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Today’s wireless investment, tomorrow’s bookings?
Winning by Sharing
Leon Benjamin, Co-founder, DestiCorp Ltd
[email protected] – May 2002
Leon Benjamin: [email protected] – May 2002
Introduction
Leon Benjamin, co-founded DestiCorp with Anna Pollock in 2001
DestiCorp is– A “thinking” consultancy, that develops innovative concepts,
models and applications for the travel and tourism industry– Pragmatists and practitioners who guide our clients through
the turbulent waters of change and dislocation with clarity and concrete action
Our ‘mantra’ is “Winning by Sharing”
Leon Benjamin: [email protected] – May 2002
Objectives
Provide insight into wireless activity in Europe and how it is reconfiguring traditional business
Describe the prevalent and emerging distribution and revenue models
Discuss how tourism providers can exploit the wireless space
………..and why this can only be achieved by a profound shift in thinking
Leon Benjamin: [email protected] – May 2002
Presentation Structure
Profile the technology landscape trends– Convergence– Location-based services– Wi-Fi
Assess the business landscape– Market dynamics– New business models
Describe the key components of a wireless distribution strategy– Connectivity, Community, Content and Commerce– Winning by sharing
Leon Benjamin: [email protected] – May 2002
Technology Landscape
The European mobile phone statistics make attractive reading– 40-75% penetration of mobile phones (Italy & Finland, Iceland now
officially the highest with 76%)– 76 mobile operators in Europe (10 major’s dominate)– 100% penetration in Western Europe by 2006 (Pyramid Research)
– that’s 350m people!– 178 countries now have GSM– Globally, 167m new subscribers in last 12 months
Strong uptake of GPRS (always on) services– 13% of all mobile phone users in the Western Europe (that’s 40
million) will be using GPRS mobile data services by the end of 2003 (Source: Analysys)
– By the end of 2003, however, non-commercial users could outnumber enterprise users, accounting for 80% of GPRS users
Leon Benjamin: [email protected] – May 2002
Technology Landscape
SMS is still the dominant (data) revenue generator for operators– 10% of total service revenues– Billions of text messages every month – Global Q1 2002 75bn, projected
total for 2002 360bn– In Europe, 90% of these messages are person-to-person with only 10%
machine or application to person Instant Messaging (IM) is the ‘next big thing’ and cannot be ignored.
– 1 in 6 mobile users in Europe currently using IM– 50 million users worldwide – Exploding into the corporate world (100,000 IBMers sending over 1m
messages a day) GPRS and a new standard called Session Initiation Protocol (SIP) will
bring about ‘SMS size’ revenue for operators– SIP ties together email, voice, and messaging– Enables SMS-IM and IM-SMS chat over wireless networks
Leon Benjamin: [email protected] – May 2002
Market Drivers
What do we as consumers want and need? – We’re information dependent, especially so for travel consumers– We’re task oriented
Choosing a destination Finding a hotel Booking a flight Listening to the news or our favourite music Keeping contact with home or office
– Increasingly, we’re multi-tasking– We don’t sit still
Leon Benjamin: [email protected] – May 2002
Market Drivers
Consumers are increasingly mobile Need to cut the physical ties that bind them to home or office Shouldn’t need a check list an arm’s length before leaving home or
office: – Have I diverted my home phone number?– Is the answering machine on?– Have I packed my modem cable?– What’s the access code for my ISP dial-up?– Have I synchronised my address book?
I shouldn’t need to carry a sackful of appliances– My computer and work-related files– A PDA for contacts and to do lists– A stereo, music player– Mobile phone
Leon Benjamin: [email protected] – May 2002
Market Drivers have created….
1. The convergence of appliancesComputer, phone, MP3 player, billing device, browser
2. Location-based servicesRelevant information, when and where we want it and determined by our location
3. Always on – everywhere – and FAST(!) connectivity4. Now we’ll make conscious choices about connecting, soon it
will be unconscious, pervasive Ambient connectivity
Leon Benjamin: [email protected] – May 2002
1. Convergence
Devices are converging and morphing into wireless and voice enabled Personal Digital Assistants (PDAs)
Palm still dominant with 47% global market share– Microsoft Pocket PC based devices second behind Palm in Europe….and
gaining – Compaq iPaq, HP Jornada eTForecasts in its report "Worldwide PDA Markets", expects explosive
growth in the form of PDA-phones, a Web cell phone with PDA functionality or vice versa
Worldwide PDA sales to jump from 12 million devices in 2000 to more than 61 million in 2007
They will be multifunction devices with built-in Internet access, digital camera, music player, scanner and other functionality
The hardware capabilities of a typical 2007 PDA will be similar to a 2001 low-end PC!
Leon Benjamin: [email protected] – May 2002
Convergent Devices
Siemens Java PDA phone
MMO2 (Cellnet) XDA Pocket PC PDA phone
Handspring Treo PDA phonePalm OS
Personal Trusted Devices (PTD)
Leon Benjamin: [email protected] – May 2002
2. Location Based Services
A person’s location sets the context for service delivery– Be relevant– Information and services should be Pulled not Pushed!
Online business directories and destination databases are ineffective without geo-coded data (Scoot, Yell, D&B)
There is a massive focus on Location Based Services (LBS)– Network operators (huge future revenue)– Galileo GPS– Webraska, Schlumberger
Geo-coding service providers– Whereonearth.com (UK) can geo-code data to virtually every city in
the world (including Jakarta)– TerraSeek.com in the US
Leon Benjamin: [email protected] – May 2002
3. Continuous, Ubiquitous & FAST!
Wi-Fi (Wide Fidelity) networks, or WLANs have literally exploded and emerged as the single most significant development in wireless technology
Wi-Fi networks are short range (100m) wireless LANs running at 10mbps
They enable laptops & PDA’s to connect to the internet by sharing a broadband connection
Cost 300-500 Euros to implement Disruptive technology
– Cheap– Effective, useful– Out of control– Could severely impede the European investment in 3G
Let’s see why
Leon Benjamin: [email protected] – May 2002
Wi-Fi - Travel Example
Internet/Intranet
Main PC
Hub
Hotel Systems - Italian beach
Personal LaptopHotel room
Kids play area
Wireless Till - Beach bar
Broadband
Wi-Fi Topology
Leon Benjamin: [email protected] – May 2002
More on Wi-Fi
Retailers are creating ‘Hotspots’– Most MacDonalds restaurants in the US by end 2002– Starbucks deploying across Europe, 462 stores enabled in US– BT to create hundreds of Hotspots in an around London– BT are rolling out 5,000 broadband subscribers every week
Internet access available via Hotspots anywhere in Cambridge (UK) First internet ‘bench’ in small market town of Bury St Edmunds (UK) Available on Brighton beach this summer In travel:
– Copenhagen Airport is opening its wireless local area network (WLAN) to the public this week. Named CPH-WIZ, Oct 2001
– Federal Aviation Administration (FAA) to provide secure, broadband wireless connectivity between FAA buildings at airports across the US
– VARIG Airlines – email, web access on entire fleet, Nov 2001– Hilton Group to deploy worldwide– Most airports will be provide Wi-Fi access within next 12 months
Leon Benjamin: [email protected] – May 2002
More on Wi-Fi
Most of Hawaii is now ‘wired’ with Wi-Fi– “Island of wireless guerrillas”
Individuals are (re)-charging their neighbours to share their broadband
Companies like Joltage.com and Boingo.com are providing a payment and global publishing platform to enable the contractual elements
Anyone can become an ISP serving small local communities Giving rise to Network Area Neighbourhoods (NANs) and
Customer Owned Networks (CONs?) In the US the FCC will soon sanction next generation Wi-Fi that
will operate at higher speeds and greater distances (miles)
Leon Benjamin: [email protected] – May 2002
Wi-Fi and the Gaming Sector
Sony built a virtual reality gaming facility off the coast of San Diego in 1999 - Norrath
Can accommodate 1m visitors per year Gamers can participate using their PCs at home but need a
broadband connection so Wi-Fi being used from remote areas Wi-Fi took this game from relative obscurity to 100,000 online
at any given moment in time Sony derives $3.6m revenue per month from this community Norrath’s per capita income is roughly between Russia and
Bulgaria Put another way, the 77th richest country in the world
Leon Benjamin: [email protected] – May 2002
Wi-Fi and Conferences
Conference Facilities will be equipped with Wi-Fi Attendees will be able to:
– Listen, – Publish web logs in real time to share their responses with the
world;– send pictures, instant transcripts, – field questions from non-attendees– Research veracity of speakers’ statement– Make e-appointments for F2F meetings with fellow delegates
Conference as community (an event pulsating in time and space) involving a web of relationships
Leon Benjamin: [email protected] – May 2002
Technology Landscape - Conclusions
There is massive “liquidity” in the wireless space– Users, devices, services, coverage
Location and context is everything Our entire surroundings are the interface to the network
– Where the TV turns itself down when our phone rings! The creation of a wireless “Digital Canopy” – Wi-Fi, GSM,
Internet, Bluetooth There is a steep learning curve for any tourism or travel
provider – and it’s changing all the time The emergence of standards and intermediaries (distribution
brokers) will enable tourism providers to concentrate on their core competency and content
Leon Benjamin: [email protected] – May 2002
Current Business Activity
Confusing, very dynamic and fluid! Market activity comprises
– Mobile technology platform providers– Mobile portals – network operators– Point solutions deployed by large corporates and
travel organisations– Payment/ billing solutions
Leon Benjamin: [email protected] – May 2002
Technology Providers
Infrastructure provided by the ‘usual suspects’ – Nokia, Ericsson, Motorola
Gateway products that deliver content, applications, provisioning– OpenWave, Phone.com, Aether Systems, Passcall, Airflash, Brience
Air2Web platform used by Best Western– Customer self-service solutions– eCRM
Autodesk Location Services has announced a location-enabled Short Messaging Service and MMS (Multi Media Messaging) solution
– Short command for retrieving hotel options based on location. With a suitable PDA/phone, a traveler would be able to view photographs of the hotel's facilities.
Leon Benjamin: [email protected] – May 2002
Mobile Portals
Every operator has one!– Vizzavi (Vodafone & Vivendi), O2 (BT Genie), Telia, Sonera,
MobilStar, T-Plus, DT Every major web portal has one!
– MSN, AOL, Yahoo, Tiscali Lots of ‘pure play’ portals and ASPs
– AvantGo, Breathe, Room33, Aspective The manufacturers are in on the act too
– Nokia Club – a community portal– Sony Ericsson
Leon Benjamin: [email protected] – May 2002
Mobile Portals
They have common features– Content – news, stocks, weather, music, etc– Logos and ring tones
These mobile portals are not really making money– Content is largely free– SMS is mostly person-to-person– Cannot live by advertising, ring tones and logos alone– Vizzavi has now invested around £1 billion, revenues from
services are in the low millions (£1-3m) The core revenue model is based around sharing traffic
revenues generated by end user ‘pull’ of content– Very successful for NTT DoCoMo (iMode)
Leon Benjamin: [email protected] – May 2002
Point Solutions – Content providers
Corporate Solutions– United Airlines EasyUpdate feature offers Mileage Plus
passengers latest travel information via the Web, a wireless device, or telephone, at any point on their journey
– CabinLINK, an in-flight, e-mail and Internet browsing service for corporate and private airline passengers, Tenzing collaborating with Singapore Airlines and Air Canada
– BA check in services (WAP)– Variety of wireless based eTicketing
UK, Odeon WAP booking service UK, Hull City Council collaborating with Ericsson to deploy first mobile car
parking payment scheme Smaller travel/tourism related service providers
– Kizoom – for UK rail timetable – 0800taxi.com – UK taxi cab firm database (WAP/SMS)
Leon Benjamin: [email protected] – May 2002
Payment Models
Frost & Sullivan prediction: Electronic commerce conducted via mobile devices such as phones and PDAs will take off over the next few years to become a US$25 billion market worldwide by 2006. M-commerce will account for 15 percent of the world's online commerce in sectors including;
– automated point-of-sale payments (vending machines, parking meters and ticket machines)
– attended point-of-sale payments (shop counters, taxis) – mobile-assisted Internet payments (fixed Internet sites
using phone instead of credit card) – Reverse Billing– peer-to-peer payments between individuals
Leon Benjamin: [email protected] – May 2002
Payment Models
Micropayment applications are key and there is huge activity in this area
– Reverse billing: Jupiter predicts that by 2006 consumers will spend 3.3bn Euros using mobiles as a content billing platform
– Nochex & Payhound (email money)– Paypal, Compaq’s Millicent– BT Microbilling – services on your blue bill– Vodafone mobile wallet (macropayment solution)– Freedompay, Nokia & MacDonalds in the US – “burgers by cell
phone”– Egold.com, Goldmoney.com
Pre-pay or post-pay? Subscription or pay-as-use?– Business plan to provide offer both methods
Leon Benjamin: [email protected] – May 2002
Wireless Distribution Strategy
So how does a tourism provider exploit the wireless channel?
How do you enrich the customer experience? What are the key steps to get there? How do you reduce transaction costs? How do you minimise the risk of failure?
Leon Benjamin: [email protected] – May 2002
Wireless Distribution Strategy
1. Shift Your Thinking, Change Your Perspective from:
Enterprise to Business Web Product to Customer Competition to Collaboration Push to Pull Controlling to Enabling
Leon Benjamin: [email protected] – May 2002
Destination Web
• A Destination Web © is an electronically inter-connected community of autonomous but interdependent, travel-related enterprises that collaborate in order to provide value to visitors, profit for providers and partners and benefits to the host community. DestiCorp
Leon Benjamin: [email protected] – May 2002
Listening to the Customer (Cluetrain)
Markets consist of conversations
“A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter—and getting smarter faster than most companies”
People in networked markets have figured out that they get far better information and support from one another than from vendors
Companies that don’t realise their markets are now networked person-to-person, getting smarter as a result and are deeply joined in conversation are missing an opportunity
Leon Benjamin: [email protected] – May 2002
Communities that Converse
Why create these communities? They are being taken seriously outside travel
Hallmark cards created a ‘listening’ community to understand how its customers celebrate Valentine’s and discovered a chasm between the fantasy they sell in their cards and what people really do
– “revolutionize our understanding of how people learn and how market research should be conducted”
– Hallmark is reducing the risk of getting it wrong by asking its customers what they want – this is helping it triple sales over the next 5 years
Proctor & Gamble with PG.com also created a listening platform that captures better insights faster builds advocates for our products provides feedback that contains “disproportionately rich ideas”
There are many thousands of these communities with a vast array of interests and subject areas
– Travel with Kids.com– Sift with Travelmole.com & Ebay.com– Hermail.com
Leon Benjamin: [email protected] – May 2002
Put the Customer at the centre
Trips/Tours
Sp
ort
s
Financial Services
Inst
ant
Mes
sagin
g
Networking/D
ating
Food &
Events
Med
ical Services
Sleep
Music
Guest
Co
nsu
lar Services
Co
mm
un
ity & C
on
tent
Business Services
Blogging & Messaging
Fut
ure
Web
Ser
vice
s
Fut
ure
Web
Ser
vice
s
DIGITALCANOPY
Pull Vs Push
• Now your customer is able to pull an experience toward him/her • At the right time, location and context• Enabled by an interconnected Digital Canopy• We call it Winning by Sharing
Leon Benjamin: [email protected] – May 2002
The Destination as Community
DestiCorp believes that Destinations are in the best position to create these communities
– Closest to the providers and the guests– Local knowledge & Relationship Capital
But they lack the skills and knowledge to implement them A Destination based community should be a place where a guest can
interact, before, during and after their trip– What’s happening here? Cool events? Good deals?– What have people said about this location and its services?– Who’s coming? Do they share my interests? What’s their IM address?– Can I share my experiences (blog)?
Create the conditions for emergent behaviour– “You want us to pay? We want you to pay attention”
Leon Benjamin: [email protected] – May 2002
Five Essential Ingredients
1. CustomersWho are they; what task are they trying to complete?
2. ContentHow can we deliver the content they need, when, where
and how that’s relevant and convenient?3. Community
What other providers and providers do I need to work with to satisfy my guests’ needs?
4. CommerceHow do I make the transaction profitable for all parties?
5. ConnectivityHow do I make it possible to “converse” via multiple
channels, touch points and provide seamless service?
Leon Benjamin: [email protected] – May 2002
Concluding Observations
This is a big, complex, very fast moving space! It will be impossible to absorb and understand all of it
– and you don’t need to! Far more important will be your ability to collaborate
– Internally in order to innovate– Externally in order to get the most from partners
Your focus on the customer This will be about ‘plug-and-play’ business Wireless is an important channel – but not the only
channel
Leon Benjamin: [email protected] – May 2002
Final Thoughts
How do you compete in a world of perfect information?
– Not by price but by perceived value– Through an obsession with the customer– By focusing on core competencies– Through collaboration– By building trust & reputation
Today’s wireless investment, tomorrow’s bookings?– Yes, but it’s a journey not an event
Successful internet businesses will be those that hunt in packs
Leon Benjamin: [email protected] – May 2002
Destizone.com
Global electronic community of industry leaders and thinking professionals
A gateway to further knowledge providing members with easy access to articles, books, reviews, discussion, experts
Engaged in all facets of the tourism industry willing to question, to learn, to share knowledge