There are two things I believe very strongly about the future of mobile commerce:

• • Mobile commerce is here to stay
• • Mobile platform fragmentation will remain a serious challenge throughout the foreseeable future

Since mid-2009 we’ve built a very successful business helping nearly twenty name-brand clients in banking, retail, insurance, fast food and other verticals wrestle with these issues.

We’ve seen the questions change from “WAP vs. App” to bewilderment at the challenge of managing an exploding number mobile product lines while simultaneously managing a flood of customer adoption and increased competition.

The mobile challenge is to develop a roadmap of continual product improvements without knowing the exact technology mix that will be in users’ hands.

Fragmentation persists because of creative destruction. The iPhone created the industry. Then, Google eclipsed the iPhone with Android devices from a variety of OEM manufacturers. Apple did it again with the iPad. Now tablet salvos from Dell, RIM, Samsung, and others are incoming. Arguably, we’ve also already seen the rise and fall of many technologies like WAP, Palm, J2ME, Blackberry, and Symbian, just to name a few.

Organizations must support the mobile devices their customers have. As customers flock to the next great innovation, companies must reach their customers on the device they have right now — and in the way that works best for them.

The days are long gone where IT picks the technologies they’ll allow their customers to use. So, the mobile challenge is to develop a roadmap of continual product improvements without knowing the exact technology mix in users’ hands at rollout, versions 1.2, 1.3, and beyond.

Companies are burning resources porting to new platforms instead of innovating and staying ahead of the competition

Most companies are rolling out their first mobile product and in some cases extending variations to other platforms. Few companies have had to manage complex product lifecycles for the mobile channel. As new platforms are emerging, companies are burning resources porting to new platforms instead of innovating and staying ahead of the competition.

Few companies have the resources to manually manage multiyear product lines across a number of platforms including product management, revision control and infrastructure, quality assurance, and development.

Organizations won’t be successful picking and choosing platforms either. It’s not enough to only support iPhone or Android (or SMS, mobile web, RIM, Windows Phone 7, iPad, etc.). The playing field is changing too dramatically and too often. Companies picking and choosing platforms may find themselves investing in a dead-end product with few customers after a release or two (or even at the first release). Two years ago RIM seemed to rule the world. Five years ago Palm ruled the smartphone world.

Browsers aren’t a panacea either. Major mobile innovation is happening with native and hybrid application technology. HTML5 solves some problems but will not make native applications obsolete. Exposing native resources through the browser create unacceptable security risks in many situations (along the lines of Java applets and Active X). Furthermore, variations in HTML5 implementations likely will continue the testing nightmare that exists with the mobile browser, where tens of thousands of browser permutations exist.

Every company interested in mobile commerce has to face the device fragmentation issue and I don’t see it going away any time soon. In fact, it usually just gets worse. We just have to deal with it.

I’m going to be spending a lot of my time addressing these issues in the future.

This morning I received some interesting statistics in my email inbox. Many of you might have received it as well. I reposted it here.

iPhone consistently covers 2/3 of mobile users

The first thing I noticed was how consistently iPhone usage is measured at around 66% of mobile usage to a given site. This is what I’ve seen in my experience with a number of organizations. I’ve also seen this stat elsewhere. It’s easy to understand why companies with a tight budget pick the iPhone when forced to pick one mobile platform.

Smartphone almost as happy with their browser as computer users

Secondly, I was surprised to find that smartphone users (68%) were almost as satisfied with using their browser on their phone as computer users (70%).  Not surprisingly, feature phone users felt differently (47%).

Coincidentally, Adam Woozeer (@AdamWoozeer) tweeted yesterday that “About 58% of total #IPhone users primarily use the iphone for web.” I’m haven’t been able to verify his data, but it seems to fit with the Chitika data. I might have ignored each of these data points individually, but together they made me take note.

Personally, I use my iPhone browser extensively, but I wouldn’t call it my “primary browser.” I certainly don’t interact with web sites in the same way on my iPhone as I do on my computer. Despite all the power of the iPhone browser, I tend to do everything mobile in task-oriented, bite-sized chunks. For me, this is as true for applications as it is when browsing web sites. In fact, web site loading is often just slow enough that I abandon the site all together rather than wait (I use the original iPhone without 3G).

Smartphone click through rates much lower than computer users

This is almost heresy. The conventional wisdom in mobile advertising is that mobile has much higher click through rates than computers (e.g. mobile ads are more valuable), although the tide may be turning. Chitika found the opposite. Chitika found that smartphone mobile advertising click through rates (0.48%) are much less than online click through rates (0.83%).

The much lower mobile click through rate for mobile makes sense given the impatient, bite-sized behavior mobile consumers display. The stratospherical and often unsubstantiated click through rates quoted by mobile vendors with a vested interest (see link above) may not hold up in less controlled circumstances with larger sample sizes.

Maybe Monetization isn’t all about ecommerce-style advertising…

According to the stats above, smartphone users essentially consider their phone browser as good as a computer browser, yet they are far less responsive to traditional advertising.

Ultimately the lower click through rate suggests that ecommerce-style mobile advertising isn’t the best way to monetize mobile. The mobile context is just different. Mobile requires a different approach than ecommerce.

And from this point there aren’t easy, tested answers to the right way to proceed. It all depends.

Best practices will arise. But for now success relies upon knowing what others have tried and the history of what-works-where and what-doesn’t. Mobile monetization should also include actual commerce, which ironically most mcommerce lacks. Product placement and transactional revenue models also are appearing to work well in certain contexts.

Resources are tight and the stakes are high. This is no time to wander into the wilderness alone.

We would love to be your sherpa. Drop us a line: info@MobileStrategyPartners.com.

Mobile Banking is becoming a commodity in the U.S and will likely drive mobile banking vendor consolidation. Consolidation and feature parity among the remaining vendors will make it difficult for banks and credit unions to differentiate themselves. Institutions should develop a long-term mobile strategy to account for these changes and plan ways to differentiate from the competition, generate more revenue, and retain customers.

Mobile Banking vendors are pairing up with traditional banking software vendors. Fiserv offers MCOM mobile banking. Fidelity National Financial Services offers mFoundry. S1 offers Fundamo.

Increasingly vendors are offering similar features on a variety of platforms including Mobile Internet (WAP), SMS, iPhone, Blackberry, Android and others.

Furthermore, while neither vendors nor banks will talk about what they’re spending on mobile banking solutions, off-the-record indications are that the price points are coming down significantly.

Lower prices are great for bankers, especially in this tough economy. More mature software and more intense competition also bodes well for banks and credit unions. However, consolidation almost certainly follows plummeting price points and deep pocketed partners who can afford even deeper discounts.

Soon the market may be down to two or three mobile offerings from the same two or three vendors that offer online banking and core deposit systems. As with online banking, vendors will likely make it difficult for their mobile banking system to connect with others systems, to prevent erosion of their customer base. Therefore, many institutions will have little choice but to choose their mobile banking solution from their Internet Banking vendor.

Many banks are developing long term strategic plans to account for this consolidation. Bank of America, USAA, Wells Fargo, and Capital One have all experimented with a number of vendor provided technologies and ultimately provided more than just vendor provided solutions. While these are large institutions with many resources, there are far smaller banks and credit unions following the same path. For example, San Antonio community bank Broadway Bank has a solution provided by Mobile Earth that is tailored to their specific needs.

We recommend our clients to evaluate their long term mobile strategy and determine the directions that are right for them regardless of vendor developments. Each institution has it’s own brand, culture and competition. While transformative, the mobile channel will ultimately extend the existing institutional traditions but in new ways. When organizations clearly understand their needs, they can push vendors toward fulfilling their needs or make decisions to innovate themselves.

(This was featured in Banking Connects 8/18/2009, available here.)

Mobile Banking Requires a Long-Term Strategy. Canada is ready.

The call for strategic mobile banking is increasing and two recent articles are absolute must-reads.

First, Mobile Financial nicely sums up the challenges of mobile banking. Mobile Banking is not a simple add-on to an existing product. Mobile provides new ways to connect with your customer, strengthen loyalty, and deliver better services at a lower cost.

Mobile poses significant risks and technical challenges. Making a prudent decision on mobile banking requires three key “legs of a stool” a) deep collaboration between the business executives who know the long term goals for the organization, and b) the technology team who knows the intricacies of the current environment, and c) deep mobile expertise, which is often missing from most organizations.

Success requires all three legs of the stool and moving forward without all three almost certainly will result in failure (although some banks have set the bar extremely low so they can claim success, regardless). Mobile banking efforts now should be a base to build upon in the future. Doing it wrong now and having to start over puts you behind your competitors who did it right.

Secondly, Jose Colucci writes a manifesto (or offers a 12 step program) on why Canadian banks should offer mobile banking now. The Canadian market is ready. Canada is the land of the RIM and increasingly the iPhone. Canada has the technology, the infrastructure, the resources, and the demand for mobile banking to completely explode (in a good way) and be an example of success for the developed world.

I predict that when the first bank makes a bold move, the entire industry will follow. Canadian mobile banking will happen in a breathtaking, large rush.

In fact, in doing some Search Engine Optimization last week, I discovered one of the most searched terms related to mobile banking in Canada is “TD Mobile Banking.” Like most other Canadian banks, TD has a mobile web site that is keeping the proverbial light on for mobile. But like most WAP interfaces,  the TD site has some usability challenges which are almost certainly preventing widespread adoption.

And the point is that despite the usability challenges and lack of promotion, there is considerable demand for the product.

Canadian customers like Jose are clamoring for mobile banking.

C’mon CIBC, BMO, Desjardins, Laurentian, National, TD, and RBC. Let’s have it!