Wireless leaders get real

April 9, 2001: 5:29 p.m. ET

Business is futile if you know technology but don't know what customers want
By Clay Shirky

NEW YORK (CNNfn) - A song is making the rounds in the wireless world right now that goes a little like this: "WAP was over-hyped by the media, but we never expected it to be a big deal. The real wireless action is coming in the future, from things such as 3G and m-commerce. There is nothing wrong with what we are doing -- wireless is simply taking a while to develop, just as the Web did."

Don't believe it. The comparison between the early days of the Web and wireless is useful, but it is anything but favorable to wireless. The comparison actually highlights what has gone wrong with wireless data services so far, and how much ground the traditional wireless players are giving up to new competitors, who have a much better idea of what users want and a much longer history of giving it to them.

As anyone who was around in 1993 can tell you, the Web was useful right out of the box. Even in the days of the text-only Internet, Tim Berners-Lee's original Web browser blew the other text-only search tools such as Archie and Gopher right out of the water. Unlike WAP, the Web got to where it is today by being useful when it launched, and staying useful every single day since.

Contrast the early user experiences with wireless data. When makers of wireless phones first turned their efforts to data services, they proposed uses for the wireless Web that ranged from the unimaginative (weather forecasts) to the downright ghastly (ads that ring your phone when you walk by a store).

Because the phone companies thought they owned their customers, it never occurred to them that a numeric keypad and a tiny screen might not be adequate for e-mail. They seem to have actually believed that they had all the time in the world to develop their wireless data offerings -- after all, who could possibly challenge them? So they have allowed companies that understand flexible devices, such as Motorola (MOT: Research, Estimates) and Research in Motion (RIM: Research, Estimates), to walk away with the wireless email market, the once and future killer app(lication).

Wireless telecoms would like you to believe that these are all just growing pains, but there is another explanation for the current difficulties of the wireless sector: Telephone companies are not very good at producing anything but telephones. Everything about the telecoms-makers of inflexible hardware, with a form-factor optimized for voice, and notoriously bad customer service-suggests that they would be the last people on Earth you would trust to create a good experience with things such as wireless email or portable computing.

As always, the great exception here is NTT DoCoMo, which had the sense to embrace HTML (actually, a subset called compact HTML) and let anyone build content that its i-mode device could read. And NTT DoCoMo also made sure the services it provides do something its customers are interested in-and in many cases are willing to pay for.

The technology is not the difficult part of making useful wireless devices. The companies creating good wireless customer experiences-Research in Motion with its BlackBerry, Apple (AAPL: Research, Estimates) Computer with its AirPort wireless networking technology, and Motorola with its Talkabout-are companies that know how to create good customer experiences, period. If you know what customers want and how to give it to them, it is easier to go wireless than if you know only wireless technology and have to figure out what customers want.

Own worst enemies
The difficulties in the early days of wireless data had nothing to do with telecom companies needing time to develop their services. Instead, those difficulties were caused by those companies' determination to maintain a white-knuckled grip on their customers, a determination that made them unwilling to embrace existing standards or share revenue with potential affiliates. Ironically, this grip has made it easier, not more difficult, for competitors to muscle in, because the gap between what users want and what the telecoms were providing was so large.

The wireless sector is slowly melting, becoming part of lots of other businesses. If you want to know who will create a good wireless shopping experience, bet on Amazon.com (AMZN: Research, Estimates), not Ericsson (ERICY: Research, Estimates). If you want to know who will create the best m-commerce infrastructure, look to Citibank (C: Research, Estimates), not Nokia (NOK: Research, Estimates). Contrary to the suggestion that the wireless sector will live apart from the rest of the technology landscape, wireless is an adjective -- the things that make a good wireless personal digital assistant or a good wireless computer are very different from those that make a good wireless phone.

This is not to say there isn't a fortune to be made in supplying wireless phones. Nor is being a wireless network for BlackBerrys and Talkabouts a bad business; as I write this column, GoAmerica Communications (GOAM: Research, Estimates) is doing quite well.

But the real breakout wireless services are being launched not by the telecoms but by innovative device and service companies who think of wireless as a feature, not as an end in itself.