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Chapter 8 Mobile Commerce

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1 Chapter 8 Mobile Commerce
Prentice Hall, 2003

2 Learning Objectives Describe the characteristics and attributes of
m-commerce Describe the drivers of m-commerce Understand the supportive technologies and their capabilities Describe the wireless standards and transmission networks Prentice Hall, 2003

3 Learning Objectives (cont.)
Describe applications of m-commerce to finance, marketing, and customer service Describe the applications of m-commerce within organizations Describe B2B and supply chain applications of m-commerce Describe consumer and personal applications of m-commerce Prentice Hall, 2003

4 Learning Objectives (cont.)
Describe some non-Internet m-commerce applications Describe location-based commerce (l-commerce) Describe the major limitations Describe some implementation issues of m-commerce Prentice Hall, 2003

5 NextBus: A Superb Customer Service
The Problem Buses in San Francisco have difficulty keeping to 20 minute schedule during rush hours Posted schedule becomes meaningless The Solution Bus riders carrying Internet-enabled cell phone or PDA helps: Find estimated arrival time at each stop, digitally in real time Soon location-based advertisements will pop up—you have time to get a cup of coffee before the bus arrives—Starbuck’s is 200 feet to the right Prentice Hall, 2003

6 NextBus (cont.) The Results
Passengers in San Francisco are happy with the system Worries about missing the bus are diminished May discover they have time for a cup of coffee before the bus arrives Bus company can: Schedule better Arrange for extra buses when needed Improve operations Prentice Hall, 2003

7 Exhibit 8.1 NextBus Operational Model
Prentice Hall, 2003

8 Mobile Commerce: Overview
Mobile commerce (m-commerce, m-business)—any e-commerce done in a wireless environment, especially via the Internet Can be done via the Internet, private communication lines, smart cards, etc. Creates opportunity to deliver new services to existing customers and to attract new ones Prentice Hall, 2003

9 Exhibit 8.2 Classes of M-Commerce Applications
Prentice Hall, 2003

10 M-Commerce Terminology
Generations 1G: wireless technology 2G: current wireless technology; mainly accommodates text 2.5G: interim technology accommodates graphics 3G: 3rd generation technology ( ) supports rich media (video clips) 4G: will provide faster multimedia display ( ) Prentice Hall, 2003

11 Terminology and Standards
GPS: Satellite-based Global Positioning System PDA: Personal Digital Assistant—handheld wireless computer SMS: Short Message Service EMS: Enhanced Messaging Service MMS: Multimedia Messaging Service WAP: Wireless Application Protocol Smartphones—Internet-enabled cell phones with attached applications Prentice Hall, 2003

12 Specific Attributes of M-Commerce
Attributes of m-commerce and its economic advantages Mobility—users carry cell phones or other mobile devices Broad reach—people can be reached at any time Prentice Hall, 2003

13 Attributes of M-Commerce (cont.)
Value-added attributes of m-commerce Ubiquity—easier information access in real-time Convenience—devices that store data and have Internet, intranet, extranet connections Instant connectivity—easy and quick connection to Internet, intranets, other mobile devices, databases Personalization—preparation of information for individual consumers Localization of products and services—knowing where the user is located at any given time and match service to them Prentice Hall, 2003

14 Exhibit 8.3 Characteristics of M-Commerce
Prentice Hall, 2003

15 The Drivers Widespread availability of devices Declining prices
No need for a PC Handset culture Vendors’ push Declining prices Improvement of bandwidth Explosion of EC in general Prentice Hall, 2003

16 Mobile Computing Infrastructure
Hardware Screenphones—a telephone equipped with color screen, keyboard, , and Internet capabilities handhelds Wirelined—connected by wires to a network Cellular (mobile) phones Attachable keyboard PDAs Interactive pagers Other devices Notebooks Handhelds Smartpads Prentice Hall, 2003

17 Mobile Computing Infrastructure (cont.)
Unseen infrastructure requirements Suitably configured wireline or wireless WAN modem Web server with wireless support Application or database server Large enterprise application server GPS locator used to determine the location of mobile computing device carrier Prentice Hall, 2003

18 Mobile Computing Infrastructure (cont.)
Software Microbrowser Mobile client operating system (OS) Bluetooth—a chip technology and WPAN standard that enables voice and data communications between wireless devices over short-range radio frequency (RF) Mobile application user interface Back-end legacy application software Application middleware Wireless middleware Prentice Hall, 2003

19 Mobile Computing Infrastructure (cont.)
Networks and access Wireless transmission media Microwave Satellites Radio Infrared Cellular radio technology Wireless systems Prentice Hall, 2003

20 Exhibit 8.5 Delta Airlines Wireless System
Prentice Hall, 2003

21 Wireless Standards and Security
M-commerce supported by Standards Security Voice systems M-commerce Prentice Hall, 2003

22 Wireless Standards Wireless standards
Time-division Multiple Access (TMDA) General Packet Radio Services (GPRS) Code Division Multiple Access (CDMA) CDMA One Global System of Mobile Communication (GSM) WLAN (Wi-Fi) Wideband CDMA Prentice Hall, 2003

23 Wireless Standards (cont.)
Wireless Application Protocol (WAP)—a set of communications protocols designed to enable different kinds of wireless devices to talk to a server installed on a mobile network, so users can access the Internet Subscriber Identification Module (SIM) Wireless Markup Language (WML) Voice XML (VXML) Enhanced Data Rates for Global Evaluation (EDGE) Universal Mobile Telecommunications System (UMTS) IPv6 Prentice Hall, 2003

24 Security Issues Viruses Smart card security solutions
Voice communication can be intercepted by hackers One solution is an embedded biometric add-on Back-end security solutions—public key infrastructure (PKI) and M-CERT (mobile certification) Prentice Hall, 2003

25 Voice Systems for M-Commerce
Hands-free and eyes-free operations increase productivity, safety, effectiveness Disabled people can use voice data for various tasks Voice terminals are portable 2 ½ times faster than typing Fewer errors Prentice Hall, 2003

26 Interactive Voice Response
Interactive voice response (IVR)—a computer voice system that enables users to request and receive information and to enter and change data through regular telephone lines or through 1G cell phones Patients schedule doctors’ appointments Users request pick-up from FedEx Employees find information, select, or change benefits packages Electric utilities can respond to customers reporting power outages Prentice Hall, 2003

27 Voice Portals Voice portal—a Web site with audio interface, accessed by making a phone call Request information verbally from system that: Retrieves the information Translates it into a computer-generated voice reply Tells you what you want to know—reminder and notification service Helps businesses find new customers Prentice Hall, 2003

28 Mobile Financial Applications
Wireless electronic payment systems Mobile phones become secure, self-contained purchasing tools capable of instantly authorizing payments over the cellular network for goods and services consumed Micropayments—electronic payments for small-purchase amounts (generally less than $10) Prentice Hall, 2003

29 Mobile Financial Applications (cont.)
M-wallet (mobile wallet)—a wireless wallet that enables cardholders to make purchases with a single click from their wireless devices Bill payments directly from cell phone via: Bank Credit card Prepaid arrangement Prentice Hall, 2003

30 Examples of Financial Applications
Swedish Postal Bank Dagens Industri Citibank Japanese banks Hoover’s wireless ( ASB Bank (New Zealand) Boston’s Faneuil Hall Marketplace Prentice Hall, 2003

31 Exhibit 8.6 Bill Payments by Cell Phone
Prentice Hall, 2003

32 Shopping from Wireless Devices allows shopping from wireless devices In 5-10 years most businesses will be wireless Online stores will become showrooms View products Purchase them using handheld devices Possibly enhanced by bar code scanners Customization may be possible Prentice Hall, 2003

33 Exhibit 8.7 Mobile Shopping Supported by CRM
Prentice Hall, 2003

34 Targeted Advertisement
Personalization of services and enhanced user interface for wireless Web pages from Knowing user preferences or surfing habits user-specific advertising messages to the location of mobile users Using GPS marketers can send location-sensitive messages can be sent Prentice Hall, 2003

35 Targeted Advertisement (cont.)
Get paid to listen to advertisements—listen to a 10–second ad before you dial your cell phone, and get 2 minutes of free long-distance time Program flopped in the U.S. SingTel of Singapore recouped its initial investment from ad revenues in about a year Prentice Hall, 2003

36 Targeted Advertisement (cont.)
Advertisement strategies and guidelines—Wireless Advertising Association ( is trying to establish wireless ad guidelines Opt-in ad programs involving mobile message alerts Addressing issues like spamming and unethical strategies: Confirmed opt-ins Personally identifiable information Push advertising Prentice Hall, 2003

37 Wireless Advertising in Action
GPS helps target users from their location—places to go and things to do in your area—location-based start-up sent coupons to customers cell phones—locations-based Web domain helps mobile travelers find anything (e.g., the nearest oil change) Prentice Hall, 2003

38 Supporting Customers & Business Partners (Consumer Services)
Using voice portals in marketing and customer service Use vendor’s voice portal to check status of deliveries to a job site Service technicians provided with diagnostic information, enabling them diagnosis of difficult problems Sales people check inventory status during a meeting to help close a sale Prentice Hall, 2003

39 Supporting Customers & Business Partners (Consumer Services) [cont.]
Using mobile portals Mobile portal—a customer interaction channel that aggregates content and services for mobile users Portals charge for their services (per service or monthly fee): Public mobile portals (e.g., Imode in Japan) Corporate portals Serve a corporation ’s customers and/or suppliers E.g., major airline portals Prentice Hall, 2003

40 Supporting Mobile Employees
Smartphones and hand-held devices Wearable wireless devices—mobile wireless computing devices for employees who work on buildings and other difficult-to-climb places Cameras Screen Keyboard Touch-panel display Prentice Hall, 2003

41 Wearable Devices for Bell Canada Workers
Wearable technology Powerful computer for pocket Keyboard attached to the vest Flatpanel display screen at the waist Video camera attaches to his safety hat Cell phone is attached and connected to the computer Battery pack against the back Prentice Hall, 2003

42 Wearable Devices (cont.)
Wearable devices enable workers to access: Work orders Repair manuals This system was developed by Xybernaut ( Problems with the technology are weather related Prentice Hall, 2003

43 Supporting Mobile Employees (cont.)
Job dispatch Transportation (delivery of food, oil, newspapers, cargo, courier services, tow trucks) Taxis (already in use in Korea and Singapore) Utilities (gas, electricity, phone, water) Field service (computer, office equipment, home repair) Health care (visiting nurses, doctors, social services) Security (patrols, alarm installation) Prentice Hall, 2003

44 Supporting Mobile Employees (cont.)
Sales force automation (SFA) tools Integrate software aimed at m-commerce applications Equipped with smartphones providing easy access to customer data at the central office Contact management information Product and spare part availability Deal tracking Prentice Hall, 2003

45 Non-Internet Intrabusiness Applications
Wireless networking used for item picking in warehouses Delivery and order status updates Online dispatching Online diagnosis support from remote locations Parts ordering/inventory queries Prentice Hall, 2003

46 Non-Internet Intrabusiness Applications (cont.)
Mobile shop-floor quality control systems enable Voice reports by inspectors Data collection from facilities Transmission to a central processor Salespeople connect to corporate networks Remote database queries Prentice Hall, 2003

47 Exhibit 8.9 Automated Wireless Workflow Applications
Prentice Hall, 2003

48 Internet-Based Intrabusiness Applications
Applications implemented inside enterprises, some examples: Sonera (Finland): electronic funds transfer (EFT) of paychecks Chicago’s United Center: inventory can be taken in a matter of hours FedEx and UPS: access Web, , databases, intranets, etc. Prentice Hall, 2003

49 Internet-Based Intrabusiness Applications (cont.)
Bertelsmann AG: gives junior-level executives wireless access to a company portal, JuniorNet, accessible from almost anywhere Kemper Insurance Company: lets property adjusters report from the scene of an accident U.S. Internal Revenue Service: equipping field employees with mobile devices that allows audits to be conducted anywhere, anytime Prentice Hall, 2003

50 Exhibit 8.10 Intelligent Office Connected by Wireless LAN
Prentice Hall, 2003

51 Mobile B2B and Supply Chain Applications
Both sell-side and buy-side of ERP Unified messaging makes user’s device less of an issue Telemetry drives supply chain efficiency and productivity through automation of: Data capture Improved billing timeliness and accuracy Reduced overhead Increased customer satisfaction Collaboration among members of the supply chain is facilitated by mobile capabilities Prentice Hall, 2003

52 Mobile Consumer and Personal Service Applications
Mobile gaming devices PDAs (Handspring’s Visor) with Flash RAM card Nintendo’s Game Boy Advance Sony’s PocketStation Sega’s portable device connected to Dreamcast Mobile gambling Germany’s online lottery company available via mobile terminals Hong Kong, betting on horse races via cell phones is popular Prentice Hall, 2003

53 Mobile Consumer and Personal Service Applications (cont.)
Mobile entertainment Music Video—real-time streaming video ( Hotels—hotel guests equipped with Bluetooth-enabled mobile devices are instantly recognized Intelligent homes and appliances Prentice Hall, 2003

54 Exhibit 8.13 Intelligent Home Connected by Wireless LAN
Prentice Hall, 2003

55 Mobile Consumer and Personal Service Applications (cont.)
Wireless telemedicine—use of mobile telecommunications infrastructures and multimedia technologies to provide medical information and deliver health care services remotely Other services for consumers Providing news, weather, and sports reports Online language translations Information bout tourist attractions (hours, prices) Emergency services Prentice Hall, 2003

56 Mobile Consumer and Personal Service Applications (cont.)
Non-Internet consumer applications Smart cards used in transportation “Contactless” cards (proximity cards) used to pay bus and subway fares and road tolls Amplified remote-sensing cards have an RF (radio frequency) of up to 30 meters used for toll collection Prentice Hall, 2003

57 Highway 91 Project (cont.)
Six express toll lanes along a 10–mile stretch in the median of the existing Highway 91 Express lane system has only one entrance and one exit, and it is totally operated with EC technologies Prentice Hall, 2003

58 Highway 91 Project (cont.)
The system works: Only prepaid subscribers can drive on the road Large sign over the toll way tells drivers current fee for cruising the express lanes Sensors in the pavement let the toll way computer know that a car has entered; the car does not need to slow or stop AVI makes radio contact with a transceiver installed above the lane Prentice Hall, 2003

59 Highway 91 Project (cont.)
The transceiver relays the car’s identity to the control center, where a computer calculates the fee for that day’s trip Surveillance cameras record the license numbers of cars without AVIs—can be stopped by police at the exit or fined by mail Video cameras along the toll way enable managers to keep tabs on traffic System accesses the driver’s account and the fare is automatically deducted from the driver’s prepaid account Prentice Hall, 2003

60 Highway 91 Project (cont.)
System saves commuters between 40 and 90 minutes each day, so it is in high demand Use of the same AVIs for other purposes: Used in paid parking lots Someday you may be recognized when you enter the drive-through lane of McDonalds and a voice asks you, “Mr. Smart, do you want your usual meal today?” Prentice Hall, 2003

61 Location-Based Commerce
Location-based commerce (L-commerce)—e-commerce applications provided to customers based on a user’s specific location Location-based technologies Global positioning systems—a wireless system that uses satellites to enable users to determine their position anywhere on the earth Geographical information systems (GIS)—relates longitude and latitude of GPS into place or address ( GPS on handsets—stand-alone units for tracking applications Prentice Hall, 2003

62 Exhibit 8.14 Location-Based Services Involving Maps
Prentice Hall, 2003

63 Exhibit 8.15 GPS System Prentice Hall, 2003

64 L-Commerce Applications (cont.)
E-911—Calls from cellular phones to providers of emergency services Wireless carriers must provide feature that allows them to identify number and location of the user Mobile 911 calls must be forwarded immediately to the appropriate agency Automatic crash notification (ACN)—device (now experimental) that will automatically notify police of a vehicular accident Prentice Hall, 2003

65 Telematics and Telemetry Applications
Telematics—integration of computers and wireless communications to improve information flow using the principles of telemetry GM OnStar system—cellular phone and PDA are integrated to provide personal information management, mobile Internet services, entertainment on the vehicle vehicle dashboard Sophisticated text-to-speech and voice recognition capabilities minimize driver distraction Prentice Hall, 2003

66 Telematics and Telemetry Applications (cont.)
Use as a remote vehicle self-diagnostics tool Daimler-Chrysler and Volvo experimented with installation of GSM chip sets in cars Monitor performance and to provide an early warning system for potential problems Chip sends a message to the manufacturer indicating what the problem is Manufacturer’s system analyzes various data and provides a fix (via a software tool) Developing faults found before they become critical and continuous operation of the car can be ensured Prentice Hall, 2003

67 Barriers to L-Commerce
The accuracy of some of the location technologies The cost-benefit justification M-spam The bandwidth of GSM networks Prentice Hall, 2003

68 Limitations of M-Commerce
Usability problem Usability of a site is critical to attract attention and retain user stickiness Effectiveness, efficiency, satisfaction Some mobile devices are found to be ineffective Customers want to find exactly what they are looking for, easily and quickly, not possible in the 2G text-based environment More and faster multimedia will be available as 3G spreads Prentice Hall, 2003

69 Technical Limitations
Lack of standardized security protocol Security methodology needs to be incorporated in mobile Customer confidence is low Insufficient bandwidth Limits the extent to which mobility can be viewed commodity 3G licenses Auctioned by governments Certain countries cannot be served by these devices Transmission & power consumption limitations Multipath interference Weather and terrain problems Distance-limited connections Prentice Hall, 2003

70 Technical Limitations (cont.)
WAP limitations Speed—in 2002 connections to WAP sites are still too slow Cost—fees for mobile phone users are still too high Accessibility—as of spring 2002, fewer than 50,000 WAP-accessible sites worldwide (must be written in WML) Prentice Hall, 2003

71 Technical Limitations (cont.)
Potential health hazards Fear of radiation Unsafe to drive and use wireless phone Cell phones may interfere with sensitive medical devices (pacemakers) Lawsuits relating to the potential health hazards of wireless devices have already been filed—public is advised to adopt a precautionary approach in using mobile phones (earphone device) Prentice Hall, 2003

72 Implementing M-Commerce
Revenue models Payment clearing Hosting fees Certification (PKI) fees Basic (fixed) fees Point-of-traffic fees Transaction fees Content and service charges Prentice Hall, 2003

73 Implementing M-Commerce (cont.)
Consumer confidence and trust Customers love free or inexpensive services like those offered by iMode Customers not willing to pay large amounts of money for services unless they trust the product/vendor Confidence should increase with reliable payment mechanisms Research is being conducted in this area Prentice Hall, 2003

74 Implementing M-Commerce (cont.)
M-commerce value chain Involves many partners Success depends on Coordination among participants Sufficient compensation for all Use ASP to deliver m-commerce or Large companies contract other vendors to complement their services Prentice Hall, 2003

75 Managerial Issues What is our timetable? Which applications first?
Is it real or just a buzzword? Which system to use? Prentice Hall, 2003

76 Summary Characteristics and attributes of m-commerce
Drivers of m-commerce Supporting technologies Wireless standards and technologies Finance and marketing applications Intrabusiness applications B2B applications Consumer applications Non-Internet applications L-commerce Limitations of m-commerce Prentice Hall, 2003

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