Wireless Web Is On The Phone

Handset makers, carriers and software firms work toward speedy broadband

Friday, July 20, 2001
By Peter Benesh
Investor's Business Daily

Forget the techno-jargon. Think, “Honey, I Shrunk the Internet.” The wireless industry believes you’ll want the Web on your cell phone’s tiny screen. And that you’ll be willing to pay for it.

For a year, as their rose-colored glasses turned gray, L.M. Ericsson AB (ERICY), Motorola Inc. (MOT) and even mighty Nokia Corp. (NOK) suffered shriveled earnings or losses in the handset business. But the three haven’t sat back wringing their hands.

While skeptics sneered, the companies forged on with plans for faster wireless networks and new handsets. The first of those, an always-on network, is about to start in Europe. It’s called 2.5G, or GPRS, for general packet radio service.

Its success will go a long way toward helping the wireless field rebound — or not. The handset makers, as well as wireless carriers and wireless software developers, are on a quest to build and sell 2.5 hardware and services. And they’re all scrambling to capture market share beyond 2.5. In the wings is 3G — third generation, a faster broadband system.

The software that the companies and many analysts say will put Web-based services on handsets is called Wireless Application Protocol. Almost all new cell phones are WAP-capable. 

WAP is a browser that whittles down Web pages to fit tiny screens, says Iain Gillott of iGillottResearch.

“On the desktop Internet you get all graphics, but what you need is just text,” Gillott said. “WAP gets you to just the core information.”

Based on the current 1.0 version, many analysts say WAP’s so clumsy that consumers will hate it. Proponents contend WAP 2.0 will transform wireless communications and give carriers new data services to sell.

Setting the pace in developing the WAP browser is Openwave Systems Inc. (OPWV), based in Redwood City, Calif. Openwave is the result of last year’s merger of Phone.com and Software.com.

It faces competition from Nokia, which has its own browser, says Gillott. “But Openwave is the gorilla of WAP,” he said.

WAP will make big money for the wireless industry, says Bruce Martin, Openwave’s vice president of product development. “It’s a technology that adds value to mobile devices, lets carriers add value and generates revenue per user,” Martin said. 

He says consumers will spend more time on their cell phones, thanks to WAP. That means more money for carriers.

Investors say Openwave has yet to prove itself. Its share price has fallen from more than 200 in March 2000 to about 20.

Still, its sales for the nine months ended March 31 rose 260% over the year-earlier period. On Monday, it reports results for its fiscal fourth quarter ended June 30. Twenty-three analysts polled by First Call/Thomson financial expect earnings of 10 cents a share, up from 9 cents last quarter.

Blame carriers and some analysts for WAP’s bad name, says Gillott. They created an impression that the full-blown Internet could work on a cell phone. “It’s unfair that WAP version 1.0 is being compared to version 6 of a desktop browser,” he said. “WAP 2.0 will mean a night-and-day difference.” 

Gillott isn’t alone.

“WAP has got a bad rap,” echoed Peter Friedland, an analyst with WR Hambrecht & Co. in San Francisco. 

WAP is the first breakthrough way to create a wireless Internet, Friedland says. 

“Let’s see what happens with 2.5G,” he said. “With more and more people keeping information on the Internet, access to it on mobile phone becomes more valuable.” 

Some critics say the content available on wireless devices isn’t worth having. That spills over into criticism of WAP itself, says Gillott. “It’s like saying the news on my Sony TV stinks, so Sony TVs stink.”

Gillott predicts that the fast 3G networks will make WAP indispensable to phone users who need data-a-go-go.

Not so, say others. In a recent study, the Shosteck Group, a consulting firm in Wheaton, Md., pooh-poohs the idea of GPRS as a WAP savior. 

“GPRS addresses the speed of access, not what is accessed,” wrote Jane Zweig, Shosteck’s chief executive. “Making the existing and generally quite poor WAP services easier to access will not, by itself, make (GPRS phones) substantially more attractive to subscribers.”

Another doubter is Jack Gold, an analyst with the Meta Group, a Stamford, Conn.-based consulting firm. GPRS won’t save WAP because cell phones are just too hard to use for Web services, he says. 

The Meta Group found that 80% to 90% of corporate users don’t use their WAP-enabled phones for on-screen information. Meta blames poor phone designs, weak content and slow networks.

WAP is driven by engineers, not consumers, says Jakob Nielsen of consulting firm the Nielsen Norman Group. People want easy-to-use, simple text messages, he says.

“Dick Tracy has taken over, trying to put two-way video on your wristwatch,” he said. “It’s an uphill struggle to try to make WAP work. It’s just not worth it compared to other alternatives.” 

One alternative, i-mode from Japan’s NTT DoCoMo, has swept its home market. It could converge with, or replace, WAP, analysts say. 

Nielsen says the success of the Blackberry, a text-based messaging device from Canada’s Research in Motion Ltd. (RIMM), shows what North American customers want.

They want fast, easy-to-read text, agrees Matthew Hoffman, an analyst for Wit SoundView Group Inc. in Stamford, Conn.

“The response time on WAP phones has gone from 15 seconds down to 3 to 4 seconds,” he said. “But even with GPRS, WAP is merely interesting. It’s not something consumers have to run out and get.” 

WAP won’t survive, Hoffman says. “WAP is transitional.”

The criticism leaves Martin unfazed. “The things that stand in the way of the second generation of WAP are being fixed,” he said. He promises it will debut by year-end.