The Hottest New Buzzword: 'M-Commerce'

I spend a lot of time talking with technology-company execs. I speak with them on the phone almost every day, plus for a half-day or so on Fridays, my "phone day." I meet with, on average, two or three companies a week in my office or over coffee somewhere. Plus, I take frequent trips to Silicon Valley, Boston's Route-128 area and Seattle, for "go-sees" -- to look, touch and play with the new stuff before (sometimes long before) it's released.

I'm not especially proud that I spend that much time on these talks, and I hate the travel. But I don't know any other way to keep up with such rapidly changing industries as are today swept under the rubric of "technology."

After 20 years of these meetings, one of the things I've learned to listen for are new buzzwords -- terms that I start hearing from several sources, usually in several parts of the country, at about the same time. Terms that aren't in print or on TV yet, but, it's clear, soon will be.

This business loves to pursue The Next Thing, and while a slavish pursuit of that chimera by writers and investors can produce more noise than signal, more heat than light, watching for the early emergence of these new buzzwords can produce invaluable inside intelligence. Run that intelligence through a reality filter, then an experience filter -- and you get a sense of what's likely to be hot in the near-to-mid-term future.

For several months now, the hottest of the hot of these new terms arising in talks with technology leaders has been "m-commerce." Forget about e-commerce, they say, m-commerce is where it's going to be. And where they want to be.

By m-commerce they mean "mobile commerce," as in e-commerce conducted over a mobile device. And they (and I) all agree that the mobile device is, overwhelmingly, going to be a smart cell phone, not a PDA or a handheld computer.

Why a smart phone instead of something sexier, like a Palm or Handspring PDA? Or one of those cool handheld PCs, like the new generation of Pocket PC devices running Microsoft's (MSFT) former Windows CE?

It's the communications, stupid.

No offense, but I couldn't resist stealing the line. Because communications lie at the heart of what is really useful about a pocketable device, and adding other functions to a cell phone turns out to make a lot more sense than grafting communications onto a PDA.

The Palm VII is a good example: It's clever, it's useful, but it suffers from lots of ugly compromises as a communications device, mainly growing out of its dependence on Palm's feeble "Web-clipping" approach. It's also hideously expensive, if you use it much -- exactly the wrong pricing approach for a tool 3Com (COMS) wants to make ubiquitous. A new flat-price contact for Palm.Net, announced last week by 3Com, will help, but using a Palm VII is still an expensive proposition.

Yes, I know a lot of TheStreet.com members love their Palm VIIs, sometimes even for accessing TSC content -- and I know I'll be hearing from a significant percentage of them.

But a lot more people -- hundreds of millions -- rely on their cell phones. We're just a couple of years away from a world market of a billion cell-phone users. And as we make more and more of those phones smarter and more useful -- especially in the new, third-generation, or 3G, phones -- they're going to become even more dominant.

There are lots of knocks on m-commerce. For example: "So how often do you find yourself walking down the street, and suddenly have an overwhelming urge to jump online and buy a book from Amazon.com (AMZN)?" Or, "The keyboard is too small, and the displays are even worse." Or, "But I love my Palm Pilot."

These comments all miss the point. It's not that you'll have a sudden urge, riding up to the 67th floor in an elevator, to buy a book. Or that you'll be using today's tiny keyboards and displays. Or that anyone's asking you to abandon your Palm Pilot, with its eight months of appointments and 1,400 contacts.

The real point is that m-commerce-enabled smart phones are going to be utterly ubiquitous. For many people, five years from now, a smart phone is going to be their primary means of communicating over the Net. For many people, three years from now, a smart phone is going to be their primary tool for what we today call "e-commerce."

Sure, this means a lot of retooling of today's e-commerce sites. Successful e-commerce companies will split their customer access between more conventional pages and smaller pages, organized very differently, with better and sharper searching, optimized for m-commerce machines.

The whole role of these pocketable smart phones is going to change. We'll use them constantly -- for everything from checking stock prices and making trades to buying movie tickets and Cokes from vending machines (already commonplace in some parts of Europe), as well as for sending short messages to one another.

As the Net spreads its tentacles, we'll use them to trigger events in Net-controlled environments -- turning on the heat at home, for example, so it's warm by the time we get there from the airport, and getting intrusion alerts from vacation homes when the alarm system there goes off.

M-commerce will be only a part of this, of course, and in fact I'm convinced that in maybe three years, as the number of truly smart, Net-enabled 3G phones reaches critical mass and the number of services we can easily access through them has exploded, all this will seem unremarkable -- utterly evolutionary, utterly predictable.

As an investor, how can you cash in on this move? More on that tomorrow.

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