscription – sales of devices – sales of profiling information content

37. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 37 Portal syndication RE-BUNDLED Aggregators (infomediaries) syndicate content providers to create portals that deliver customized offerings Product Customer Infrastructure Payment Communication Access Platform Network Device Marketing Relation mgmt Personalization – subscription and airtime charges from customers – margins from selling content and services through wortals – subscription and pay-per-use – advertising fee – charges for personalized bundled services and content customers

38. Université de Lausanne SYLLABUS SYLLABUS | AGENDA | FINAGENDA FINSYLLABUSSYLLABUS | AGENDA | FINAGENDAFIN © 2001 Pigneur, HEC Lausanne e-business 38 Evaluation of scenarios ScenariosProsCons Operator Operators control customer experience Intense price competition among operators will keep service affordable Ability to provide unified billing for services and content Breadth and quality of content and commerce are limited Users will ultimately choose services based on content brand names Market Capitalizes on strengths of individual players Customer has direct contact with content provider No big brother: protection of private life Risk of anarchy Difficulty to reach the customer and maintain the distribution channels Portal Allows users a virtually seamless transition from the desktop to mobile world Core competency is a provision of highly customized content and services Portal may just serve as a launch pad to the Internet for users Rules for sharing third-party content with mobile users are complex and uncertain Product Customer Infrastructure