GPRS was touted as the next major driver behind the handheld market. But six months after the new technology hit the market, corporate resellers and retailers alike are still waiting for the penny to drop in the marketplace.
GPRS connectivity in Pocket PCs and handhelds offers significant advantages to users — allowing field workers to surf the Net and email and access the corporate intranet at similar speeds as if they were sitting in a home office. Despite this, GPRS-enabled handheld market hasn’t taken off yet. When will it happen?
There are many reasons why GPRS technology isn’t currently driving handheld sales. A number of industry players attribute the slow uptake to the lack of awareness in both the corporate and retail market about the GPRS-enabled handheld’s capabilities, usage and overall costs.
Harvey Norman’s computer division general manager, John Slack-Smith, said GPRS connectivity had not done a thing to drive PDA sales in the retail sector but this would change once prices came down and customers became better acquainted with the technology.
“The education of most people in the marketplace, even that of the more literate Pocket PC users, regarding GPRS, the Pocket PC, the business tool component of the Pocket PC, the time management tool and the email facility is insufficient,” Slack-Smith said.
Harvey Norman is aggressively tackling this knowledge deficit in the marketplace by providing greater educational support at the point of sale, as well as by launching a proprietary web site that serves as an information, training and connection tool for handheld customers.
“We’re speaking to more and more people every day who want more information but don’t know how to get it, we’re trying to educate and assist our customers through the services we offer,” Slack-Smith said. “We recently launched a connection guarantee whereby if a customer loses a connection between their mobile and their pocket PC, we’ll re-establish the connection for you.”
The retail giant is making significant investments to market the technology and build public awareness about the capabilities of the technology.
“As much as I say GPRS has gone nowhere for us, we are actively putting in place systems, strategies and marketing plans to try and improve the customer experience with phone-enabled, GPRS-enabled Pocket PCs at the point of sale,” he said. “We’re focusing our marketing efforts on showing more people, in a simple yet seamless way, that your Pocket PC can be a whole different range of things — from an email device to a personal organiser, to a time management tool.”
Some resellers argue that the process of configuring GPRS is too complicated for many users, particularly retail customers, and therefore may be hindering adoption rates.
“The theory behind GPRS is wonderful, the practicality is terrible. One of the great evils of the pocket PC business is the process of trying to connect a GPRS-enabled mobile phone to a Pocket PC,” Slack-Smith said. “It would normally take more than an hour and there were many hurdles that you had to jump over to achieve that. Only somebody who was well above average in technical proficiency was able to do that.”
To simplify the configuration process for consumers, Harvey Norman’s proprietary web site allows users to download preconfigured settings for a variety of different mobile phones and Pocket PCs onto their handhelds in under 15 minutes. The user then just carries out basic personal configurations.
Tech Pacific’s systems and peripherals category manager, Joshua Velling, argues it is not so much that the complexity of the technology that is impeding the adoption rates of GPRS-enabled handhelds, it’s the cost. Nowhere is this more obvious than in the cost-sensitive retail market, where consumers are snapping up low-end offerings like the Palm Zire.
“The technology isn’t complicated but it’s not intuitive yet,” Velling said. “The pricepoint of GPRS-enabled PDAs clearly segments the end users, it’s an executive product.
“There are a large number of people who have mobile phones and there are a large number who have PDAs, so there is definitely a market for connectivity between the two existing technologies. But I think the integrated PDA/mobile phone is where we’re going.
“For an integrated PDA/mobile phone on the market now you’re looking at a pricepoint of about $1200. The price has got some way to go before it goes mainstream, where 50 per cent of the PDA market is.”
While the handheld market has shown steady growth over the last 12 months, IDC’s associate analyst of computer hardware, Imraan Ali, attributes this overall growth largely to an increase in low-end retail market sales following the release of a number of low-cost PDAs with sub-$300 pricepoints.
According to IDC statistics, the number of unit shipments of converged handhelds in Australia dropped 1.7 per cent from Q3, 2002, to Q4, 2002.
Unit shipments of standard pen-based PDAs increased a modest 5.3 per cent for the same period, the analyst reported, and there have been no shipments of key-based PDAs in Australia since Q2, 2002.
“There has been noteworthy growth in the low-entry PDA market, while the high-end corporate handhelds, many of which feature GPRS connectivity, were not big sellers during the period,” Ali said.
Sub-$300 PDAs topped the charts in Q4 with the Palm Zire and the Tungsten T reporting strong sales for the period. The Palm Zire was the number one selling handheld product during December and made up 30 per cent of Palm’s total sales. Its price of $239 hit the sweet spot with many consumers, but Inform analyst, Luke Solyom, said the device had also sold surprisingly well in the business sector.
“The new Palm release undercuts the cheapest Pocket PC device by over $500,” he said. “Whilst it’s true that the Palm Zire is aimed at non-business users, the device is actually selling surprisingly well to the business demographic.”
Managing director of PDA distributor Brightpoint, Felix Wong, agreed that the price of GPRS-enabled handheld devices was hindering uptake.
“Certainly GPRS is better known and better understood now, however, pricing is still very high for serious users and hence a major concern to potential users,” Wong said.
Velling said that over the next 12 to 24 months there would be a big change in the market that would be driven principally by a significant drop in the price of GPRS-enabled handhelds. This would drive demand in the retail market.
It is not only the upfront cost of the devices that are of concern to both retail and corporate customers, it’s the cost of transferring data via the telco’s networks.
Toshiba’s product manager, Justin White, said the GPRS billing systems currently offered by telcos were largely responsible for slowing uptake.
“The cost of transferring data via a GPRS connection has become cost-prohibitive so nobody has adopted it,” White said. “If that obstacle went away then people would start using wireless data. At the moment, it’s too costly to be economically viable.”
Today there are two basic billing methods for GPRS that are similar to mobile phone billing systems. Under the user-pays system users are billed according to the amount of data they transfer rather than time. The other method is a pre-paid system where the user pays for a certain amount of data upfront. The pay-in-advance method is typically a little cheaper and easier for the user, although it is not always easy for users to predict their usage patterns.
Telstra currently charges up to $22 per MB of data transferred, which can become prohibitive when downloading e-mail and web surfing.
“Users must be diligent as to how they use the service in order to avoid unexpected presents from the telco in the post,” White said.
Resellers should educate the customer about the different types of billing methods available and ensure they understand how the customer intends to use the device so they can suggest the best billing option.
A dearth of applications designed specifically for GPRS-enabled Pocket PCs and handhelds has also not helped build the nascent market.
Excluding email and a couple of vertical applications, such as sales force automation tools like iTouch, there are no killer apps out there to drive sales of the devices. By far the majority of applications on offer are just pared down versions of once feature-rich apps designed for the desktop. Subsequently users familiar with desktop versions of these applications are unimpressed by the Pocket PC versions.
However, there is a significant amount of R&D going into the development of niche applications designed with the mobile executive in mind.
Today, the number of vendors rushing to develop mobile messaging solutions is increasing, varying in scope from Microsoft, IBM, and Oracle to device manufacturers Nokia, Palm, and Handspring. A multitude of smaller vendors have also entered the fray.
And these vendors are not just focusing on email but on mobile messaging as a central part of mobile applications such as CRM, ERP, or supply chain management (SCM). People don’t just want email; they want messaging-driven applications.
Quite clearly the handheld market is immature. Potential corporate buyers are aware of the plethora of emerging wireless technologies — Bluetooth, WiFi, smart phone, 3G — and are no doubt hesitant to make significant investments in costly GPRS-enabled Pocket PCs when in 10 months time there will be a more sophisticated technology available that offers greater functionality.
It is critical therefore that customers are made aware of how their businesses will benefit by adopting the technology that is available today rather than waiting for the next generation of technology to become available. In many cases these customers needed to see an immediate ROI, general manager of Toshiba, Ralph Stadus said.
“Resellers need to understand the individual customers’ time/dollar trade-off,” he said. “This trade-off is different for every different user. Some customers, like stockbrokers for example, will see an ROI a lot quicker than others. Resellers cannot take a generic ROI model to the market.”
Many of the benefits of mobile computing come from intangibles such as saved time, improved data accuracy, and more efficient management of field resources. Since it’s difficult to measure such benefits, building a case for mobile computing requires resellers to sit down with the customer and identify their needs and match it with the most appropriate solution.
Email on demand is the most compelling solution that GPRS-enabled Pocket PCs and handhelds offer. Wong gives an example on how this facility translates to time savings: “Take for example a typical businessman that spends a minimum of 10 minutes a day waiting. If they turned that 10 minutes into email reading time, that would amount to 50 extra minutes a week or 200 extra minutes per month. It doesn’t take an Einstein to work out that the ROI here is far greater than the cost of the device.”
However the email facility offered by GPRS-enabled Pocket PCs and handhelds will not suit every mobile executive.
“If the customer usually sends and receives content rich emails with bulky attachments, they are better off investing in a GPRS-enabled notebook,” Wong said. “Pocket PCs with GPRS are best suited to clients, such as technicians, doctors and people who traditionally use pagers, who predominantely send short, succinct emails that are light on content.”
Wong said the rule of thumb was, “If the customer doesn’t need it — then they shouldn’t buy it. If it doesn’t satisfy a business requirement and bring positive return to their business, then they shouldn’t buy it.”