WAP: The hot spot in the New Economy

News Analysis: Revenues for the European mobile portal market are forecast to reach £63bn by 201

June 2002 and you are driving up the M1 in your Honda-powered Rover 35. Your mobile phone bleeps you with a message. "Have you remembered your father's birthday? Would you like to send a gift via lastchance.com for guaranteed delivery tomorrow?" You roll the cursor on to the internet icon on your WAP-enabled mobile phone and click through to the lastchance site. You order the suggested present of a bottle of Macallan single malt whisky and pay via your e-account. You then drive on, a family embarrassment avoided.

June 2002 and you are driving up the M1 in your Honda-powered Rover 35. Your mobile phone bleeps you with a message. "Have you remembered your father's birthday? Would you like to send a gift via lastchance.com for guaranteed delivery tomorrow?" You roll the cursor on to the internet icon on your WAP-enabled mobile phone and click through to the lastchance site. You order the suggested present of a bottle of Macallan single malt whisky and pay via your e-account. You then drive on, a family embarrassment avoided.

This may sound spooky but mobile phone companies, the dot.com fraternity and hosts of City internet analysts expect it to become an increasingly mass-market phenomenon. It also explains why mobile internet portals are the hot new area in the digital economy.

On Monday, a new mobile internet portal was launched by iTouch, the mobile phone information company, which is 70 per cent owned by Independent News & Media.

Vodafone AirTouch, the UK mobile phone giant, will roll out its Vizzavi mobile portal in the next few weeks in conjunction with Vivendi, the French media group and Carphone Warehouse, the mobile phone retailer, is set to launch its Mviva portal with the backing of AOL later this summer.

These services will add to existing mobile portals, which include Genie, operated by BT Cellnet, and which already has 900,000 subscribers. Meanwhile, mobile phone manufacturers such as Nokia and traditional internet service providers like Yahoo! are also looking at the market closely.

Will WAP-enabled phones and m-commerce (internet jargon for mobile commerce) be big enough markets to justify this level of activity and investment?

According to Merrill Lynch, which has just produced a 68-page research note on the wireless market, the number of wireless internet users will rise from just 9 million this year to 242 million in 2005 and 311 million in 2010.

It further forecasts revenues for the European mobile portal market to reach 22bn euro (£14bn) by 2005 and 100bn euro (£63bn) by 2010, with half the market being grabbed by the existing mobile phone operators' portals, such as Vodafone, as they will find it easier to sell on services to their existing subscriber bases. The bulk of the remainder will be taken by the fixed-line phone companies and niche operators.

One of the key benefits of mobile portals is that because people tend to carry their mobile phones with them all the time, they potentially offer a more user-friendly service than PC-base internet portals, which people use either at work or at home. Also, because mobile phone networks know where individual users are, they can offer a targeted, personalised service. For example, if Waterstone's knows you have bought books from them in the past and knows you are walking close to one of its stores, it can e-mail you a special offer on your favourite author.

Whether people want to be bombarded with what are essentially sales messages on their phones is a moot point. But as Peter Bradshaw, internet analyst at Merrill Lynch said: "If people don't like it they can turn their phone off. Also they can customise the services so they only get alerts when Liverpool score a goal, for example; or to let them know that there is a huge traffic jam up ahead of them on the M6."

Merrill Lynch estimates that there is plenty of room in the market for the various m-commerce approaches currently being offered. BT has already made good progress with its Genie mobile internet portal, which was launched in January. It offers a series of "zones" including money, news, sport and music. Specific customer services include the sending of alerts, which send e-mails to your mobile phone of specific movements on your share portfolio. It is also inter-operable with digital television and your PC.

ITouch is offering news, business and sports coverage as well as classified advertising, weather and diary services. Its business services will include details of the top share price movements on the London market by price and volume. It will also be the first portal in Britain to offer live share prices by phone. The iTouch service will appear as a separate icon on the Vodafone/Vizzavi service,

Mviva's strength is its distribution through the 900 branches of Carphone Warehouse across Europe. It also hopes to load its portal on to all mobile platforms. Its other strength is the backing of AOL, which has taken a 15 per cent stake in Mviva, valuing the company at $550m (£367m) - the deal includes a cash consideration of $25m (£16.7m). It also has an option to acquire a further 4.9 per cent stake for $35m valuing the company at $700m.

Analysts suggest that, like many other markets, mobile portals will see a period of proliferation, consolidation, followed by the development of niche players. The market for internet service providers is very much in the consolidation stage with Dixons stake in Freeserve up for sale and Terra Networks recently buying Lycos. For the mobile portals, the fun is only just starting.

Additional research by Rachelle Thackray