Getting iReady

During the Windows Hardware Engineering Conference in Los Angeles in May, Microsoft chairman Bill Gates said, “I wholeheartedly believe the mobile phone will become the new PC and the PC will become the new phone.”

If the thousands of shoppers who waited in line last month to spend over a half-grand on Apple’s new iPhone are any indication, that time is much closer than we might think.

In the first quarter of 2007, approximately 74 million Americans subscribed to mobile Internet providers to search, e-mail, and check weather and sports, according to San Francisco-based mobile research firm Telephia. In April alone, there were 29 million active U.S. mobile Internet users. And the numbers keep on growing.

True, mobile Internet access has become a standard for convenience. But are we ready to make purchases—from sweaters to plane tickets to car payments—with these devices?

“We already have the right technology to do m-commerce,” said Levi Shapiro, director of Telephia. “What’s lacking is the consumer value proposition. People ask why they should even try if they have to do it in 38 scrolls and 12 clicks.”

At least that is the argument here on the home front, as m-commerce grows into a very tangible market outside the United States. In Japan, for example, more than 10% of e-commerce sales take place on mobile devices and more consumers access the Internet through their handsets vs. computers. Additionally, more hard goods than mobile content such as ring tones, games and wallpaper are being purchased via personal devices.

Although the United States doesn’t currently match Japan or Western Europe in market maturity, I don’t expect this to be the case for long.

According to mPoria, a Seattle-based m-commerce solution provider, there are about 95 million wireless subscribers in Japan and 236 million in the United States. However, there are only 7 million m-commerce users here in the States (which generated $480 million in revenue last year), while Japan reaped $10 billion in 2006 alone from its 27 million users. The sales gap is huge, but we are primed to close it soon.

Today’s mobile phones have far larger screen sizes than before, and the data speed from the server to the mobile phone is much faster, too.

“If a phone can operate just as fast [as a computer], pages can load quickly. And when you have that sort of positive user experience, customers will get value out of it,” said mPoria CEO Dan Wright. “The infrastructure is driving adoption, too.”

The expectations for m-commerce are also high. U.K.-based Juniper Research predicts that the global market will reach $88 billion by 2009, and 44% of m-commerce purchases will be physical items.

Although those numbers seem big from where we stand today, keep in mind that the digital-downloading market was small when the iPod first hit stores. However, the ultimate impact it had on digital consumption was dynamic.

If the iPhone is only the beginning, it’s almost scary to venture a guess at what’s still to come.