Factors Affecting M-commerce Adoption

Feb. 27, 2012 - PRLog -- Cost
M-commerce operates within the paid-for service framework in the private mobile phone industry where business competition is stiff. In using this telecommunication services, users pay for air time, by the size of the data packet transmitted, and by the service used for what they get (Fox, 2000). At present, global wireless networks are segmented and owned by different mobile operators. Shim and Rice (2001) argued that compared to the low cost for internet access, a distinctive characteristic of m-commerce is the high cost of the network infrastructure. Mobile communication through mobile phones is costly, and any additional services and applications lead to extra charges. The reason is that the establishment of a mobile communication network requires heavy business investment (Ramakrishnan, 2001). Therefore, m-commerce players must generate revenue by conducting business activities to justify the huge initial investment (Lamont, 2001). Similar perspective can therefore be put forward on the price of services and applications. The development and delivery of services and applications also need initial investment. This means the service and application providers must look for revenues from selling the services and applications. Unfortunately, these costs of mobile network usage, and service and applications delivery have to be passed on to consumers. This high cost is undesirable because cost has been an important factor considered by consumers when deciding whether or not to participate in m-commerce (Plouffe, Hulland and Vandenbosch, 2001).

As stated by Chen and Hitt (2002): “when switching to different products or online services, consumers must deal with non-negligible costs.” Obviously, adoption of m-commerce initially implies expenses such as equipment (Constantinides, 2002). Combining with the cost of subscription and using the services and applications, in m-commerce models, we can observe that cost influences the adoption of m-commerce, which directly influences the efficiency of m-commerce models. However, it is quite common that the services and applications and equipments which incorporate the latest technology always cost more than products with matured technology. Although high cost may prevent users from accepting new services and applications, lack of services and applications may also lead to low usage.

Technology
M-Commerce services are constrained by a variety of wireless media communication standards ranging from global (Satellite), regional (3G, IEEE 802.11a/b, DoCoMo I-mode), to short distance or Bluetooth (Shim and Rice, 2001). Mobile network providers use different systems and standards such as GSM (Global Service for Mobile), TDMA (Time Division Multiple Access), and CDMA (Code Division Multiple Access) to compete with each other (Leung and Antypas, 2001). Because of different standards of technology, m-commerce applications tend to be device and network dependent. Studies found that there has been no generic world-wide framework and standard for application development using universal mobile connection and access. This resulted in the slower-than-expected adoption of m-commerce (Shim and Rice 2001).

Despite the challenge in different network standards, variant bandwidth is a critical problem. Recently, the multi-band and multi-mode mobile devices have emerged, allowing communications between networks. Typical forerunners are the dual-band mobile phones that are able to use 900 MHz and 1800 MHz GSM networks. Also, there are services that can use WLANs and Bluetooth, together with GSM, GPRS, and 3G networks. However, wireless technologies vary on the degree of bandwidth and reliability they provide. On one hand, this limits the types of services and applications that can be provided, for example, mobile TV that requires high bandwidth. On the other hand, it induces slow, unreliable connections, or poor connection quality – resulting in unsatisfying user experience. Furthermore, in some networks and for some services, fees are charged per connection-time, while for others, such as in packet radio, it is charged per message or packet (Wu and Wang, 2004). The difficulties in networks quality such as frequent unexpected disconnection may directly lead to increase in charges, which results unfavorably for m-commerce adopters.

In addition to underlying networking infrastructure and standards, it is the client devices that actually determine what specific services and applications can be delivered. M-commerce applications rely on the use of mobile devices. Mobile phones, as the main m-commerce device, can be divided into four categories based on their processor, memory and battery capacity, applica­tion capabilities (SMS, WAP, Web, I-mode) as well as physical size and weight (Tsalgatidou & Pitoura 2001). These categories are (from weakest to strongest): usual voice handsets with SMS capability, WAP phones, communicators or PDA with wireless communica­tion capability, and finally laptops with wireless communication facilities. On one hand, in order to achieve mobility, devices must be physically light and small. Portability considerations, in conjunction with a given cost and level of technology, will keep mo­bile elements having less resources than static ele­ments. This in­cludes smaller memory, disk capacity and computational power than traditional computing devices. Additionally, mobile devices such as mobile phones have tiny screens with limited display area. Although WAP devices support a limited graphics format called Wbitmap, because mobile devices had limited bandwidth and small screens, any application that is heavily graphic or animation driven would not be suitable at this time. Furthermore, software applications are relatively crude. There are no cookies or session controls, meaning that if the connection is lost, the application will have to restart rather than being able to continue from previous screens (Leung & Antypas, 2001). Web browsers and drop-down menus are unavailable, so companies must plan on character-based terminal applications with cursors and key entry forms. Long selection lists or deep menu layers will wear out the fingers of even the most patient users (Moustafa 2000, Jainschigg and Grigonis 2001).

Service Provision
With the support of the mobile infrastructure, services and applications can be delivered to customers. Market players including network providers, service and content providers, gain revenue based on consumption of these services and applications.

Research by Zhang, Yuan and Archer (2002) concluded that wide accessibility of the internet plays a major role in e-commerce success. Powerful and matured computer systems enable searching and delivery of a variety of complex services and applications, as well as transaction processing to be accomplished easily. Comparing to e-commerce, the delivery of m-commerce applications relies on private network providers. Services are usually available in specific region, and are simpler, more personalized, location-specific and time-sensitive (Zhang, Yuan and Archer, 2002). Because mobile devices normally stay close to owners anytime and anywhere, it is believed that m-commerce creates a more private environment compared to e-commerce activities which may take place on any public computers. Lucas (2001) and Swartz (2001-1) affirmed that: “time sensitive, simple transactions such as movie ticket purchases, banking, and travel reservations are believed to be the key applications that will stimulate m-commerce”. Other important services and applications which drive m-commerce growth are location-based applications such as traveller navigation and emergency response

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