mcommerce

FROM E-COMMERCE TO M-COMMERCE: RESEARCH DIRECTIONS
February 2001

Franz Lehner
Department of Business Informatics
University of Regensburg
D-93040 Regensburg
Germany
Phone: ++49-941-943-3201 Fax: ++49-941-943-3211 franz.lehner@wiwi.uni-regensburg.de Richard T. Watson
Department of MIS
Terry College of Business
University of Georgia
Athens, GA 30602-6237
USA
Phone: 706.542.3706 Fax: 706.583.0037 rwatson@terry.uga.edu ABSTRACT

1.

INTRODUCTION

Even though mobile business (or short: m-commerce) and mobile commerce (or short: m-commerce) are currently the mostly used terms in business literature, there is none – or almost none – appropriate and/or satisfying definition for either one. What is even worse is the vast amount of terminology that is used synonymously, including terms such as “mobile electronic commerce”, “wireless electronic commerce”, or simply “wireless”.
Durlacher (1999) defines m-commerce as “any transaction with a monetary value that is conducted via a mobile telecommunication network.” Similar to any traditional definition of e-commerce, the focus lies on the exchange of products and services that is associated with a monetary value. A distinction, however, can be made in terms of the technology used. In the mobile context, mobile telecommunication networks substitute the Internet as the underlying driver and enabler.

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Author Name, Chapter Number

Skiba et al. (2000) take a slightly different approach and define m-commerce as “the use of mobile hand-held devices to communicate, inform, transact and using text and data via connection to public or private networks”. They specifically list any kind of service that can be provided by the mobile device, thus, expanding the mere commercial character through communicative and informative services.
The two dominant global communication networks are the Internet and the GSM1
(global system for mobile communications) cell phone system. The Internet currently has about 375 million users (eTForecasts 2000), and GSM has around 400 million customers in 158 countries (GSM Association 2000). Informal observation suggests that the majority of the attention of IS researchers has focused on Internet-based business
(i.e., e-commerce) and that until recently GSM-based commerce (i.e., m-commerce) has been relatively neglected. In this paper, we set out to give m-commerce research a boost by establishing a conceptual framework for mapping this relatively unexplored territory. According to Diebold Mobile (e)Commerce is defined in a very broad sense to include all services that can be initiated over mobile devices such as a mobile telephone, PDA by a laptop or from an automobile. This includes among others (TimeLabs/Diebold
2000):
•

Voice telephony

•

Communication-based services (messaging, bulletin boards...)

•

Mobile Internet including services over WAP

•

Mobile data

•

Mobile payments

•

Services over local radio systems like Bluetooth

In terms of business models, mobile commerce (MC) includes relations between customers, operators, ecommerce providers, payment providers, and other parties. bandwidth (KBit/sec)

year
1. Generation 2. Generation 3. Generation
4. Generation
1 GSM is not the only cell phone technology, but because of its universality we focus attention on it. Our comments
GSM
GPRS
UMTS
... and analysis should apply to other cell phone technologies.

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Author Name, Chapter Number

Figure 1.
There is a growing number of publications on MC sometimes labeled as research. But most of this work should be better called market studies or benchmarks. They highlight different aspects such as the number of prospective consumers, the estimated market volume, etc which do not really provide deeper insights. Well known sources for this kind of information are Arthur D. Little, Ovum, Durlacher, Merrill Lynch, Gartner,
Forrester and others. They all try to estimate the perspectives of the mobile market(s) by using figures on mobile phone penetration, SMS usage, mobile internet access etc. Many of the remaining publications are technically oriented or just surveys (for an overview see e.g. Prasad et al. 2000, Muller-Veerse 2000, Webb 1999, Leong et al. 1999, Hansmann et al. 2001). So what we are generally missing are concepts and guidelines for developing the mobile business, which something the MIS field can undertake. It is the purpose of this paper to contribute to a solution by providing a structured view of the major areas from a business point of view.
MC is an important topic for IS scholars because it forces us to confront some new IS issues and revisit some old. For example, cell phones are used by poorly educated and even illiterate people, a segment significantly different from the well-educated whitecollar workers that are so often the subjects of concern. Cell phones have an aural, tactile, and visual interface, whereas the bulk of IS research has focused on visual interfaces. Mobility is another issue that has not traditionally concerned IS researchers, whose investigations have predominantly occurred within the office. When an information technology affects new populations with a new interface in new places, IS researchers are venturing into uncharted waters. How do we start to explore this terra incognita? In this paper we provide a series of models for exploring the major research issues in m-commerce.
2.

PROSPECTIVE RESEARCH FRAMEWORKS

There are several ways to come to an overview of the research field in a certain domain.
One may be a systematic and methodological approach (e.g., a Delphi study) compiling the expert knowledge within a community. Another way might be a systematic survey of the literature and digging for open questions, unsolved problems or applications to be developed. Both ways seem not appropriate in the case of MC. The main reason is time. The field of MC is rather new and rapidly changing. So the community building process is in a very early phase and not many serious publications with a business focus are available.
At this point we should remember the relation between mobile and electronic commerce. Of course we can reduce the discussion to a question of definitions. This position is not very helpful and even shortsighted. It denies that MC is an emergent field with its own set of concepts and relationships. The reduced view of understanding
MC as just another electronic marketing channel is understandable from a strategic or
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Author Name, Chapter Number

marketing point of view. It is not, however, really a help for understanding this new field and even less for supporting practice with reliable data and insights. This does not mean that we will not have one common view (or more of them) in the near future. An impression of this possible future is given in a short essay on U-commerce by Watson
(2000). But before this becomes reality we have to elaborate theories, models and appliances of practical use. In short, MC is different because of the equipment, the application and the infrastructure currently used. It is this difference that makes research directions necessary. And it should not be forgotten at this point that there is still a high economic risk in the mobile business and it is not clear who will be the key players in the next decade.
A first attempt to structure the research field is the hex model by Straub and Watson
(2000). It is used to explain e-commerce from a stakeholders perspective. This model covers the basic interactions with various stakeholders whereby the organizations are linked by the supply-chain or further intermediaries. Further models presented in the next sections of this paper concentrate on MC services, MC market players, and the value chain. Beyond this background we suggest to follow a structural approach. This structural approach is related to the need for something similar to a landscape or a map presenting the relevant areas in a context (dependencies, relations etc.). In other words, there is a need for a general model allowing the integration of partial research results and supporting an incremental process of knowledge accumulation. A preliminary attempt is made after the comparison and discussion of the models already mentioned.
3.

A STAKEHOLDER PERSPECTIVE

The stakeholder perspective uses a broad definition of MC based on a prior definition of e-commerce (see Watson et al. 2000). Mobile commerce is the use of cell phone technology for communications and transactions between an organization and its various stakeholders to improve organizational performance. Stakeholders include customers, suppliers, governments, financial institutions, managers, employees, and the public at large.
Increasing profitability, gaining market share, improving customer service, and delivering products faster are some of the organizational performance gains possible with m-commerce.
The hexagonal model describes the organization 's interactions with various stakeholders (see figure 2) developed by Straub and Watson (2000). In their model, the firm is shown to interact with six stakeholders, namely: (1) suppliers or (2) intermediaries, (3) customers (4) government, (5) employees, and (6) investors.

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Author Name, Chapter Number

Investor

Supplier/ intermediary Government

Supplier/ intermediary Firm

Employee

Investor

Customer

Government

Firm

Employee

Supplier/ intermediary Customer

Figure 2. Hexagonal (Hex) Model of Firm Interactions
The hex model indicates the communication and transaction relationships that can potentially be investigated. For example, researchers could study the issues involved in
GSM communications between a firm and its investors. In identifying and exploring the research issues posed for each relationship, we concentrate on the goals that a firm is likely to pursue. In the case of the firm/investor relationship, the firm is most likely to be seeking to lower its cost of capital. It is the research questions raised by these relationships that are the dominant focus for the remainder of this section (see Table 1).
Table 1: Stakeholder-driven research issues (Straub and Watson, 2000)
Stakeholder

Firm’s goal

Research questions and issues Investor

Minimize the cost of

How does a mobile information service make a firm a more attractive investment proposition?

capital.

What information do mobile investors want to pull and what do they want pushed? Government

5

Reduce the cost of complying with government regulations.

How can mobile technology reduce the cost of transferring information to governments?

Author Name, Chapter Number

Influence government decision making.

How does mobile technology increase the buying power?

Increase market share and share of a customer.

What mobiles information services do customers value? How can customization increase switching costs?

Maximize revenue.
Employee

How can mobile technology reduce supplier/intermediary coordination and information sharing?

Retain customers.

Customer

Reduce transaction costs.

Reduce raw material costs.

Supplier/Intermediary

How can mobile technology be used to influence political and public opinion?

What business model maximizes revenue?

Increase employee productivity. What organizational tasks can be leveraged by mobile information services?
What is the ROI on mobile information services for employees? Share knowledge across the How to design and deliver organization. mobile information systems that make knowledge accessible when and where required? The research questions raised in Table 1 are, we believe, central issues for IS researchers studying MC. They are large in scope and consequently unlikely to be answered in a single study. We believe a program of research will be more successful when driven by a top down approach, as this enables a comprehensive investigation to be planned. Key issues can be explored using multiple methods (e.g., experiments to studying the relationship between information and an investor’s opinion of a firm to field studies of employee directed mobile information systems).

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Author Name, Chapter Number

4.

MC SERVICES AND APPLICATIONS PERSPECTIVE

The growing number of mobile applications leads to a demand for classification as it is almost impossible currently to oversee the whole range of products and services. The framework suggested offers a functional view on mobile applications and services. A main aspect of this view is supporting the creation of a company specific portfolio. The model presented in Figure 4 is a first attempt to classifying existing and future applications. The underlying idea is that all these applications will be supported by either information, communication or transaction processes or any combination of these. The basic processes can be seen as „constructors“ on an architectural level. Figure
3 therefore can be used to explain mechanisms or constructions on a higher level. Some of the applications in Figure 3 represent something like a clean-state application but most of them combine several basic processes.

M-e-Bill
M-Salary
M-Advertising
M-Information Services

information process M-Navigation
M-CRM
M-Health Care
M-Car Care

M-Retailing
M-Ticketing
M-Reservations
M-Betting
M-Banking
M-Brokerage
M-Auctions

M-Entertainment

communication process transaction process M-Payment
M-cash

Figure 3. Underlying Processes

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Author Name, Chapter Number

Entertainment
•Music
•Games
•Graphics
•Video

Comunication / Interaction
•Short messaging
•Unified messaging
•E-mail
•Chatrooms
•Video-conferencing

Further applications and services •Search and investigation
•Value added services
•Tracking

Applications in
Mobile Commerce
Transactions
•Banking
•Brokering
•Shopping
•Auctions
•Betting
•Booking & Reservation
•Mobile wallet

Remote control and decision support
•mobile devices as control devices •Automotive applications

Information and data access
•News
•City Guides
•Directory Services
•Maps
•Traffic and weather
•Corporate Information
•Market data

Figure 4. Classification of Mobile Commerce and Mobile Applications

Relevant research fields are:
•

Identification of future applications

•

Business development and success factors of mobile applications

•

Business models

•

Interactions between e- and m-commerce

•

User profiling and attractiveness of mobile portals

•

Mobile customer relationship management

Of course, the previous classification scheme is not the only way to structuring the emerging and dynamic field of mobile applications. Figure 5 shows an alternative view which uses dimensions well known from electronic commerce.

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Author Name, Chapter Number

Goods

Services

Content

C2C
Point-of-Purchase
Support for B&M

Interactive Games
Gambling

Auction Trading

Booking/Ticketing
Services

Advertisement

Vending

Banking/Trading

Needs based content

Procurement
JIT systems

E-Promotions/
Loyalty Schemes
Market Research

Interactive Chat
Discussion

Customer Support

Ads / Need based content B2C

B2B

Cross-Media Content

Auction/Exchange
Trading

Figure 5. Wireless Commerce Applications (Kannan et al. 2001)
There will be some overlaps between the different perspectives as well as within the models used to classify the growing number of applications.
Finally a more technical approach focuses on how to develop, implement and test these systems. This leads to several research areas which are very specific and sometimes connected to certain devices. For example, the presentation of information (audio, video, text, graphics) not only depends on the information and the task context but also on device properties (display size) and the technical restrictions (bandwidth) of the underlying network. The following enumeration lists selected research problems:
•

mobile engineering and mobile application development

•

style guides and usability tests

•

mobile content management

•

mobile access to data (data bases)

•

tool support

•

security mechanisms

•

standards and protocols

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Author Name, Chapter Number

5.

MC MARKET PLAYERS (INSTITUTIONAL) PERSPECTIVE

The institutional perspective helps to identify and supervise market segments, market shares, their growth or decline as well as the relationships between key players in this field. Figure 7 presents an overview which has been adapted from Ovum and similar sources. Of course, the companies in this market cannot be seen only as independent units. They interact with each other and one way to visualize the interactions is the value chain perspective. Also the stakeholder perspective is of importance and provides interesting insights in the relations between different market participants and segments. Finally, a very interesting approach is the so called MC life cycle as proposed by Varshney/Vetter
(2001). This MC life cycle depicts the flows and interactions between highly specialized firms in the mobile business.
Apps

Applications
Developers

Contents

Content
Providers

Equipments

Other Service
Providers

Contents
Transaction
Request

Equipment
Vendors

Equipments

Equipments

Wireless Service
Provider

App Interface
Information

Transaction
Response

App Input

Users

Figure 6. Mobile Commerce Life Cycle according to Varshney/Vetter (2001)

Relevant research questions and problems from an institutional or market players perspective are:
•

Which alliances will be useful and what are the driving forces for cooperation?

•

Interactions between mobile market players

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Author Name, Chapter Number

•

National differences (e.g., in regulations, adoption or diffusion of technologies or standards) •

General market models on a macro level

•

What needs for national or international regulations can be derived?

•

Educational needs / mobile professionals

Network infrastructure operator infrastructure providers
•Networkuser base
•Customer information
•Authentication Authorisation
/
•Non-Repudiation
•billing/ Payment processing
•Brand

Device Manufacturer
· Interface design
· Brand

Key Players in
Mobile Commerce
Content Aggregators and
Content Providers
•Brand
•Aggregation
•Search
/Selection delivery
•User base

Wireless Application
Service Providers
(WASPs)

Equipment and
Infrastructure Vendors

FinancialServices Provider
(Primary Service Provider)
•Authentication
/Authorisation
•Non-repudiation
•Payment processing
•User base

Application Developers
Other Service Providers,
System Integrators
•Customisation
•Experience / Consultancy
•Installed Infrastructure

Government
Regulation Autorities
Standardization Groups and Initiatives

Figure 7. Key Players in Mobile Commerce

6.

DISCUSSION AND FINAL REMARKS

The key focus of the hex model is the firm that uses e-commerce for its business. This makes the model generally valuable for explaining mobile commerce as well and allows the formulation of questions and research directions for each stakeholder´s view. But the model has also disadvantages because it does not cover the whole field and thus important aspects might be forgotten. What about the core industry (network supplier, equipment producer, ASPs, equipment vendors, standardization organisations or service provider) for instance? Even in these cases the hex model may be used to identify stakeholders and their possible interest. But is this the superior view, as these organizations are engaged in the mobile business in different ways? This brings us back

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to traditional views like the value chain or business models which serve as very general instruments for explaining different businesses. The hex model is nevertheless quite useful and the research questions listed by Straub and Watson (2000) could be adapted to the mobile business without major problems.
The models presented in this paper can be seen as part of an open MC framework which will support systematic investigations and prevent the design of proprietary products and services in an ad-hoc manner. We believe that these models can lead to new insights because they provide a systematic basis for investigation in the sense of a research framework. It is expected that their application will lead to improvements in the interoperability between applications and better interactions between firms in the mobile business.

References

Durlacher (1999) “Mobile Commerce Report” Durlacher Research Ltd. http://www.durlacher.com eTForecasts. 2000. Internet user forecast by country: executive summary.
GSM Association. 2000. Half a billion customers in sight for GSM - the world 's leading wireless system.
Hansmann, U., Merk, L., Nicklous, M. S., Stober, Th. 2001. Pervasive Computing
Handbook. Springer Publ. Comp., Berlin/New York et al.
Kannan, P. K., Chang, Ai-Mei, Whinston, Andrew B. 2001. Wireless Commerce:
Marketing Issues and Possibilities. In: Proceedings of the 34th Hawaii
International Conference on System Sciences 2001
Leong, Hong Va, Lee, Wang-Chien, Li Yin, Bo Li (Eds.): Mobile Data Access.
Proceedings of the First International Conference MDA´99, Springer, Berlin et al.
1999
Muller-Veerse, N. J. 2000. IP Convergence: The Next Revolution in
Telecommunications. Artech House, Boston/London.
Prasad, Ramjee, Mohr, Werner, Konhäuser, Walter (eds). 2000. Third Generation Mobile
Communication Systems. Artech House, Boston/London.

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Author Name, Chapter Number

Skiba, Brian, Johnson, Mairi, Dillon, Michael (2000) “Moving In Mobile Media Mode.”
Lehman Brothers, 2000, http://www.entsoftware.com, Access date: 09/14/00.
Straub, Detmar W., and Richard T. Watson. 2000. Key issues in researching IT and electronic commerce: Georgia State University.
TIMElabs/Diebold (ed.). 2000. Winning in Mobile eMarkets. Zukunftslabor TIMElabs,
Diebold Deutschland GmbH, Frankfurter Str. 27, D-65760 Eschborn
Varshney, Upkar, Vetter, Ron: A Framework for the Emerging Mobile Commerce
Applications. 2001. In: Proceedings of the 34th Hawaii International Conference on System Sciences 2001
Watson, Richard T. 2000. U-Commerce: The Ultimate. Ubiquity, http://www.acm.org/ubiquity/views/r_watson_1.html. Watson, Richard T., Pierre Berthon, Leyland F. Pitt, and George M. Zinkhan. 2000.
Electronic commerce: the strategic perspective. Fort Worth, TX: Dryden.
Webb, William. 1999. The complete wireless communications professional. Artech
House, Boston/London.

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References: Durlacher (1999) “Mobile Commerce Report” Durlacher Research Ltd. GSM Association. 2000. Half a billion customers in sight for GSM - the world 's leading wireless system. Hansmann, U., Merk, L., Nicklous, M. S., Stober, Th. 2001. Pervasive Computing Handbook Kannan, P. K., Chang, Ai-Mei, Whinston, Andrew B. 2001. Wireless Commerce: Marketing Issues and Possibilities Prasad, Ramjee, Mohr, Werner, Konhäuser, Walter (eds). 2000. Third Generation Mobile Communication Systems Skiba, Brian, Johnson, Mairi, Dillon, Michael (2000) “Moving In Mobile Media Mode.” Lehman Brothers, 2000, http://www.entsoftware.com, Access date: 09/14/00. Straub, Detmar W., and Richard T. Watson. 2000. Key issues in researching IT and electronic commerce: Georgia State University. TIMElabs/Diebold (ed.). 2000. Winning in Mobile eMarkets. Zukunftslabor TIMElabs, Diebold Deutschland GmbH, Frankfurter Str Watson, Richard T., Pierre Berthon, Leyland F. Pitt, and George M. Zinkhan. 2000. Webb, William. 1999. The complete wireless communications professional. Artech House, Boston/London.