Hewlett-Packard was not the first technology company to recognise the potential of the Internet, and it was not the first technology company to embrace mobile Internet services. But when it realised the potential of mobile data it made a sizeable investment and at a recent mobile e-services briefing at its mobile bazaar in Helsinki, the company made it clear that it intends to throw even more weight behind cellular services.
The motivation is astounding growth figures for mobile phone usage. According to HP, there were eight million mobile phone subscribers worldwide in 1995, compared to 16 million Internet users. In 1999 Internet usage grew to 240 million people, but 480 million people used mobile phones. The one-billionth mobile phone user is expected to connect to a network by 2002 or earlier.
Sheer numbers aside, the relationship between human and phone also holds promise. "The handset has already become the single most important and valued thing a person carries," says Peter Vesterbacka, a business development manager at the bazaar. Everyone involved in mobile services agrees that consumers are willing to pay for the same wireless services that they would expect to be free on the Internet. Cellphone users are conditioned to pay for calls and short messages, while the Internet has at its roots a tradition of free information.
There is another difference between wireless and traditional Internet, Vesterbacka says. On mobile, it is about business, not information. "We are moving towards a model where it is all about the transaction. It is not about browsing and surfing, it is about a payable transaction."
Idea incubators
The Mobile E-services Bazaar in Helsinki and its sister-projects in Singapore, Tokyo and Palo Alto are designed to take advantage of the intersection between the three parts HP says the mobile future will consist of: appliances, infrastructure and e-services. HP has plans for the appliance sector and is already seeing increased demand for infrastructure, where stratospheric profits are eventually expected. But it all depends on services.
"We believe the services will drive the mobile marketplace," says Larry Sellin, director of worldwide operations for the event`s programme. "Demand will be driven by the cool new services that become available."
The bazaars function as incubators of such ideas. It makes technology from the likes of partners Nokia and Motorola available to start-up companies, including prototypes of new devices and previews of software. It also provides sales, marketing and business support to small companies, up to and including finding venture capital to match bright ideas.
Companies that use the bazaar in their development include the likes of Springtoys, a designer of interactive games for mobile devices. "We have this idea for a universal catching game, where you just go around the world catching people with your mobile phone showing you who to catch," says co-founder and CEO Panu Mustonen.
Or there is Arcus Software, which wants to deliver interactive, textured three-dimensional city maps to mobile phones. "Bandwidth is still somewhat of an obstacle," admits CEO Akif Ali.
It is companies like these that HP wants to nurture and advance as rapidly as possible, in an adaptation of the crack-dealer strategy used by so many Internet companies: show people services they simply cannot resist and ride the wave as demand surges.
"Our value doesn`t just come from the technology," says Steve Muddiman, GM of HP e-services for the EMEA region. "Our job is to continue to aggregate services." He says any new Internet service must, to succeed in the long run, be adapted for mobile use even before it is launched. HP has the clout and resources to spread that message.
Appliances on the way
While creating demand for its hardware is part of the strategy, HP is not adverse to directly sharing in the riches it expects the e-services segment to generate. "The money is to be made in services. That is where the margin is," says Muddiman.
But HP says it will derive revenue from support services and providing solutions for the time being and invest in promising start-ups when they have matured somewhat. It says there is still room in the devices market too.
The company is focusing its energies on mobile phone services for the moment, and says it does not have the experience to develop phones, but as mobile data becomes more important than mobile voice it will have a role to play. "All the talk is about PDAs [personal digital assistants], but if you look at the numbers it seems the centre of gravity may be somewhere else," says the bazaar`s Vesterbacka.
Wolfram Fischer, VP and GM of sales, marketing, service and support in Europe, promises that HP will participate in what is at the moment the more esoteric consumer devices market. "You will see a lot of PDA-like tools from HP, only different, and you will see a lot of voice recognition devices."
A relationship with Swatch also holds the promise of Internet-enabled watches.
Fischer acknowledges that the Wireless Application Protocol (WAP) incarnation of mobile Internet services has disillusioned may users who believed the hype, but says the market will soon claw-back consumer confidence as new technologies prove themselves. "We are in the early innovation phase and there are problems to resolve. The technology was not stable, the phones and the network were not ready or designed for the Internet." After the leap from landlines to cellphones, he contends, anything else was bound to be a letdown.
"WAP is a disappointment because we don`t have the transport layer to make it work," says David Shirley, mobile computing European product marketing manager. "But imagine how it will be with GPRS [general packet-switched radio system]."
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