Wireless Readies for Prime Time:
Interoperability Power to Attract Renewed IT Spending
But Big Questions Remain: How
Much? How Soon? With Whom?
By
JOHN
PARKER and STEVE WEISSMAN
The
promise of wireless networking has been with us for a long, long time,
but issues of compatibility, reliability, capacity, and security have conspired
over the years to keep it from reaching critical mass. However, recent
symbiotic advances in connectivity and communications have enabled the
technology to gain practical traction as an enterprise interoperability
(EIO) and accessibility tool, and thus to be viewed as a credible means
for wringing more value from existing IT infrastructures.
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| This being the case, customers and vendors alike are starting
to ask two fundamental questions whose answers have enormous market-making
potential:
How big will the wireless payoff really be,
and how great is the risk of investing now?
Even though their post-9/11 nerves are still raw and, for many, a lot
of economic red ink is still damp, customers today recognize that they
are not in business for the sole purpose of not spending money: rather,
they know they must start spending smart and acquire technology that will
help them work better, and work better together.
As a result, many economic forecasters Kinetic Information among them
believe the capital investment clock has been reset, and that customers
are ready to resume play (to the tune of spending 3%-5% more this year
than last see our Brief last month Trading
Mayhem for Mainstream). And since wireless is becoming an increasingly
important part of many game plans, vendors of all related ilk software
providers, telecom companies, and personal device manufacturers are starting
to gear up for an opportunity that is as exciting as it is yet uncharted
(see box).
Making the Case for Wireless EIO
That there is a market for EIO at all was proven and validated in Kinetic
Informations seminal work Mapping the Market
for Enterprise Interoperability, which was published in the latter
half of 2002 and predicted a worldwide opportunity for software-related
products and services that will reach $62.7 billion by 2006.
Further research into the space now tells us that a particular EIO hot
spot lies in the realm of wireless and mobile computing. Encompassing the
platforms, applications, and development tools that characterize the market
as a whole, the wireless environment also embraces carrier services and
personal hand-held devices as well, and thereby adds a new dimension of
opportunity to the mix.
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AN $80 BILLION
OPPORTUNITY KNOCKS!
(chart:
est. worldwide opportunity 2006)
For
Enterprise Solution Providers
Extend customers enterprise
infrastructures to embrace, literally, the world
Increase the accessibility
and utilization of business applications
Enable usability via multiple
access devices (cell phone, PDA, tablet PC, etc.)
For
Telecom Carriers
Renew investor interest
and appeal by capturing new opportunity
Generate additional network
traffic leading to higher usage revenue
Offer premium service tiers
tied to speed, bandwidth, data integrity, etc.
For
Personal Device Manufacturers
Sell voice/data/image-capable
devices in multiple form factors
Cross-sell to consumer
and business audiences
Distribute via resellers
of communications and computer technology
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Given the ubiquity of telecommunications in our business
and personal lives, wireless EIO offerings should easily outdistance conventional
PC- and server-based EIO solutions in terms of the revenue they generate
especially if and as effective partnerships are forged between players
on the computing and telecom sides of the business. Here are just a few
of the reasons were so bullish:
Pervasive computing is grabbing mindshare and fueling industry
partnerships. The idea of embedding wireless communication and transaction
processing in small-footprint devices inside appliances, vehicles, and
other non-PC environments has been promoted by IBM and other industry leaders
for nearly a decade. Application development for pervasive computing was
a major motive behind IBMs acquisition of Rational Software late in 2002.
And pervasive computing got more publicity during the latest CES show in
Las Vegas, when Microsofts Bill Gates demonstrated a wristwatch
that was equipped with the companys Smart Personal Object Technology (SPOT)
to deliver a stream of wireless data feeds directly to the user in the
most literal sense.
Smart phones are poised to swamp the market. The ability to combine
multiple functions and the pressure on service providers to make multi-function
packages affordable presages the death of the voice-only cell phone.
According to Allied Business Intelligence, shipments of replacement handsets
will increase from 211 million last year to 591 million in 2008, at which
point they will account for 85% of all shipments worldwide.
Web services are reaching market-ready levels of security and reliability.
This became clear in December 2002 when Microsoft, IBM, BEA Systems, VeriSign,
and RSA Security announced publication of the first set of WS-Security
specifications. Meanwhile, in early January 2003, Sun Microsystems, Oracle,
and Fujitsu announced WS-Reliability specifications that are designed to
facilitate the use of standard interfaces. Continuing progress on security
and reliability fueled by competition will go far to convince business
enterprises to explore the ROI advantages of using Web services, both as
a low-cost method of encapsulating business processes in software
and as a way to rapidly share those processes with a widely distributed
and mobile audience of customers, employees, and partners.
Wireless LANs are becoming widely available. A consortium of technology
leaders including AT&T and Intel Corp. are seizing the opportunity
to create much-needed revenue streams by selling wireless LAN access, based
on the 802.11b protocol, in the U.S. The groups Project Rainbow produced
a new company called Cometa Networks that will sell to ISPs and to cable
and telecom carriers. We expect other similar ventures to appear in the
months ahead.
In the end, we expect the worldwide annual revenue opportunity to
exceed $80 billion by 2006, broken down as follows:
Wireless
EIO Market Opportunity, 2006
Questions
Seeking Answers
All this being so, suppliers of the hardware, software, and services
needed to make wireless EIO a reality already are jockeying to see who
will be first out of the gate to tap the new opportunities. Succeeding,
of course, requires a thorough understanding of the perils and possibilities
that will appear along the way and effective answers to a host of critical
questions such as these:
Is it realistic to expect as many in the media, vendor, and analyst communities
do that wireless networking and EIO will be high-octane fuels for the
economic recovery? If not, then are we again putting too much emphasis
on unmarketable technology?
Assuming the opportunity is real, then what is its nature? What applications
are likely to be used by people in their work AND in personal lives, often
from the same device/platform and sometimes at nearly the same time?
What is the potential monetary payoff for technology vendors providing
the hardware and software needed to make mainstream use a reality?
What are the economic, business process, and communications/collaboration
payoffs for users seeking Maximum Total Value from their wireless technology
investments?
What functional and technical characteristics network reliability and
availability, application development, security, pull features to engage
end users, etc. are necessary for wireless networking to reach the next
level?
What type(s) of technology, service, and support are essential to ensuring
implementation success? What will the interplay be among them?
Which vendors are leading the pack in terms of innovation?
How do such major players as HP, IBM, Microsoft, and Sun see the wireless
networking market evolving, and what role are they likely to play in its
emergence and success? What opportunities exist to partner with them and/or
run around them?
What opportunities do telecom carriers, smart phone manufacturers, and
other personal device providers see in wireless networking, and what are
they doing to capture their fair share?
What ingredients are needed to make a IT/telecom partnership work? How
should these ingredients be offered and priced?
At this early stage in the markets development, few definitive
answers to these questions seem to yet exist, though there is a consensus
that opportunity is indeed brewing where wireless and interoperability
are coming together as one observer put it, Well, youre shooting at
the right elephant! As a result, one of our next steps likely will be
to assess the opportunity for ourselves and for our clients, and to provide
some truly workable intelligence to help people realize the untapped potential
we intuitively know is there. Please let us know what you think, too, and well be sure to fill you in as we learn more. Stay
tuned! Contact
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