Today's Wireless Environment, Tomorrow's Bookings

Today’s wireless investment, tomorrow’s bookings? Winning by Sharing Leon Benjamin, Co-founder, DestiCorp Ltd [email_address] – May 2002

Introduction

Leon Benjamin, co-founded DestiCorp with Anna Pollock in 2001

DestiCorp is

A “thinking” consultancy, that develops innovative concepts, models and applications for the travel and tourism industry

Pragmatists and practitioners who guide our clients through the turbulent waters of change and dislocation with clarity and concrete action

Our ‘mantra’ is “Winning by Sharing”

Leon Benjamin: leon@desticorp.com – May 2002

Objectives

Provide insight into wireless activity in Europe and how it is reconfiguring traditional business

Describe the prevalent and emerging distribution and revenue models

Discuss how tourism providers can exploit the wireless space

……… ..and why this can only be achieved by a profound shift in thinking

Presentation Structure

Profile the technology landscape trends

Convergence

Location-based services

Wi-Fi

Assess the business landscape

Market dynamics

New business models

Describe the key components of a wireless distribution strategy

Connectivity, Community, Content and Commerce

Winning by sharing

Technology Landscape

The European mobile phone statistics make attractive reading

40-75% penetration of mobile phones (Italy & Finland, Iceland now officially the highest with 76%)

76 mobile operators in Europe (10 major’s dominate)

100% penetration in Western Europe by 2006 (Pyramid Research) – that’s 350m people!

178 countries now have GSM

Globally, 167m new subscribers in last 12 months

Strong uptake of GPRS (always on) services

13% of all mobile phone users in the Western Europe (that’s 40 million) will be using GPRS mobile data services by the end of 2003 (Source: Analysys)

By the end of 2003, however, non-commercial users could outnumber enterprise users, accounting for 80% of GPRS users

Technology Landscape

SMS is still the dominant (data) revenue generator for operators

10% of total service revenues

Billions of text messages every month – Global Q1 2002 75bn, projected total for 2002 360bn

In Europe, 90% of these messages are person-to-person with only 10% machine or application to person

Instant Messaging (IM) is the ‘next big thing’ and cannot be ignored.

1 in 6 mobile users in Europe currently using IM

50 million users worldwide

Exploding into the corporate world (100,000 IBMers sending over 1m messages a day)

GPRS and a new standard called Session Initiation Protocol (SIP) will bring about ‘SMS size’ revenue for operators

SIP ties together email, voice, and messaging

Enables SMS-IM and IM-SMS chat over wireless networks

Market Drivers

What do we as consumers want and need?

We’re information dependent, especially so for travel consumers

We’re task oriented

Choosing a destination

Finding a hotel

Booking a flight

Listening to the news or our favourite music

Keeping contact with home or office

Increasingly, we’re multi-tasking

We don’t sit still

Market Drivers

Consumers are increasingly mobile

Need to cut the physical ties that bind them to home or office

Shouldn’t need a check list an arm’s length before leaving home or office:

Have I diverted my home phone number?

Is the answering machine on?

Have I packed my modem cable?

What’s the access code for my ISP dial-up?

Have I synchronised my address book?

I shouldn’t need to carry a sackful of appliances

My computer and work-related files

A PDA for contacts and to do lists

A stereo, music player

Mobile phone

Market Drivers have created….

1. The convergence of appliances

Computer, phone, MP3 player, billing device, browser

2. Location-based services

Relevant information, when and where we want it and determined by our location

3. Always on – everywhere – and FAST(!) connectivity

4. Now we’ll make conscious choices about connecting, soon it will be unconscious, pervasive

Ambient connectivity

1. Convergence

Devices are converging and morphing into wireless and voice enabled Personal Digital Assistants (PDAs)

Palm still dominant with 47% global market share

Microsoft Pocket PC based devices second behind Palm in Europe….and gaining – Compaq iPaq, HP Jornada

eTForecasts in its report "Worldwide PDA Markets", expects explosive growth in the form of PDA-phones, a Web cell phone with PDA functionality or vice versa

Worldwide PDA sales to jump from 12 million devices in 2000 to more than 61 million in 2007

They will be multifunction devices with built-in Internet access, digital camera, music player, scanner and other functionality

The hardware capabilities of a typical 2007 PDA will be similar to a 2001 low-end PC!

Convergent Devices Leon Benjamin: leon@desticorp.com – May 2002 Siemens Java PDA phone MMO2 (Cellnet) XDA Pocket PC PDA phone Handspring Treo PDA phone Palm OS Personal Trusted Devices (PTD)

2. Location Based Services

A person’s location sets the context for service delivery

Be relevant

Information and services should be Pulled not Pushed!

Online business directories and destination databases are ineffective without geo-coded data (Scoot, Yell, D&B)

There is a massive focus on Location Based Services (LBS)

Network operators (huge future revenue)

Galileo GPS

Webraska, Schlumberger

Geo-coding service providers

Whereonearth.com (UK) can geo-code data to virtually every city in the world (including Jakarta)

TerraSeek.com in the US

3. Continuous, Ubiquitous & FAST!

Wi-Fi (Wide Fidelity) networks, or WLANs have literally exploded and emerged as the single most significant development in wireless technology

Wi-Fi networks are short range (100m) wireless LANs running at 10mbps

They enable laptops & PDA’s to connect to the internet by sharing a broadband connection

Cost 300-500 Euros to implement

Disruptive technology

Cheap

Effective, useful

Out of control

Could severely impede the European investment in 3G

Let’s see why

Wi-Fi - Travel Example Leon Benjamin: leon@desticorp.com – May 2002

More on Wi-Fi

Most of Hawaii is now ‘wired’ with Wi-Fi

“ Island of wireless guerrillas”

Individuals are (re)-charging their neighbours to share their broadband

Companies like Joltage.com and Boingo.com are providing a payment and global publishing platform to enable the contractual elements

Anyone can become an ISP serving small local communities

Giving rise to Network Area Neighbourhoods (NANs) and Customer Owned Networks (CONs?)

In the US the FCC will soon sanction next generation Wi-Fi that will operate at higher speeds and greater distances (miles)

Wi-Fi and the Gaming Sector

Sony built a virtual reality gaming facility off the coast of San Diego in 1999 - Norrath

Can accommodate 1m visitors per year

Gamers can participate using their PCs at home but need a broadband connection so Wi-Fi being used from remote areas

Wi-Fi took this game from relative obscurity to 100,000 online at any given moment in time

Sony derives $3.6m revenue per month from this community

Norrath’s per capita income is roughly between Russia and Bulgaria

Put another way, the 77th richest country in the world

Wi-Fi and Conferences

Conference Facilities will be equipped with Wi-Fi

Attendees will be able to:

Listen,

Publish web logs in real time to share their responses with the world;

send pictures, instant transcripts,

field questions from non-attendees

Research veracity of speakers’ statement

Make e-appointments for F2F meetings with fellow delegates

Conference as community (an event pulsating in time and space) involving a web of relationships

Technology Landscape - Conclusions

There is massive “liquidity” in the wireless space

Users, devices, services, coverage

Location and context is everything

Our entire surroundings are the interface to the network

Where the TV turns itself down when our phone rings!

The creation of a wireless “Digital Canopy” – Wi-Fi, GSM, Internet, Bluetooth

There is a steep learning curve for any tourism or travel provider – and it’s changing all the time

The emergence of standards and intermediaries (distribution brokers) will enable tourism providers to concentrate on their core competency and content

Current Business Activity

Confusing, very dynamic and fluid!

Market activity comprises

Mobile technology platform providers

Mobile portals – network operators

Point solutions deployed by large corporates and travel organisations

Payment/ billing solutions

Technology Providers

Infrastructure provided by the ‘usual suspects’

Nokia, Ericsson, Motorola

Gateway products that deliver content, applications, provisioning

OpenWave, Phone.com, Aether Systems, Passcall, Airflash, Brience

Air2Web platform used by Best Western

Customer self-service solutions

eCRM

Autodesk Location Services has announced a location-enabled Short Messaging Service and MMS (Multi Media Messaging) solution

Short command for retrieving hotel options based on location. With a suitable PDA/phone, a traveler would be able to view photographs of the hotel's facilities.

Mobile Portals

Every operator has one!

Vizzavi (Vodafone & Vivendi), O 2 (BT Genie), Telia, Sonera, MobilStar, T-Plus, DT

Every major web portal has one!

MSN, AOL, Yahoo, Tiscali

Lots of ‘pure play’ portals and ASPs

AvantGo, Breathe, Room33, Aspective

The manufacturers are in on the act too

Nokia Club – a community portal

Sony Ericsson

Mobile Portals

They have common features

Content – news, stocks, weather, music, etc

Logos and ring tones

These mobile portals are not really making money

Content is largely free

SMS is mostly person-to-person

Cannot live by advertising, ring tones and logos alone

Vizzavi has now invested around £1 billion, revenues from services are in the low millions (£1-3m)

The core revenue model is based around sharing traffic revenues generated by end user ‘pull’ of content

Very successful for NTT DoCoMo (iMode)

Point Solutions – Content providers

Corporate Solutions

United Airlines EasyUpdate feature offers Mileage Plus passengers latest travel information via the Web, a wireless device, or telephone, at any point on their journey

CabinLINK, an in-flight, e-mail and Internet browsing service for corporate and private airline passengers, Tenzing collaborating with Singapore Airlines and Air Canada

BA check in services (WAP)

Variety of wireless based eTicketing

UK, Odeon WAP booking service

UK, Hull City Council collaborating with Ericsson to deploy first mobile car parking payment scheme

Smaller travel/tourism related service providers

Kizoom – for UK rail timetable

0800taxi.com – UK taxi cab firm database (WAP/SMS)

Payment Models

Frost & Sullivan prediction: Electronic commerce conducted via mobile devices such as phones and PDAs will take off over the next few years to become a US$25 billion market worldwide by 2006. M-commerce will account for 15 percent of the world's online commerce in sectors including;

automated point-of-sale payments (vending machines, parking meters and ticket machines)

attended point-of-sale payments (shop counters, taxis)

mobile-assisted Internet payments (fixed Internet sites using phone instead of credit card) – Reverse Billing

peer-to-peer payments between individuals

Payment Models

Micropayment applications are key and there is huge activity in this area

Reverse billing: Jupiter predicts that by 2006 consumers will spend 3.3bn Euros using mobiles as a content billing platform

Nochex & Payhound (email money)

Paypal, Compaq’s Millicent

BT Microbilling – services on your blue bill

Vodafone mobile wallet (macropayment solution)

Freedompay, Nokia & MacDonalds in the US – “burgers by cell phone”

Egold.com, Goldmoney.com

Pre-pay or post-pay? Subscription or pay-as-use?

Business plan to provide offer both methods

Wireless Distribution Strategy

So how does a tourism provider exploit the wireless channel?

How do you enrich the customer experience?

What are the key steps to get there?

How do you reduce transaction costs?

How do you minimise the risk of failure?

Wireless Distribution Strategy

Shift Your Thinking, Change Your Perspective from:

Enterprise to Business Web

Product to Customer

Competition to Collaboration

Push to Pull

Controlling to Enabling

Destination Web

A Destination Web © is an electronically inter-connected community of autonomous but interdependent, travel-related enterprises that collaborate in order to provide value to visitors, profit for providers and partners and benefits to the host community. DestiCorp

Listening to the Customer (Cluetrain)

Markets consist of conversations

“ A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter—and getting smarter faster than most companies”

People in networked markets have figured out that they get far better information and support from one another than from vendors

Companies that don’t realise their markets are now networked person-to-person, getting smarter as a result and are deeply joined in conversation are missing an opportunity

Communities that Converse

Why create these communities? They are being taken seriously outside travel

Hallmark cards created a ‘listening’ community to understand how its customers celebrate Valentine’s and discovered a chasm between the fantasy they sell in their cards and what people really do

“ revolutionize our understanding of how people learn and how market research should be conducted”

Hallmark is reducing the risk of getting it wrong by asking its customers what they want – this is helping it triple sales over the next 5 years

Proctor & Gamble with PG.com also created a listening platform that

captures better insights faster

builds advocates for our products

provides feedback that contains “disproportionately rich ideas”

There are many thousands of these communities with a vast array of interests and subject areas

Travel with Kids.com

Sift with Travelmole.com & Ebay.com

Hermail.com

Put the Customer at the centre Leon Benjamin: leon@desticorp.com – May 2002

Pull Vs Push

Now your customer is able to pull an experience toward him/her

At the right time, location and context

Enabled by an interconnected Digital Canopy

We call it Winning by Sharing

The Destination as Community

DestiCorp believes that Destinations are in the best position to create these communities

Closest to the providers and the guests

Local knowledge & Relationship Capital

But they lack the skills and knowledge to implement them

A Destination based community should be a place where a guest can interact, before, during and after their trip

What’s happening here? Cool events? Good deals?

What have people said about this location and its services?

Who’s coming? Do they share my interests? What’s their IM address?

Can I share my experiences (blog)?

Create the conditions for emergent behaviour

“ You want us to pay? We want you to pay attention”

Five Essential Ingredients

Customers

Who are they; what task are they trying to complete?

Content

How can we deliver the content they need, when, where and how that’s relevant and convenient?

Community

What other providers and providers do I need to work with to satisfy my guests’ needs?

Commerce

How do I make the transaction profitable for all parties?

Connectivity

How do I make it possible to “converse” via multiple channels, touch points and provide seamless service?

Concluding Observations

This is a big, complex, very fast moving space!

It will be impossible to absorb and understand all of it – and you don’t need to!

Far more important will be your ability to collaborate

Internally in order to innovate

Externally in order to get the most from partners

Your focus on the customer

This will be about ‘plug-and-play’ business

Wireless is an important channel – but not the only channel

Final Thoughts

How do you compete in a world of perfect information?

Not by price but by perceived value

Through an obsession with the customer

By focusing on core competencies

Through collaboration

By building trust & reputation

Today’s wireless investment, tomorrow’s bookings?

Yes, but it’s a journey not an event

Successful internet businesses will be those that hunt in packs

Destizone.com

Global electronic community of industry leaders and thinking professionals

A gateway to further knowledge providing members with easy access to articles, books, reviews, discussion, experts

Engaged in all facets of the tourism industry willing to question, to learn, to share knowledge

Thank You Leon Benjamin: leon@desticorp.com – May 2002 Leon Benjamin, Co-founder, DestiCorp Ltd

Today's Wireless Environment, Tomorrow's Bookings

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