Originally published on July 31, 2000 and brought to you today as a time capsule.
New data from Forrester Research (Nasdaq: FORR) shows that while the U.S. market for wireless has the potential to reach the heights that other areas of the world are enjoying, most Americans remain uninterested.
According to Forrester, many Americans have yet to buy into cellular technology. Less than half of U.S. households subscribe to a cellular service, and 34 percent of householders say they are unlikely to buy any cellular devices.
Looking at the small percentage of Americans who say they are interested in mobile Internet access, 69 percent said they would rather use personal digital assistants than mobile phones to log on to the Web.
However, the study does claim that there is “latent demand” for Internet-enabled mobile phones.
“Consumers don’t think they want the wireless Web yet, but they will,” said Patrick Callinan, a researcher with Forrester.
The relatively small wireless Internet penetration in the U.S. bucks the trend in other parts of the world, particularly in Japan, where Internet-enabled cell phone technology is superior. Interest is also exploding in parts of Europe.
The Forrester study, which analyzed the habits of 9,000 Americans and Canadians, said the U.S. industry must follow four rules of “latent demand,” which it defined as “demand for a technology product or service that consumers are unable to define in advance of using it.”
To cultivate demand, companies must find new ways that complement old Internet usage, build on existing technology, better understand consumer needs and expectations, and create niche market opportunities like their foreign counterparts, the study suggested.
Revenues To Soar
Earlier this month, an Ovum survey predicted that global revenues from wireless Internet portals will rise from US$747 million in 2000 to $42 billion in 2005.
Accordingly, Forrester said the U.S. market will be affected by the worldwide interest and by the Asian and European success stories. “The mad adoption of wireless technology in Japan and Europe provides North American developers with confidence that their turn is just around the corner,” the report said.
Too Little, Too Soon
The Ovum survey indicated that growth will start slowly, but increase rapidly after the year 2001, when next-generation wireless technology, called 3G, begins to replace the current Wireless Application Protocol (WAP). Mobile phone users who access the Internet under WAP have complained about small screens, slow bandwidth, digit-only keypads and other inconveniences.
Japanese companies have been successfully luring subscribers to the wireless Web through the use of “i-mode” technology, considered vastly superior to WAP.
The mobile phone market, especially in the U.S., has other problems.
The Forrester study shows that two-thirds of North American consumers are reluctant to make purchases using Internet cell phones, although the study also points out it took two years for online shoppers to grow accustomed to buying on the Internet with their PCs.
The industry has also suffered a health scare, with reports of possible complications arising from radiation levels emitted from cell phone handsets. Although manufacturers say limits fall within acceptable limits, the World Health Organization in June called for further testing.
The Cellular Telecommunications Industry Association recently announced plans to require certain models of mobile phones to carry information regarding radiation levels.
In addition, the National Highway Traffic Safety Administration said “driver distraction” from cell phones and other devices are responsible for a great number of car crashes. A variety of studies have consistently shown cell phone users in autos have higher accident rates, and some lawmakers are calling for restricted use.