Wireless Internet May Be Next Big Thing

Asian consumer portals may face the fate of being squeezed out of the market competition without developing a wireless Internet strategy.

Internet user growth in all Asia-Pacific countries is still exceeding most forecasts, and revenues are now beginning to gather momentum as well, judging by results announced by some of Asia's leading Internet companies.

In Asia, the wireless Internet assumes significantly greater importance than in the United States because of the high penetration rates for mobile devices relative to those of the personal computers (PC), said an Internet research report of the Salomon Smith Barney (SSB).

The International Data Corporation predicts that the number of wireless Internet users in Asia will rise at a compound average growth rate (CAGR) of 324 percent over 1999-2003, to reach 137 million. This far exceeds the 49 percent CAGR for the number of wireline Internet users, which is expected to hit 96 million in 2003.

In China alone, China Mobile, formerly known as China Telecom, estimates that the users of WAP-enabled cellphone, which provides wireless access to Internet, will reach about 800,000 by the end of 2000 and 4 million by the end of 2001.

Email is an example that best shows the importance of a multi-access offering. Consumers want to access the same email address whether it is via their PC, laptop, mobile phone, personal digital assistant or interactive TV.

"Incumbent portals that do not react to the overall convergence may be the extinct dinosaurs of tomorrow," the report said.

Many leading Asian consumer portals are rapidly making the first moves to ensure they are not left behind in the wireless Internet land grab, but the battle for customer ownership will be fierce and only a few wireless Internet portals and even fewer multi-access portals will survive several years from now.

Leading Chinese portals like sina.com and china.com have set up partnership with mobile phone companies like Ericsson, Siemens and Motorola to deliver services including email, stock quotes, weather, news, city guide and even auction.

SSB pointed out that, in terms of wireless devices, cellphone will dominate the wireless device population, and, in terms of products and services, wireless Internet is still at such an early stage of development that business models are still fuzzy and many current offerings are simple and generic.

However, the advent of 3G cellular technology, with its wider bandwidth, will enable wireless broadband Internet access and bring a whole new array of services to the market, it predicted.

It is imperative for the incumbent wireline portals to extend their offerings through the wireless Internet though many of them currently see the wireless Internet as another channel to reach and service their customers rather than as a significant revenue contributor, according to Pete Hitchen, SSB's Regional Internet Research Analyst, and Pratik Gupta, SSB's Head of Regional Internet Research.

Those who fail to do so risk customer churn and, consequently, a weaker bottom line, they said.





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