No future for WAP
- 27 August, 2000 23:00
WAP will never take off in the mainstream market despite phone companies' best efforts, says Australian telecommunications analyst Paul Budde.
“In the next year we’ll see 60 to 70% of all voice traffic going over mobile, but don’t expect to see WAP or GPRS services ever taking off.”
Budde says the cost of each service to the end-user coupled with a lack of real need for the services will see users turning away from WAP in droves.
“Are you really going to use your WAP phone to find an Italian restaurant in a strange city? Why bother when you can just ask the hotel staff or a local on the street?”
Budde says a number of services will be necessary, such as voice mail, call waiting and text messaging, but for users that want up-to-the-minute news or information, a pager service at $30 a month can provide all that and more in a much cheaper format.
“If I’m overseas using my WAP phone the cost will become prohibitive — I think it’s one of those things users say they would like but would never actually use.”
Budde says the market for WAP or WAP-like services is there, but it’s quite different to the one pushed by phone companies.
“Dedicated mobile services built around a business application will appear — a company’s sales team might use a contract package out in the field, that sort of thing.”
Budde can see these kinds of applications driving a niche WAP market of around 3% to 4% of the overall cellular market, but no more than that.
“That’s not a small market — in the next couple of years we’ll see the number of cellular users in New Zealand grow from around one million to around two million. That’s not a small market.”
Budde believes phone companies are pushing WAP services as a way of propping up declining revenue streams.
“The hardware companies, Nokia and Ericsson for example, have seen the price of a phone drop from $600 to $100. They need to sell more phones. The telcos have seen the price of a call plummet and need a new revenue stream as well.”
Budde says a new model will emerge in the cellular market - something he calls a “permission-based marketing model” - and it should mean consumer users won’t ever have to pay for a phone or phone call again.
“Every company wants to ‘capture’ customers. The Hyatt hotel, Farmers department store, Mercedes Benz - they all want to build relationships with the customer.”
Budde says these kinds of companies will offer free phones or calls in exchange for a closer relationship with the end customer.
“You may not be comfortable offering up all your demographic information to Mercedes because you don’t deal with them very often, but Farmers or the grocery store might not be a problem.”
These companies will gain valuable information about their customers as well as priority access to them. Customers will get free phones and connections. Only the telcos lose out — they lose access to and control over their end-users, but Budde says that isn’t stopping telcos in Australia and the US from adopting the model.
“By 2005 we’ll see 40% of cellphone users on such a plan.”