REPORT

Mobile Internet and Intranets: The Road Ahead for Corporate Applications
Extract from a report by Ovum, February 1998

Introduction A: Key findings and messages to suppliers B: Supply side developments C: Demand side survey   Introduction Although mobile voice services are now well established around the world, and the number of subscribers continues to grow healthily, the history of mobile data so far makes rather less cheerful reading. Mobile Internet and intranets are important because they represent the interaction of two of the fastest growing markets in telecommunications and may provide the impetus which will lift mobile data out of its specialist niche. Much of this report is about the user demand for mobile connectivity to Internet and intranets. However, this existing or latent demand will be tempered by the availability of products and services from operators and vendors, who face hard choices in how best to serve the developing demand for data connectivity. The development path from today's networks through to the third generation is a difficult and unclear one and the supply side will need to work hard if the potential for mobile data is not to suffer the fate of other seemingly golden technologies - ISDN is a close parallel to GSM data but its development history is in itself a good object lesson in how not to do things, with uptake in many countries dogged by operator uncertainty, incompatible standards and unimaginative marketing. A number of trends in telecommunications and computing are causing fundamental change, however. The rapid uptake of both mobile communications and datacommunications on the Internet create step changes in the telecommunications environment. At the same time, developments in terminals are providing users with portable computing devices of ever increasing power and decreasing size. The combination of Internet technology with mobile connectivity holds out the prospect of the marriage of two of the biggest and fastest growing markets in telecommunications. Meeting the problems this combination poses, and developing packages of services, terminals and applications which will delight users will be one of the key challenges to the mobile supply community over the next decade. This user survey indicates that, in large companies at least, mobile access to Internet and intranets are expected to become part of users' daily lives - if the right products and services are available.   A.  Key findings and messages to suppliers The demand side survey presented in section D contains a number of key findings on large corporate users' attitudes to scoping, implementing, using and managing mobile Internet and intranet access on behalf of their users. In this section we present the implications of the study for suppliers.   Still no globally accepted meaning of an intranet User views on the definition of an intranet remains wide. Suppliers will have to understand the breadth of this requirement in positioning solutions packages and working with other vendors. Intranet definitions will not remain static as fixed intranets develop additional functionality, such as transactions and conferencing.   Implementation of mobile Internet/ intranet services is planned, but lags that of the fixed services by 2 years Providing end users with mobile Internet access is an application task with some additional hardware. Providing mobile access to an intranet is amore complex infrastructure project, with a higher value assigned to the corporate information and applications resident on the intranet. Operators could act to cut this lag time by: using the corporate IT/telecoms departments as a distribution channel in terms of education on access performance and security partnering with systems integrators for critical applications work with IT vendors to ensure that mobile access is integral to intranet development tools.   Wider access to information is the main benefit Users expect better information access from both intranets and the Internet. This expectation, together with messaging applications to manage communications effectively, will form the basis of corporate demand during the early phases of corporate mobile Internet and intranet use. Operators have the opportunity to develop relationships now with key content and information providers and should investigate: dual branding with recognised content exclusive agreements for key business-oriented content and services - either generic information such as flight information, or industry specific information such as pharmaceuticals databases for low user base, high usage applications.   Main barriers are security and data rates.... ....Telecoms managers prefer traditional security measures Convincing users that mobile Internet and intranet access is secure is a key requirement. Users currently rely on password protection at the application level and third party security at the intranet firewall. Operators and vendors should put forward the strong messages about the inherent security of digital cellular. Concerns over data rates are linked with concerns over usage costs in a circuit-switched environment. Application response times are on aspect of the concern, session lengths another Operators and vendors should: work towards optimisation of data transport through data reformatting, data compression and spoofing to improve both response times and cost-effectiveness put forward the strong sales messages on competitive edge and cost effectiveness compared with, for example, hotel telephone rates.   Concerns over major barriers increase with use Problems with mobile access to Internet and intranet do not go away once the sale has been made. Users score key barriers higher than non-users, and concerns over security, performance and runaway costs will keep implementations at the pilot stage. Managing user expectations is one of the key challenges facing both operators and vendors. Operators and vendors should: provide effective after sales support to help with specific implementation issues and to keep users abreast of developments which would address their concerns. A good help line would be a minimum. Other initiatives might include user groups, co-ordinated web activities (the Mobile Data Initiative led by Intel is one example) or newsgroups. Compete on support encourage benchmarking pre- and post-implementation, allowing users to make a more rigorous assessment of the performance and cost effectiveness.   Demand drive is mainly decentralised with users being the key drivers.... ....Equipment purchase is now centralised End users and departments within the organisation are perceived as the key drivers of adoption by our survey. Rather than being a directed implementation from above, demand is driven from the user base. This has the effect of spreading the effort required on promotional activities. The barriers described earlier concerning security and data rates came from our sample of telecoms managers; earlier barriers from Ovum work on a larger sample of end users or potential users concentrated as much on having no real need for the solution. Purchasing of equipment is, however, centralised. promotional activity needs to be targeted at the technical and user communities alike. The user community will require convincing of the benefits of adopting mobile data The technical world, in addition, will have to be convinced of effectiveness, security and cost justification. operators and vendors should join joint promotional campaigns aimed at raising end user awareness, especially if they combine the credibility of key computing and communications companies vendor support to IT/telecoms department will be a key point of differentiation, assisting central staff to meet user demand operators and vendors should make it easy for individuals to trial data services.   Key applications are corporate email, web access and database access - there is no killer application Most users will use a variety of applications. This is entirely in line with earlier Ovum studies and with comparable work on generic networks such as ISDN. For equipment manufacturers and software vendors this means that: users will not be satisfied with single application devices integration with the PC desktop will be crucial flexibility without complexity in the interface is the difficult balance to strike. For operators: different applications will be optimised for different bearers. Bearer selection should be either easy at the application level, or transparent to the user, based on cost effectiveness and performance rules specified earlier during application setup service packages tailored to specific user groups will be important, requiring more efficient data user segmentation.   There’s a great deal of interest in mobile multimedia, 4 years before launch of third generation systems.... ....Fixed network services are superior to mobile network services on all criteria, particularly data rates and usage costs Users are already excited at the prospect of multimedia data services on third generation systems. With the massive increase in desktop computing power and the rise in fixed network user expectations of network performance will continue to rise. Fixed network performance will continue to set user expectations for performance, pricing, functionality and content. Cellular services are unlikely to keep pace with fixed network developments in the medium term and so the differential experienced by users will increase. Operators and vendors will need to: optimise application performance over network bearers be careful in managing user expectations, avoiding a "boom and bust" in mobile multimedia before capable networks are even in place. The failure of early PDA attempts is a good lesson in the dangers of raising hopes of fundamental change prematurely.   Users expect big growth in the use of third party applications, particularly electronic commerce and location dependent services Operators have the opportunity now to put the relationships in place to offer commerce and location-based services. In a similar way to content owners, operators should be talking to transaction specialists and to location-based information specialists Operators and vendors should work intensively with early adopters of both transaction and location technologies in order to produce the marketing collateral to stimulate broader demand.   Users currently expect to migrate to high speed circuit switched services rather than packet switched services in the future.... ....Users expect tariffing to be volume dependent not time dependent Two related but contradictory results reflect users' uncertainty over future bearer service development Users often say they are interested in tariffs, not technology. Operators should; manage user expectations proactively ensuring that user expectations match likely deployment develop segmentation-specific tariff packages for data services using a mix of bearers. Higher volume users will expect bundled packages to include data services.   The main users are managerial and professional workers Managerial and professional staff will form the bulk of early widespread adoption. Operators and vendors will need to: target promotional campaigns at high interest professional groups provide solid benefits messages such as strong messages on coverage, roaming and cost effectiveness make it easy for individuals to trial data services provide applications packages matched to the capabilities of the GSM network. End users will expect a high degree of integration with their existing applications.   Usage will grow from about 30-60 minutes per month per user to 1-2 hours per month in 2000.... ....Mobile Internet/ intranet will become part of daily life for users Usage is expected to grow strongly in terms of both frequency of access and total access time. Operators and vendors should ensure that: applications are scalable across user numbers and usage volumes in terms of both performance and management service packages are flexible enough to accommodate rapid rises in usage without creating a managerial barrier to further growth. Unconstrained costs are a major perceived barrier for IT and telecoms staff.   Users expect terminals to become more integrated A substantial proportion of respondents expect a higher degree of integration in their computing and communications terminals, but vendors should also ensure: a high degree of PC desktop compatibility minimal complexity in the interface a range of product forms - full integration will not be appropriate for all users.   Mobile operators are the suppliers of choice. However as complexity increases, so will the importance of system integrators.... ....A good supplier is characterised by reliability, quality and price .... ....Users want Internet/intranet included in corporate deals Users recognise the benefits of expertise in managing complexity, but key requirements are still hygiene factors such as quality, reliability and price. Operators and vendors should: use systems integrators as a key channel to market ensure that service and applications packages are scalable in terms of performance, management and pricing stress promotional messages on reliability and cost effectiveness.   Users will pay extra for high bandwidth services - but not much Users are unwilling to pay more simply for higher speed data transport; a price increment of 50% for 64 kbit/s transport over the current 9.6kbit/s would deter half the user base in our sample. However, low tariffs and flat rate packages will undoubtedly be difficult for operators at a time when existing networks are threatened with capacity constraints Operators will need to: investigate more sophisticated tariffing, based on perceived value rather than simple traffic concentrate promotional messages on added value in the applications whilst stressing that data transport is not cost-prohibitive.   B: Supply side developments Introduction Although mobile voice services are now well established around the world, and the number of subscribers continues to grow healthily, the history of mobile data makes rather less cheerful reading. Mobile Internet and intranets are important because they represent the interaction of two of the fastest growing markets in telecommunications and may provide the impetus which will lift mobile data out of its specialist niche. Much of this report is about the user demand for mobile connectivity to Internet and intranets. However, this existing or latent demand will be tempered by the availability of products and services from operators and vendors, who face hard choices in how best to serve the developing demand for data connectivity. The development path from today's networks through to the third generation is a difficult and unclear one and the supply side will need to work hard if the potential for mobile data is not to suffer the fate of other seemingly golden technologies - ISDN is a close parallel to GSM data but its development history is in itself a good object lesson in how not to do things, with uptake in many countries dogged by operator uncertainty, incompatible standards and unimaginative marketing.   B2 Why is mobile Internet/ intranet important? Like videoconferencing, mobile data has long been viewed as one of those market areas with huge untapped potential. And, like videoconferencing, there it has remained, with disappointing uptake failing to match optimistic projections. A number of reasons have contributed to this relatively slow growth: lack of perceived user value particularly in the minds of the general business user community where changes in user behaviour can take a long time and a significant effort in raising market awareness. a perception that airtime charges made data usage uneconomic at the data rates available complexity and incompatibility in equipment and software a lack of product and service packages aimed at the average portable PC user Mobile datacommunications has until relatively recently been the province of companies using dedicated technologies for specific purposes, or keen technology acolytes willing to bear the cost and complexity. However, a number of strands of development in recent years means that the picture is changing: cellular network developments the scale of adoption of GSM provides a fundamental discontinuity in the mobile environment, providing a platform for the deployment of widespread services and applications, particularly as enhancements to basic systems start to provide higher speed data services Internet today the Internet is widely known and used for work and leisure alike. Its growth has been phenomenal and its importance lies as much in changing attitudes to the use of communications technology as in any single piece of functionality it provides. Its power lies in its flexibility, allowing the same basic infrastructure to power a range of applications, from basic messaging to multimedia conferencing intranet the corporate world has been quick to see the potential benefits of and adopt Internet technologies as a way of enabling access to corporate information and the construction of virtual communities within the organisation. terminals laptops are currently the most important mobile computing terminal, but this is changing, as smaller product forms begin to meet the functionality requirements of mobile users, in terms of interface, weight, size and battery power Smart phones and handheld devices will play a large role in facilitating work for an increasingly mobile workforce (much of this section of the report was written on a Psion Series 5, for example) Peripherals such as PCMCIA cards provide a standard interface for mobile devices and commonality in software is increasingly the norm changing work patterns increasingly, sections of the workforce are working flexibly from home or on the move. Much of the demand seen for mobile connectivity comes from professional and managerial groups who need to remain connected to their core information and contacts whilst away from base. Mobile Internet/intranet will form a core component of this connectivity. The combination of Internet technology with mobile connectivity holds out the prospect of the marriage of two of the biggest and fastest growing markets in telecommunications. Meeting the problems this combination poses, and developing packages of services, terminals and applications which will delight users will be one of the key challenges to the mobile supply community over the next decade.   B3 Supply side issues Network issues The end goal for most network operators is to offer a seamless range of services to their different customer segments. User requirements must be matched to technology offerings over time and this will result in some hard decisions about network upgrades and migration. Figure B1 outlines the generic choices facing GSM operators today. In addition to questions of capacity limitations for voice services on current systems, operators must also factor in the potential development of new data-based revenue streams. Operators face either the investment cost of upgrading their current systems to cope with higher speed data, through either HSCSD or GPRS, or the opportunity cost of doing nothing and waiting for third generation systems to become available. Even these choices are not static as the further development of modulation techniques holds out the potential for even higher data rates on enhanced GSM systems.   Figure B1 Operator choices for GSM upgrades Source Ovum Ltd: Third Generation Mobile Systems Report, 1997 High Speed Circuit Switched Data (HSCSD) HSCSD is an enhancement of the current circuit-switched operation of GSM being developed for speeds higher than the current 9.6Kbit/s. It will provide circuit switched data at speeds up to 76Kbit/s. Operators will need to upgrade their current systems to cope with the use of multiple time slots and similar functionality will be required in the terminals. When HSCSD is combined with public ISDN networks, it offers very fast set-up times and high quality transmission as the transfer of data is completely digital. Implementation is likely during 1998.   General Packet Radio Services (GPRS) The second development path that will provide higher bandwidth over GSM is GPRS. It will introduce the capability to support mobile packet data on GSM and will operate at speeds ranging from 14Kbit/s to 115Kbit/s. We expect GPRS to be introduced in 1999. As GPRS is a packet technology, it will be more suited for bursty data applications, such as e-mail and database access services and connectivity with TCP/IP networks. GPRS uses the network more efficiently than circuit switched data as the same radio resources are shared by more than one user in a cell. However, supporting GPRS will require significant investments by operators to upgrade their networks, because a packet architecture is used, rather than the existing circuit switched infrastructure. This upgrade will take the form of GPRS support nodes (GSNs), either to support users or acts as a gateway to external packet networks such as the Internet. The operator will also require some form of GPRS backbone network. The GSNs act essentially as routers with mobility management. In addition, modifications to the air interface to manage the shared radio resource will require enhancements to both the infrastructure and terminals. The decisions on the migration route taken towards third generation networks will depend on three key areas: capacity constraints on existing systems demand for access to Internet/intranet and other data applications level of market competition. The higher the level of each of these factors, the higher the incentive to go for an early adoption of some solution. Operators will then have to balance: expected demand the ability of any GSM upgrade path to meet the functionality and service requirements of expected demand the ability of implementations of GSM upgrades to seed the market for third generation services the risk that a GSM upgrade will be a substitute for, or delay implementation of, third generation systems interests in roaming capabilities for key user groups. New entrants in the developing world may, paradoxically, be able to adopt a fast track approach to the development of third generation systems, as rapid increases in demand and the lack of legacy investment both drive and stimulate investment.   Terminal Issues Terminal developments will be crucial in establishing the ease of use and user satisfaction with mobile data services. The simple issues of weight, size and interface will continue to rank high but users are increasingly considering integration of functionality as a move away from today's laptop + mobile phone paradigm. Terminal vendors will also face big decisions in the development and marketing of integrated and multimode terminals. The next few years will see considerable experimentation with product form and functionality as vendors from both the phone and computer camps attempt to integrate successful packages of functionality for different user segments. The embedded systems market will also become more important as low speed data is used for telemetry and command/control functions - often in conjunction with location technology. Beyond the ever-present issues of size, weight, display and battery life, there are several issues which will influence the development of terminals: multiple terminals or a single device? multiple terminals per user will become the norm multimode terminals no single mode terminal type will provide the connectivity required for all users. We expect that multimode terminals will become the norm, particularly in the run-up to third generation disintegration of hardware and software increasingly the software required to enable and control mobile applications is becoming decoupled from the manufacture of individual devices.   Software issues The development of software environments for mobile applications is becoming increasingly uncoupled from the production of terminals. Commonality is seen as a virtue and proprietary functionality a sin. A number of significant developments characterise this development.   Windows CE and Java The development of handheld devices based on common operating environments will grow. A number of manufacturers have developed devices around Microsoft's Windows CE operating system, and Java shows potential to enable functionality on mobile devices.   WAP (Wireless Application Protocol) A multivendor approach to the development of wireless application support, founded by Ericsson, Nokia, Motorola and Unwired Planet. The group aims to enable the development of wireless applications, removing the proprietary protocol barriers by proposing open, network-independent scalable protocols based on existing standards such as HTML.   Middleware will be a key requirement for corporate solutions The mobile world presents a significant and specific set of challenges. In the mobile environment, many of the rules of traditional data processing are broken. The parameters of a mobile data session, in terms of available bandwidth, delays, security requirements and addressing are different from a typical session on an in-house LAN. Wireless transmissions are severely bandwidth-constrained, with data speeds on GSM, for example, currently limited to 9.6kbit/s. Delays on packet services are variable, which means that applications cannot count on data packets arriving within a set time frame, and the delays may exceed the time-outs for LAN-based applications, causing the application session to fail. Vendors can use a variety of techniques to get around some of the limitations of mobile networks. These include: data compression which cuts down the number of bits to be transmitted over the network, improving information throughput spoofing spoofing keeps those applications running which require a constant flow of information or acknowledgements. Both the client and server software will generate messages to keep their session alive as long as needed, without transmitting data over the wide area intelligent restarts Mobile calls are prone to dropout, where the call is lost because of a network problem, usually a loss of signal. This is annoying during a voice conversation, but is potentially catastrophic for a data session. Middleware products for mobile users often have the ability to sense when such an interruption has occurred, bring the call back up and restart the session where it left off, rather than requiring the user to start at the beginning again agents software agents provide a mechanism for getting tasks performed for mobile users outside the normal client-server interactions. Agents can perform monitoring tasks or information retrieval tasks whilst the remote user is offline, and make contact when the task is done and the response is ready to be sent to the user.   Security Security is a major issue in mobile connectivity and in addition to application level security based on passwords, a good deal of work is currently underway to provide security and authentication of mobile IP links using tunnelling protocols   C: Demand side survey If you would like the full version of this report, please contact Clare McCarthy at Ovum (cmc@ovum.com, Tel:+44 171 312 7218) C1 Introduction C2 Definition of an intranet C2 Implementation of Internet and intranet services C3 Benefits of mobile Internet and intranet C4 Barriers to mobile Internet and intranet C5 Decision-making process C6 Applications C7 Users and usage C8 Equipment C9 Management issues and suppliers     About Ovum Ovum Ovum is an independent research and consulting company offering clear, authoritative advice on IT and telecoms markets. Respected for our unbiased analysis of key market, technical and regulatory developments, we deliver the facts and vision - without the hype. With over 10 years of experience, we have a dynamic growth record of 30% per annum. We are an international company with offices in London, Boston and Melbourne. Our 50 expert analysts provide reports, continuous information services, and consulting services to over 6,500 clients worldwide.   Ovum’s mobile and satellite group The Mobile and Satellite Group specialises in providing expert information and advice on mobile communications, including: Cellular and cordless communications Fixed mobile convergence LEOs, MEOs and GEOs Location dependent services Mobile data and Internet Third generation mobile. We provide this information via: Market reports Mobile@Ovum, an advisory service Bespoke consulting assignments. Our key clients include mobile network operators, satellite mobile operators, equipment manufacturers and regulators.