Date: April 16, 2001

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The Industry Standard's "Roam" Wireless Conference was held
April 9-11, 2001, at the Westin La Paloma Resort in Tucson, AZ
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Dear clients, partners, friends,
and cell phone addicts everywhere:

It was a big week, conference fans. The things I do in the name of enlightenment. Fly to Phoenix...drive to Tucson (in the dark), which is like a bad moonscape experience, trying to communicate wirelessly all the way, feeling around for my Palm...then sit inside on a freaking-gorgeous day, and proceed to get rained on bigtime when I come out the next day -- just to catch the buzz on wireless. Lucky for you (and me), it was worth it.

Then, tear out back to Phoenix (driving in damn-near galeforce winds, slithering between semis) to climb onto one of Herb Kelliher's buses-in-the-sky to San Diego -- only to drive *some more* in the dark, north to Dana Point -- on a mission to understand what the heck George Gilder is thinking lately, along with hundreds of his close, personal friends. But that's another story, which you'll read about in the next report -- that is, if you care to tap into even more of that serious buzz I manage to harvest on these seemingly endless travels for you ungrateful bastards... I mean, valued subscribers! (Sorry, my fingers ran off there for a few seconds--I'm under a little pressure these days, know what I mean?)

Forthwith, the Tucson escapade...turning up green on the desert, of all places (my report as filed to Conferenza.com).

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Lush, Green Desert -- and Forecasts to Match

Wireless No Bubble, Say Industry Leaders

by Graeme Thickins
graeme@thickins.com

In a gloriously green and flowering Arizona desert, moreso than many had ever seen (thanks to an especially rainy winter), wireless executives, investors, and entrepreneurs from around the world came together this week to assess the state of another kind of "green": prospects for growth in their much-hyped industry -- and to talk about what's coming and what's for real, in a tech economy hot in search of a Next Big Thing.

Some of many predictions heard:

- The global market for corporate mobile solutions will be $4.7 billion by 2006, as cited in a recent Industry Standard issue.

- The wireless data market will reach $2.5 billion by next year, according to Frost & Sullivan.

- The number of wireless shoppers will climb to 373 million by 2004, says Ovum Research.

- Only 1 in 70 Americans is on the wireless web now, but by 2005 the number will be 1 in 3, said The Standard's chairman in opening the event.

- Nokia sees huge demand in the wireless web: total "aggregate" revenues of $1.2 trillion by 2005.

- Cingular Wireless says 84% of the U.S. population will have cell phones by 2006; already, half of its 20 million customers have phones that access the web.

- In a prediction cited by the Mayfield venture capital firm, the voice-access market alone will be $12 billion by 2005.

- By 2005, 45% of e-commerce will be done wirelessly, according to Vignette; and, by 2002, the wireless data market will reach 1.3 billion subscribers.

- More than 500 million SMS (text) messages are already being sent each month in the U.K., and a worldwide forecast cited by Mayfield predicts 100 billion messages for the year 2002.

-SMS (text) messaging already accounts for $25 million a day in additional revenue for wireless service providers, says Cahners In-Stat Group.

- Wireless ad spending, only $4 million in 2000, will grow to somewhere between $890 million and $6.1 billion by 2005, depending on which of three large research firms you care to believe.

Key Insights from the Event:

Watching That G Thing

Despite doubts and suspicions being raised about 3G (third- generation wireless) and the inevitable delays, the big carriers have big plans indeed -- and are making progress. NTT will be the first, introducing the technology in Japan this year. An interim technology, GPRS (often called 2.5G) is just now being introduced in several states in the U.S. by Cingular Wireless -- adding features like being able to check email and take a call at the same time. And Sprint says some of its new 3G services will start phasing in late this year, featuring data speeds up to 10x faster.

Enormous sums were spent on 3G licenses in Europe, with carriers there taking on some $100 billion in debt to acquire them (and said to be investing perhaps another $150 billion more in infrastructure). Many wonder how the return could possibly be big enough to justify such a sum, which has been part of the reason for negative media coverage on wireless of late. But event co-producer Janice Roberts of venture capital firm Mayfield took this bold position: "3G *is* happening and will survive...Wireless is not the next bubble -- here hasn't been hyper growth, so it won't burst."

She went on to say: "Business models are a challenge. Who owns the customer? Everyone wants a piece of the pie....But there is money to be made. Service models will get simpler and more attractive. We're talking billions and billions of opportunity here."

The 'UI' Issue Is Huge

The biggest single software challenge in the wireless/mobile arena is improving the "presentation layer," as opposed to the logic layer. Improvements in the user interface are difficult, have been slow in coming, and much hard work remains. "The concept of 'develop once' [for multiple platforms] is important," said Cindy Groner, Director-Mobile Traveler Services, Sabre, "But interface and user experience issues--that what's been slowing things down."

U.S. Catching Up?

One reason the U.S. is behind in wireless has been our obsession with wired broadband. But, since that's not proceeding nearly as fast as hoped (certainly not to the home), it would now seem that wireless could get more emphasis in the U.S. in the near term.

An area of wireless where the U.S. is already ahead of Europe is financial services applications, which are highly transaction oriented, time sensitive, personalized, and secure. Things like checking your bank balances, making account transfers, and placing securities trades are here now -- and one industry leader even predicted that, in 3 years, a majority of financial transactions could be conducted wirelessly.

The "911 mandate" by the federal government, requiring all cell phone service providers to be able to know the location of any subscriber--now only six months away from a deadline--gives the U.S. another chance to jump ahead of Europe, said a speaker from U.S. Wireless. But former FCC Chairman Bill Kennard says the carriers aren't spending sufficiently to meet the deadline.

Battle Royale Brewing

Former FCC Chairman Kennard opened his remarks by saying wireless "has potential to be the new broadband pipe to the home, and huge potential for productivity advancements." The problem, he said, is a "huge spectrum drought, which is a major gating factor for migration to wireless." Kennard said government and business need to work together closely to solve the problem. He thinks more spectrum should be freed up from the defense industry and TV broadcasters, because "we don't have virgin spectrum for 3G." But, he continued, "it will be a major battle for who will give it up" -- and a deadline of July 1 is fast approaching. He said three federal agencies have issued studies saying they won't give up any spectrum -- "essentially saying 'we'll fight you to the death'!"

Email Not Almighty?

The fact that youth in Europe would rather "text" using their wireless devices than email is a reminder that the latter may be the big killer-app in the U.S., but not necessarily worldwide. And, soon, other new killer communications apps may be displacing it further. In fact, according to Mayfield Ventures, while email, news, and travel apps are driving wireless in the U.S., in Europe it's text messaging, games, and ring tones, while entertainment and games are the two hot uses in Japan. "Voice leads the way, though, overall--with text gaining momentum."

Your Car as a Wireless Device

The auto industry is hugely committed to wireless services in the car -- the "telematics" platform, as it's called. Ford will have it in 100% of their vehicles by 2004, as will virtually all the premium car brands. And, by the 2007 model, it will be in every vehicle. The carmakers view it as a customer relationship advancement, to help bring people back when they're ready for their next car purchase. In that sense, they see it as a breakeven -- but, beyond that, revenues they take in from these services are seen as a new source of profits.

Beam Me the Money, Honey

One bet for a consumer app that could be a big early hit is consumer peer-to-peer payments, a la PayPal, on your phone. Speakers from at least two big-name financial services firms (Wells Fargo and Merrill Lynch) both made mention of it as one to watch. With such attention and apparent consumer demand, killer-app status may not be far behind.

Wi-Fi's Hotter Than a Pistol

Technologies that got play, and one that didn't: 802.11b (also called "wi-fi"), a form of wireless LAN, was mentioned often and positively as gaining momentum in the enterprise space. [Which provides further evidence that Apple finds trends early--their "Airport" wi-fi product being introduced almost two years ago.] HP's about to launch an internal initiative using 801.11b technology on 60,000 laptops. And "wi-fi" got further play the day the event opened via a hard-hitting piece on The Wall Street Journal's editorial page, by VC Andy Kessler. On the other hand, Bluetooth -- a device-to-device type of LAN technology -- was paid little respect at the conference, since it's been slower in gaining momentum or converts. Another advance to be aware of: a technology that lets your PDA synch to your PC wherever you are. Well, it's coming, anyway, says Mayfield.

Off Switch a Put-Off

The "called-party pays" model in the U.S. is inhibiting the growth of "always-on" services and the benefits therefrom. Only 50% of cell phones in the U.S. are left on vs. 90% in Europe. And the U.S. still has its bevy of competing cell standards, unlike other parts of the world. But "session mobility" across different wireless platforms is coming. And new low-power, frequency-agile tranceivers, too. "But we're about 18 months away from the next Walkman-type device," said one CTO presenter.

Buzz Acronyms to Know:

MVNO - Mobile virtual network operators (Virgin being one early, high-profile example in Europe). Think branded wireless without those all those pesky expenses of network infrastructure. Basically, a glorified reseller that private labels a carrier's service for its own customers.

SMS - Short messaging service, also called text messaging. Mad Cow isn't the only disease speading like wildfire across the pond.

GPRS - Don't ask, but think "2.5G". Then again, who needs all these G-for-generation terms, either. All you need to know is this: cool, new things you can do with your cell phone are coming, saving you even more time. And Cingular's just now introducing some of them in the U.S., if you're lucky enough to be in the right state. The first true 3G services in the U.S. aren't far behind -- fourth quarter, says Sprint. Or was that 2.5? Stay tuned.

Interesting Wireless Facts to Impress Your Friends:

- Time to access a wireless app with current technologies: :04 on a laptop, :08 on a PDA, :18 on a voice portal, and :25 on a web phone

- A disposable cell phone, with 60 minutes preloaded, is now being sold for about US$10

- Fidelity Investments and Merrill Lynch each claim 100,000 customers now using their wireless services

- Just how defensive of a driver are you? In a shocking development, a vote of this audience found that 63% had used a cell phone and a PDA, at the same time, while driving!

- Another shocker: 70-80% of all cell calls in the U.S. are made from the car, where the average American spends 540 hours a year.

- Need a quick "thou"? According to the president of Junkbusters, both junk calls to cell phones and junk faxes are illegal, and you can simply go to small claims court and collect $500 for each confirmed transgression.

Other General Observations:

It was a subdued crowd (such are the times), but one that seemed all business, too -- mostly senior execs. (Perhaps subdued so as not to play their cards?) Then again, there were more non-U.S. attendees than at previous Standard conferences (not surprisingly, since the U.S. hardly leads in wireless), so perhaps cultural and language differences had something to do with the group seeming less than ebullient. Then again, Standard chairman John Battelle may have pegged it right in his opening comment (see quotes below).

Adding to the sober feeling at the event was the noticably low number of exhibiting firms, another indication of the tighter spending climate, or lack of VC funds for marketing. There were only five such young "demo companies" present, when 10 to 20 are more commonly seen at such events.

Subdued or not, it was a noticably business-like audience, as evidenced by the high quality of questions asked in virtually every session. And there was never a shortage of questions, either -- indicating attendees showed up fully intending to get their money's worth.

Speakers and panelists included many big names, and gave generally enlightening presentations. Only one session disappointed -- one run by a major sponsor (a panel they did with two other big-name tech vendors), giving more argument for keeping sponsors off the dias, or at least not allowing them to provide content, which was largely absent from this particular session on "B2B m-commerce." Except for a brief look at one customer app, it hardly did justice to what's going on out there in B2B or cross-enterprise wireless.

Event attendance of about 350 was certainly respectable, representing all major sectors of the wireless business. Of the total, I counted about 10% on the list who were VCs, investment bankers, or corporate investment professionals -- not a bad showing, though we've certainly seen a higher percentage at other conferences focused on hot, up-and-coming technology areas. (Then again, VCs as a group have been far less visible these last few months, surely cutting back on their event attendance.)

Selected Quotes from the "Roam" Conference:

"A lot of us are probably feeling guilty being here in this nice place when the market is tanking. But, godammit, we have an industry to build here!"
- John Battelle, Chairman, Standard Media International

"In late '99, we learned 20% of our web traffic was coming from AvantGo -- so we knew something was up with this wireless thing."
- John Battelle, Chairman, Standard Media International

"There's a new, young class of 'always connected' mobile users...and a generation of 12-25 year olds that's very text-centric....SMS [a technology for peer-to-peer text messaging] is spreading like a disease in Europe."
- Janice Roberts, General Partner, Mayfield

"A new 'thumb culture' is downloading things like ring tones and logos, and spending real money -- in fact, here's a 12-year old in the front row who spent 48 pounds just last month -- stand up!"
- Janice Roberts, General Partner, Mayfield

"Some may laugh at the notion of having an office on the beach, but getting information anywhere, anytime is a real desire."
- Janice Roberts, General Partner, Mayfield

"Sending digital photos worldwide via cell phones will be big because it'll be faster than doing it on a PC, and the emotional factor is there [sending them while the fire is still hot]."
- Ilkka Pukkila, Director-Global 3G
Market Development, Nokia

"We're dealing with first-generation devices now -- but if you build to that, you're missing out on huge opportunity. You have to build to a 'stretch' platform... a vision for where you want to be two, three years out."
- John McKinley, CTO, Merrill Lynch

"Blackberry's success is due to the fact that it works with crappy infrastructure."
- John McKinley, CTO, Merrill Lynch

"Getting mobile right will be huge for Merrill Lynch. We want to be only one click away from our institutional and retail clients."
- John McKinley, CTO, Merrill Lynch

"Content may be king, but transactions are King-Kong."
- Bruno Giussani, European Editor, The Industry Standard
(repeating a phrase he thought was fitting for
the financial-services panel he was moderating)

"The wireless Internet is not the Internet wirelessly It's a lot more slimmed down."
- Joe Ferra, Senior VP, Fidelity Personal
Investments & Brokerage Group

"What about corporate applications? Email is the killer app, plus knowledge management and collaboration. How do I make my own peers and expert network a click away?"
- John McKinley, CTO, Merrill Lynch

"We thought initially that active traders would be our biggest wireless users. But many people are using the service, across all customer segments. The wireless customer is tech literate and a better customer, with more assets."
- Joe Ferra, Senior VP, Fidelity Personal
Investments & Brokerage Group

"Innovation is not the exclusive province of New Economy companies."
- John McKinley, CTO, Merrill Lynch

"On the 'Net, you're either on a mission or a cruise. On the phone, you're on a mission only."
- Pamela Reed, VP-Strategic Alliances, Consumer
Internet Services Group, Wells Fargo Bank

"Could the killer wireless app for the auto industry be enabling the tracking of murderers?" (referring to location-based services)
- Janice Roberts, General Partner, Mayfield

"The killer app for carmakers is the one that will lower their costs."
- Paul Drysch, Director-North America, WirelessCar

"My vote for a killer wireless app for drivers would be real-time traffic reports. I live in Silicon Valley, and that could make 40 minutes difference!"
- Mike Orr, CEO, MobileAria

"I'd say the auto industry isn't the place to be using the 'killer app' phrase!"
- Gonzalo Bustillos, Director-Business Development,
Automotive Business Unit, Microsoft

-"Privacy issues or not [re: location-based services], I just don't see the business model working for tracking people all the time. Who will pay for all that traffic?"
- Tim Farrar, Principal Consultant, Analysys Ltd.

"There are 98,000 deaths per year because of medical errors, the equivalent of a 747 crashing every day!" - Jeff Smith, Director of Marketing, iScribe (a provider of mobile solutions for physician practices)

"In the past, it's been a 'mother may I?' approach to get a spectrum license -- but you could only get it if you were special. The spectrum auctions have helped make it a more open, transparent process, so it's no longer about who's special, or who has the best lawyers."
- William Kennard, Former FCC Chairman

"The EU people think we've done it all wrong -- letting things be so free. Our 'let the best standard win' approach [TDMA, CDMA, GSM] didn't work as well as it should have. That's humbled us, and has made the dialog better with Europe."
- William Kennard, Former FCC Chairman

"Our advice to customers is to assess how wireless technology can be a change agent in your organization." - Darrin Wood, Product Marketing Manager, Vignette

"This industry is poised for breakthroughs. People will fall in love with it again, and stay married for life!"
- Stephen Carter, CEO, Cingular Wireless

"Our customers don't want tech for tech's sake. They like it for what it *does*. There's been an over-reliance in this business on technology, and an under-reliance on what the consumer wants or needs."
- Stephen Carter, CEO, Cingular Wireless

That's it from the desert, friends.

More from the beach soon.

your ever-curious conference reporter,
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Graeme Thickins, Founder/Editor/Analyst
GT&A Strategic Marketing Inc.
*Twin Cities *LA *SF *Anywhere
Voice: 952/944-1672
Fax: 952/944-1673
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A Little Background:

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So, it's about staying out in front -- but with a decided
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I hope you like my reports and, as always,
your thoughts and feedback are welcomed.

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Watch for our BIG upcoming conference report
on George Gilder's "Storewidth 2001" event,
April 10-12, 2001, at the Ritz-Carlton Hotel,
Laguna Niguel, CA. We also hope to be covering
"Line56!Live" in SF in late June, and The Industry
Standard's "Internet Summit" in July in Carlsbad, CA.

If you have suggestions about other tech events you'd like to
see covered, please let me know, would ya? Thanks.