An Indian Perspective On Mobile Commerce Computer Science Essay

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In the last few years, Mobile commerce has attracted considerable attention in India. It will enable millions of people around the world to access web information services easily. It is believed to be driving substantial changes in the way business is conducted in many industries, especially in information technology, telecommunications, and financial services. In this paper the importance of mobile commerce is argued because the m-commerce represents the extension of the Internet beyond the static terminal of the personal computers, or even the TV, into a more nimble, anytime, anywhere and anyplace context. We attempt to prepare a deep overview on mobile and mobile commerce in the Indian context. In this work we try to identify several most important Categories of M-commerce Applications amongst various sections society in last few years. This paper also explain the basic issue of mobile commerce to help business managers, specially those without IT background, to understand the impacts of mobile commerce on current businesses as well as to identify new business prospects in future. Finally, we'll look into the situations of the Mobile Telephony Market both in the world and India.

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Key words: Mobile commerce, Mobile VAS, Business organizations, wireless technologies, India

Introduction

Nowadays communication-centric and computing-centric devices are becoming a single intelligent wireless device. Peoples around the world are making use increasingly of electronic communications facilities in their daily lives. This mostly involves interactions between parties who have never formerly met. Consequently, communications networks of all kinds are being exploited in new path to conduct business, to facilitate remote working and to create other "virtual" shared environments.

Mobile is becoming the dominant means for accessing communications primarily because deploying mobile network is not only more cost-efficient but also mobile provides greater flexibility and convenience to its subscribers than landline telephone. (Sanjay, 2007) Mobile Commerce is the subset of e-commerce, which includes all e-commerce transactions, carried out using a mobile (hand held) device. (Sharma, 2009)

The booming popularity has forced the corporate world to develop a new commerce platform that can reach to masses. M-commerce has attracted massive traffic because of its unique characteristics. The user can change the service of any financial institute or banks if gets better product and service or user is unsatisfied with the service of the subscribing company. Mobile has played a giant role in communication technology through its versatility and superiority. The ubiquity and easy usage has further made it extremely popular across the globe. It has already surpassed the fixed phone in the world. Software platform is essential for operating any mobile and this tool has revolutionized the communication world because of its functioning as a small computer. (Kumar, 2009) Despite of massive popularity of m-commerce, it is yet in the primitive stage and can be further expand in to all the fields, which affect the human life. Also, Lack of trust is a remarkable factor influencing the uptake of m-commerce. Trust is significant during situations that are perceived to be risky, and Mobile commerce exposes consumers to new vulnerabilities and risks.

Aim of study:

This paper aims to:

Provide an overview of the fundamentals about mobile and mobile commerce.

Show the Perspective of Mobile Value- Added Service (MVAS) in India

Help businesses to define what benefits they could derive from mobile wireless technologies.

Show what are the categories of mobile commerce applications

understand the situation of the Indian mobile telephony market and mobile commerce

Research Approach

We have done a depth research to obtain as much as possible necessary data about the Mobile and Mobile Commerce. In this work, it has been used secondary sources of data collection such as the websites, Internet, magazines and books etc. by analyzing of historical data analysis, firm disclosure data, sector reports, and company case studies, it has been obtained so important information related to our research.

Concept of mobile commerce and mobile wireless technologies

According to the Gartner Group, consumer to business e-commerce will soon come from smart phones using mobile commerce technology. Many researchers suggested that next phase of electronic business growth will be in wireless and M-commerce (Ngai and Gunasekaran, 2007, Smith, 2006, O'Connell, 2005, Matthew, et al, 2004, Urbaczewskj,

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et al, 2003). To better understand the potential Effects of m-commerce on businesses, a quick review of definition and background information about it would be beneficial.

In general M-commerce is a natural successor to electronic commerce. (Au, 2007& Mahil, 2008) Ting (2004) believes that with the rapid proliferation of mobile devices, including handheld computers, mobile phones and PDAs [1] , mobile commerce is widely considered to be a driving force for next-generation electronic commerce. M-commerce should not be viewed as e-commerce with limitations, but rather as a unique form of e-commerce with its own unique benefits. (Scornavacca et, al., 2006) Additionally, m-commerce is not a substitute for Personal computers. Rather; it is a new and a much more powerful way to communicate with customers.

Time sensitivity, Intimacy, location awareness and ubiquity are key concepts that make m-commerce so different from 'traditional electronic commerce'. (Paavilainen, 2002) The other difference between m-commerce and e-commerce is the opportunity to connect information with objects in a more direct way than has been possible until now. (Mobile Commerce, 2008)

There is apparently no standard definition of the term "Mobile commerce". According to Lyytinen(2001), M-commerce, a subset of electronic commerce that  involves the use of mobile computing devices in carrying out different types of economic transactions (marketing, buying and selling products and services) or enabling them to take place over space and time. The mobile commerce includes use of such technologies as Bluetooth applications, SMS [2] services over a number of carriers (IS95 [3] , Global System for Mobile Communications (GSM), 3G [4] , W-CDMA [5] and CDMA [6] ), and the integration of low-level digital carriers to IP based services through Wireless Application Protocol or Compact HTML [7] like the Japanese I-Mode service. This integration is one of the fastest growing markets of E-business and it will involve the development and design of a host of new applications, services, business models and technological solutions.

On the other hand, Malladi et al. (2002) claimed that mobile wireless technologies including of 2 aspects (1) computing and (2) mobility. They believe that 'mobile computing represents users' continuous access to network resources without limitation of location and time. Wireless means that transmission of any form of data such as video text, picture, or voice- is conducted through infrared waves, microwaves or radio waves rather than using wires (Dubendorf, 2003). Therefore, mobile wireless technologies is defined as any wireless technology that uses radio frequency spectrum in any band to facilitate transmission of video, voice, text data, or multimedia services to mobile devices with freedom of location and time limitation.

The freedom of location and time is related to the concept of anywhere and anytime access that represents the two main characteristics of mobile wireless technologies: reach ability and mobility. (Camponovo and Pigneur, 2003; Turban, et al. 2002; Ng-Kruelle et al., 2002 and BenMoussa, 2005)

Perspective of Mobile Value- Added Service (MVAS) in India

Mobile phones have deeply transformed the telecommunication industry and they have been proclaimed to be the new service frontier. Mobile value-added services (MVAS) are those services that offer differentiation and the ability for mobile operators to charge a premium price.

Generally, Value Added Service (VAS) in telecommunication industry refers to non-core services, the core or basic services being standard voice calls and fax transmission including bearer services. The value added services are characterized as under:

Stands alone in terms of profitability and also stimulates incremental demand for core or basic services

Not a form of core or basic service but adds value in total service offering.

Can be add-on to core or basic service and as such can be sold at premium price.

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Can sometimes be provided as stand alone.

May provide operational synergy with core or basic services. (IAMAI, 2008)

A MVAS may illustrate one or more of these characteristics and not necessarily all of them. All the 'value added services' address some need of the end consumer whether it is monetary, convenience or psychological. Based on the need fulfillment of the end user, we have grouped Mobile value added services into seven phases respectively. Although, there are many services that could be called "value-added". But for better understand, we show briefly a few of these services below.

Graph 1: complexity of mobile value added services

SMS: stands for 'short message service'. It's also mostly referred to as text messaging or sending text messages. The service allows for short text messages to be sent from one cell phone to another cell phone and recently from the Web to another cell phone.

Indians use this service for all sorts of reasons from checking on flight status to enquiring about exam results to receiving jokes. (sinha, 2009) It's effective for getting the message out to potential customers or retaining existing ones. SMS is a powerful medium for getting in touch with people without soliciting a backlash as seen on phone calls. The graph below shows the number of SMS Usage in India - Gender Difference

Graph 2- SMS Usage in India - Gender Difference

It can be deciphered from the graph 2 that the Males are generally more active users of SMS value added services compared to their counterparts. While males are more interested in getting sports; stocks/finance/business and love tips, on the other hand females are interested in spiritual and astrology.

Information service: Mobile information services are considered 'value-added' because they depict many of the characteristics such as:

Can be offered at a premium price

Does not cannibalize existing services

Can provide synergy with basic service.

Provides differentiation (Singh, 2009)

Ringtones, Wallpaper and Graphic Download: Indian Mobile Network Operators (MNOs) are partnering with content providers to deliver information services on the go and downloadable services like ringtones, graphics, and wallpapers.

The market size in India of basic 'value added services' like wall papers and ring tones was around US $155 million in 2005. (kakani & Jackson, 2007)

Contest participation: Another popular service in Mobile VAS is Contest participation. For example, 30% of Urban Indians have participated in a SMS contest with Males being the more participative gender. (Vitalanalytics's, 2009) 59.5% of Females have participated in 1 to 3 SMS contests and though this is higher than their male counterparts (only 49%), in frequency of participation males outshine. Around 25% of male and 19% of Female have participated in 4 to 5 SMS contests. This is as per mobile users in April 2009.

Graph 3: SMS contest participation - Men and Women in urban India

Color ring back tone: It's one of the most successful enhanced services for wireless, and now wire line, service providers in India. Color ring back tone is a highly viral, self-propagating application that uses readily available content and can easily grow from $0 to millions in revenue in a few years. Since it is completely controlled and delivered by network-based signaling servers, CRBT has the advantage of allowing complete operator control with minimal customer and handset interaction.

Instead of hearing "the familiar ring tone" when calling someone, CRBT lets wireless service subscriber's play their favorite sound, jingle, tune, or phrase to incoming callers. (Dialogic, 2007) With the ability to choose the ring tone a caller will hear, subscribers have an instant way to express their own individuality and enterprises have the option to provide a customized message to the calling party.

Mobile commerce:

M-commerce, which in India has been limited primarily to basic banking transactions, purchase of travel tickets and payment of some utility bills, is finally taking off with banks, cellular operators and payment service providers coming together to find solutions that comply with regulatory guidelines. India is going through a telecom revolution, especially in the wireless telephony segment.

The adoption of mobile telephony remains unparallel in scope, as users from diverse segments increasingly choose to exercise the option of personal mobility. (IAMAI, 2006)

The growth of an infrastructure sector such as telecom has a multiplier-effect on the entire economy of the nation. Fortunately the telecom sector in India, since its liberalization in 1991, has registered an unprecedented growth and is therefore valued at $100bn today, contributing significantly (13%) to the GDP. Globally in terms of mobile subscriptions, India is the world's second largest wireless market after China. The following graph clearly shows the number of India mobile telephony subscriber base from 2004 to 2010.

Graph 4 shows the number of India mobile telephony subscriber base from 2004 to 2010

Data sources: (IAMAI, 2008; Telecom regulatory authority of India, 2010 & Afshar, et al, 2010)

The Mobile telecommunications system in India is the second largest in the world after China, with a subscriber base of more than 670 million and it was thrown open to private players in the 1990s. Government and several private players run local and long distance telephone services. Competition has caused prices to drop and calls across India are one of the cheapest in the world. The rates are supposed to go down further with new measures to be taken by the Information Ministry.  The mobile subscriber base has grown from 33.69 million subscribers in 2004 to over 670 million subscribers as of August 2010 (a period of less than 6 years). (Telecom regulatory authority of India, 2010)

Nevertheless in India, Mobile Commerce is still in the development phase as the use of mobile phones for carrying out transactions is very limited. However, the development is taking place at a nice speed and in the coming years, Mobile Commerce is most likely to make its presence feel as companies and businesses have started understanding the benefits of Mobile Commerce. Some of the companies have even incorporated this technology. Airtel, Vodaphone, ICICI and Reliance are some of the companies/businesses that are using this technology as their users are allowed to make limited purchases from their phones. For now, the users are mainly allowed to pay phone bills, utility bills, book movie tickets, book travel tickets with their cell phones. However, more services will be introduced in coming years.

Security is one of the major concerns of M-Commerce as it's very important to offer secure transactions and this is the reason why M-Commerce is still in the development phase in India. For now, users are mainly allowed to do Mobile Banking i.e. to access the bank account with a cell phone in order to pay the utility bills. With the current rate of development, users will be soon allowed to purchase products, advertise, to take part in auctions and pay bills with the help of a cell phone, while they are on the move.

Categories of Mobile Commerce Applications

Most of people have access to a mobile phone that to a computers and this means that Mobile commerce has the opportunity to connect not just big businesses but also medium and small business, consumer's and supplier's on a vast scale. In this sense, mobile phones have the potential to bridge the digital divide and allow organizations and individuals to reach out to one another more easily than ever before. (Mobile Commerce, 2008)

In last few years, M-commerce has gained increasing acceptance amongst various sections society. The reasons for its growth can be traced back to technological and demographical developments that have influenced many aspects of the socio-cultural behavior in today's world. Mobile phone and services have registered impressive growth in preceding years and M-commerce is slowly but surely showing signs of a healthy growth. (Hu, 2005; Gordon & Gebauer, 2001 and Sadeh, 2002) The major mobile commerce applications are briefly showed along with details of each in below Diagram.

Enterprise resource planning

(Resource management)

Travel and ticketing

(Travel management)

Entertainment

(Music/video downloads and online gaming)

Health care

(Accessing and updating patient records)

Traffic

(GPS and traffic advisories)

Education

(Mobile classrooms and labs)

Commerce

(Mobile transactions and payments)

Major mobile commerce applications

Diagram 1: Major mobile commerce applications

Commerce:

Commerce refers to the buying and selling of products and services between individuals and organizations, usually on a scale large enough to require transportation from place to place or across city, state, or national boundaries.

It is boosted by the convenience and ubiquity conveyed by mobile commerce technology. (Hu, 2005) There are many examples displaying how m-commerce is useful for commerce. For instance, mobile users can check their bank account balance without needing to go to a bank or consumers can buy products from a vending machine and book a ticket by using their mobile phones.

Education:

Similar to other wired technologies, mobile wireless technologies have first been used in industry sectors such as business. The movement of mobile wireless technologies in education is a recent trend, and it is now becoming the hottest technology in higher education (Levine, 2002; McGhee & Kozma, 2001; McKenzie, 2005).

Enterprise Resource Planning (ERP):

In the coming mobile commerce era, users will want to be able to have access to the right resources and work as efficiently as possible- whether they are traveling, seeing a customer or working at other remote locations- with their ERP systems (Siau et al., 2001). Many ERP vendors are currently researching for means to provide mobility to ERP users. They attempt to connect employees to their work more effectively than ever before by enabling mobile phones and other wireless devices to become a new kind of tool to seamlessly exchange information, automate data entry and perform a range of transactions anytime, anywhere (Siau and Shen, 2003).

Entertainment:

According to Leavitt (2003) Entertainment has always played a crucial role in Internet applications and is probably the most popular application for the younger generation. M-commerce makes it possible to download picture, game, music and video files at anywhere, anyplace and anytime, and it also makes on-line games and gambling much easier to access and play. It is projected that by 2005, 80 percent of all mobile users in the United States and Western Europe will play mobile games at least occasionally.

Health Care:

In most of societies the cost of health care is very high and m-commerce can help to reduce it. By using the technology of mobile commerce, nurses and physicians can remotely access and update patient records immediately, a function which has often incurred a considerable delay in the past. This reduces administrative overheads, enhances overall service quality, and improves efficiency and productivity. Mobile technologies like Laptops, Tablet PCs or PDAs can be of great value in hospitals and healthcare facilities by allowing better access to critical information - e.g. patient status, staff and patient location and facilities availability (Banitsas, 2002; Larkin 2001; Chau et al. 2004; Rowley 2005 and Varshney 2004). Healthcare facilities that choose to adopt such technologies may be able to not only perform better but ultimately provide more efficient and better quality of care for patients (Bahlman et al. 2005).

Travel and Ticketing:

Travel expenses can be costly for a business. Mobile commerce could help reduce operational costs by providing mobile travel management services to business travelers. It can be used to provide assistance to customers by using the mobile channels to locate a desired hotel nearby, purchase tickets, make transportation arrangements, and so on. It also extends the reach of relationship-oriented companies beyond their current channels and helps the mobile users to identify, attract, serve, and retain valuable customers. (Hu, 2005)

Traffic:

Traffic is the movement of vehicles or pedestrians through an area or along a route. The passengers in the vehicles and the pedestrians are all mobile objects, ideal clients of mobile commerce. Also, traffic control is usually a major headache for many metropolitan areas. Using the technology of mobile commerce can easily improve the flow of traffic in many ways. For example, a mobile handheld device can have the capabilities of a GPS [1] , such as determining the driver's exact position, giving directions, and advising on the current status of traffic in the area. A traffic control center could also monitor and control the traffic according to the signals sent from mobile devices in the vehicles.

Specific Advantages of Mobile Commerce to consumers

M-commerce is an effective and convenient way to deliver electronic commerce to consumers from anywhere and at anytime. Realizing the advantages to be gained from mobile commerce, many major companies have begun to offer mobile commerce options for their consumers in addition to the electronic commerce they already provide. (Yankee group, 2002) Generally, M-commerce has several major advantages to consumers:

Advantages of Mobile Commerce

Spontaneous decisions and need

Context-specific services

Efficiency increase

Time-critical situations

Graph 5: Specific Advantages of Mobile Commerce to consumers

Time-critical situations: The immediacy and ubiquity of M-Commerce allows user to perform urgent tasks in an efficient manner, irrespective of his current geographic location.

Context-specific services: M-Commerce makes it possible to offer location based services, which are specific to a given context (e.g. time of the day, location and the interests of the user). (Rajnish & Stephan, 2007)

Spontaneous decisions and need- Spontaneous needs are not externally triggered and generally involve decisions that do not require a very careful consideration, e.g. purchase decisions involving small amounts of money.

Efficiency increase: Mobile Commerce helps increase the productivity of the workforce by increasing the efficiency of their daily routines. Time (employees) can use 'dead spots' in the day, e.g. during the daily travel to and from workplace, more effectively.

Situation of Mobile Telephony Market in the world

Mobile phones are no longer just a means of calling another person. In several countries, mobile devices are used to pay for merchandise, receive time sensitive information and send e-mail messages. (Paavilainen, 2002) There is no doubt that mobile technologies have the potential to bring changes to businesses and industries. (Gordon, 2001) Despite the recent economic downturn, the use of ICT services, such as mobile phones and the Internet, continues to grow worldwide. By the end of 2009, there were an estimated 4.6 billion mobile cellular subscriptions, corresponding to 67 per 100 inhabitants globally. (International Telecommunication Union, 2010)

Table 2: List of countries by number of mobile phones in use

Rank

Country or region

Number of mobiles

Population

% of population

---

World

4,600,000,000

6,797,100,000

67.6

1

China

794,779,000

1,338,610,100

60.8

2

India

652,420,000

1,180,166,000

55.14

3

United States

285,610,580

308,505,000

91.0

4

Russia

213,900,000

141,940,000

147.3

5

Brazil

187,020,000

191,480,630

97.6

6

Indonesia

14,0,200,000

231,369,500

60.5

7

Japan

107,490,000

127,530,000

84.1

8

Germany

107,000,000

81,882,342

130.1

9

Pakistan

99,185,844

168,500,500

60.4

10

Italy

88,580,000

60,090,400

147.4

11

Mexico

83,500,000

111,212,000

75.0

12

United Kingdom

75,750,000

61,612,300

122.9

Resource: (Afshar et al, 2010)

According to above table, China's communications firms added a combined 9.255 million mobile customers in July (2010), ending the month with a total of 794.779 million mobile users. (Telecompaper, 2010) In India, Wireless subscriber base increased from 635.51 Million in June-2010 to 652.42 Million at the end of July-2010 registering a growth of 2.66%. Wireless Tel density stands at 55.14. (Telecom regulatory of India, 2010)

The number of mobile phone users in Brazil grew to 187 million in July (2010), according to the telecommunications regulator Anatel. In July, 1.89 million new users were added, an increase of 1.02 percent over June. In the first seven months of 2010 Brazil recorded 13.06 million new users, the second best result for this period in history, behind only the same period in 2008 (14.35 million). With the result in July, Brazil now has 97.6 mobile phone users for every 100 inhabitants. (Telecompaper, 2010)

The UK added over 3million new mobile connections during 2008, to take the total base to 75.75million, equivalent to 123% penetration. (Vodafone, 2008)

Status of the Indian Mobile Telephony Market

Mobile telephony was introduced in Indian markets in mid- 1990s. In the last few years, the sector has witnessed tremendous growth. The subscriber base is adding more and more customers every year. Both Public Players and Private Players are competing hard to capture more and more market share. It can be deciphered from the graph 6 that Private sector capture 78% of the market share in Indian mobile segment and public sector capture only 22%. The private sector has done more than expected.

Graph 6: share of Public and Private sector in Indian mobile segment

Conclusion

While e-commerce continues to see phenomenal growth in India, mobile commerce is still in its infancy. But, both the business world and the telecommunications industry are starting to see m-commerce as a major focus for the future. Indian Private and Public sections in telecommunications industry are competing hard to capture more and more mobile market share. As wireless network grows, it is expected that emerging wireless and mobile networks will create new trade models for mobile operators and provide new avenues for growth in m-commerce, offer new applications to consumers and business in India.

Mobile Commerce players need to improve the user interface soon and implement innovative pricing structures. Despite the initial frustrations of the users, consumers envision that once the glitches are worked out, mobile applications will become a common part of their daily lives. Most mobile commerce applications in India is in sections such as buying and selling of products and services, download image, game, music and video files, book and purchase tickets, GPS and traffic advisories.

Also there are potential risks in m-commerce Investment and applications in India. Getting a return on m-commerce investment can take a long time, and organizations or individuals aren't always prepared to stay afloat until they recoup that money. Lack of trust is also a remarkable factor influencing the uptake of m-commerce in India.

Generally, in India Mobile phone have registered significant growth in last few years (over 670 million in 2010) and mobile commerce is gradually but surely showing signs of a healthy recovery.