FORRESTER ADVISES
AMSTERDAM, Netherlands, 14 June 2002 . . . Today's dominant visible mobile
paradigm -- focused on person-to-person communication among very visible
human beings -- is too limited, saturated, and expensive for profitable
growth, and it will take a new approach -- Invisible Mobile -- to renew
opportunity and growth for telecom vendors and operators, according to a
groundbreaking report by Forrester Research B.V. (Nasdaq: FORR).
"The telecom industry's future depends on selling more gear, subscriptions,
and network services -- but visible mobile only has a set number of humans
to sell to," said Forrester Senior Analyst Lars Godell. "Most Europeans
already have a mobile subscription, and mobile penetration will not exceed
80 percent of the population. Today, the European telecom industry aims to
combat saturation with a 300 billion euro gamble on 3G -- hoping to raise
average revenue per user through yet-to-be-invented 3G services. This
strategy simply won't reignite growth because it will only yield
diminishing returns at sharply higher costs for infrastructure and
marketing, and will result in massive operator consolidation."
But Forrester argues that a new paradigm -- Invisible Mobile, which will
link hundreds of billions of network endpoints -- will restore growth to
the mobile telecom industry over the next five to 20 years. Forrester
defines Invisible Mobile as mobile communication without human
intervention. Enterprises, as well as chip makers, equipment makers,
solution providers, and telcos, will all benefit. Invisible mobile will
allow seamless, cost-effective communication across network boundaries --
from body area to wide area networks -- and it will tap into
machine-to-machine communication by exploiting diverse network
technologies. For instance, immature visible mobile technologies like 3G
and 4G depend on more and more radio spectrum, but invisible mobile can
draw on a large number of more mature radio technologies like GPRS,
Bluetooth, W-LAN, and RFID that depend on little spectrum.
Significantly for the telecom industry, invisible mobile will restore
opportunities because it has no major growth constraints and costs far
less. While visible mobile is constrained by people, invisible mobile's
real constraint is imagination, as trillions of physical objects remain
unconnected. With the support of some of the world's largest companies --
Coca-Cola, Procter & Gamble, Unilever, and Wal-Mart, to name a few --
researchers at MIT's Auto-ID Center aim to develop an Electronic Product
Code system using RFID technology that can track 1 trillion unique physical
objects per year. Invisible mobile exploits good-enough wireless
technologies like GPRS, RFID, and Bluetooth that use cheap or free radio
spectrum. Not only is the spectrum cheaper, but the network costs are much
lower -- a 3G base station costs 200,000 euros to 500,000 euros while a
W-LAN access point costs 150 euros to 200 euros. The network endpoint costs
are much lower, too -- compare today's RFID chip cost of $0.20 with $500
for a 3G phone.
"Over time, invisible mobile will create new pools of value for telecom
manufacturers and operators to exploit by connecting billions of new
endpoints and driving an explosion in network traffic," Godell added. "In
contrast to today's 8 million regular mobile Internet users, invisible
mobile allows for unassisted wireless communication among Western Europe's
200 million passenger and commercial vehicles and the approximately 500
billion unique physical objects that pass through European supply chains
every year. Forrester expects more invisibly connected machines and
physical objects than visible humans from 2005 onward as invisible mobile
sessions outnumber visible mobile sessions by a factor of more than 30 to
one in 2020.
"Corporations with deep pockets will fund invisible mobile because it will
deliver real business benefits -- driving growth and profit for the telecom
industry. For example, by applying smart RFID tags to every bottle it
produces, Coca-Cola could cut down the average 7 percent of consumer
product sales that get lost when goods are out of stock. By tracking the
200 billion unique objects in its annual supply chain, Coca-Cola could
reduce losses that typically represent 3 percent to 5 percent of total
supply chain costs. Equally, it could diminish theft, fraud, and errors
that amount to approximately 2 percent of US sales per year. Also,
outfitting billions of new devices with radio capabilities will bring new
business to communication chip makers and telecom equipment vendors."
