The early description of mobile commerce was first pointed out by Muller Veerse in 1999[3]. In his explanation, mobile commerce is a subset of electronic commerce, and any transaction made via mobile communication network or involved with monetary values is regard as mobile commerce. In later years, Tsalgatidou and Veijalainen[4], Clarke[5], and Barnes[6] approached with a perspective of transactions. They considered any kind and economic values transactions managed through at least one kind of mobile terminal equipments on the mobile network, as a part of mobile commerce. In 2001, Mackintosh[7] and Kannan et al[8] referred mobile commerce as an extension of electronic commerce on the Internet. Mylonopoulos and Doukidis had a systematic definition in 2003. It refers to an interactive ecology system of corporations and individuals, and this ecology system is built on the social economic background and various previous technologies [9].
The mobile market has seen significant growth in the past few years. Global m-commerce revenues expected to $88 billion by the end of 2009. It enables a new opportunity for the growth of m-commerce. M-commerce is attractive for research because of its relative rapid growth, and prospective applications [10]. According to Varshney and Vetter, M-commerce covers a broad applications[11]. There are twelve m-commerce applications identified and classified. Naming several important categories of m-commerce applications are mobile financial applications, mobile advertising, mobile inventory management, locating and shopping for products, proactive service management, wireless re-engineering, mobile auctions or reverse auctions, mobile entertainment services and games, mobile offices, mobile distance education, and wireless data centers. They then explained detail for each application and networking requirement. This gave systematic approach for those who want to develop mobile commerce application based on mobile network.
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3.2 Mobile commerce value chain
In 1985, Michael Porter defined value chain as the linkage and integration of a series of activities in which enterprises deliver the created and valued products or services to customers[12]. He also indicated that the value chain of any company is included in a lager value hierarchy. This value system is created from the value chains between the many firms from its upstream to its downstream organizations. In this perspective, value chain concept both is analyzed in term of the enterprise‘s internal value activities, and the external entire industry to compare the cost with competitors. Mobile commerce comprises products and services. According to Barnes [6] in 2002, the practice of adding values to the ultimate users also relates many possible members, largely including bank, mobile network operator, customer, and other value providers [13]. This process of value creating activities both draws in more members such as content supplier and mobile service suppliers, enabling them an opportunity to join in the activities and also changes the value system of the traditional mobile communication [4]. When the new technologies came out such as 3G technology with new services offering, the number of providers is increasing. As Ying-Feng Kuo and Ching-Wen Yu classified in 2005[14] there are total of 11 identities involving mobile commerce value chain such as Technology platform vendors; Infrastructure and mobile equipment vendors; Infrastructure and mobile equipment vendors; Application developers;
Content developers; Content aggregators; Mobile portal providers; 3G mobile network operators; Mobile service providers; Mobile equipment retailers; Customers. While each of them has own role, responsibility and value adding to the whole value chain they could merge with each other to be a bigger identity which has more capabilities. In the value chain, network operator has several advantages over the peer providers. They can act the any role in value chain so they also could fit in several types of business model.
3.3 M-Commerce ecosystem
In nature, an ecosystem consists of a world of plans and animal – herbivores, carnivores, insects and plants of all kind which are in balance. In 2003, Takeshi Natsuno defined ecosystem model includes mobile phone manufactures, content providers, carriers such as DoCoMo, server manufacturers, customers coexist, compete and prosper together[15]. M-commerce services require real-time delivery or service quality, security, location management, transactions support,
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and wireless network reliability. Wireless LANs (WLANs), cellular networks, and satellite-based networks can support one or multi m-commerce services such as mobile auctions, interactive game, mobile finance service, mobile advertising, mobile entertainment services, proactive service management, and mobile inventory management[16]. Content of the service is made and integrated by one or many providers among Technology platform vendors; Infrastructure and mobile equipment vendors; Infrastructure and mobile equipment vendors; Application developers; Content developers; Content aggregators; Mobile portal providers; 3G mobile network operators; Mobile service providers; Mobile equipment retailers in the M-Mobile value chain. All coexist and cooperate base on mobile networks infrastructure creating M-commerce ecosystem.
3.4 Business models for M-Commerce
In the past few years, some interesting case of mobile commerce was conducted. Xianjun Geng and Andrew B. Whinston in 2001 pointed out that network operator could gain benefit from usage-based pricing or prepaid flat-rate plans[17]. In 2002 Mitsuru Kodama studied the market expansion and global strategy of DoCoMo [18]. He pointed out that one factor helped DoCoMo and i-Mode successful was building up ―portal community‖. It gives users ―one stop shop for all‖. DoCoMo took advantage as dominated player in supply chain creating and enforcing an exclusive group of service providers. With this power Japan‘ DoCoMo had built profound ecosystem for its 48 million customers around i-Mode. Users pay in usage-based. On the contrary, Vodafone[19] does not control third-party providers that its customers can access. News services and content are included in Vodafone‘s subscription charge for second-generation (2G) to 3G services. It offers flat rates for data services and event-based or per-minute charges for games, live TV and concerts. South Korea (SK) Telecom‘s created one business model to charge a fixed monthly subscription rate (around US$6) for voice, data, and SMS services. In 2008, still from control rights point of view, Upkar Varshney sum up two kind of business model for network operators [16]. They are centric business model and managed one. Their differentiation is the way network operation controlling network access and content like DoCoMo. In centric approach operators strictly take over both but in managed way they let user free to choose content
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providers such as Vodafone. Decision upon each way also setup benefit sharing mechanism among partners. He finally came up with a hybrid model of these two.
Model Attributes Example
Centric Business Model
Network operators control both network access and content creating
and enforcing an exclusive set of service providers then redistributing benefit along partners
DoCoMo
Managed model Network operators control network access only let users free to access to third parties for content
Vodafone
Hybrid model The control right of network operators could vary depending on its capabilities and market power
Table 2 Business model for mobile network commerce
Source: U. Varshney, "Business Models for Mobile Commerce Services: Requirements, Design, and the Future," IT Professional, vol. Vol. 10, No. 6., pp. 48-55., 2008.
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