Application Customization, Profit Zones, and the Design of a Delivery Network for Mobile Commerce Services

Abstract

Wireless industry has enjoyed an impressive growth over the past few years. However, recent developments in the marketplace suggest that future growth depends on offering customized mobile commerce-related data services targeted at commercial customers. A theoretical framework that we introduce in this paper shows that such key parameters as the client network size, performance of the delivery network, expected market demand, and degree of required customization lead to the formation of profit zones within the marketplace. Different profit zones call for different designs of the delivery network and its corresponding business model. Profits generated within each zone vary because of the tradeoffs between potential revenues from services and costs of customization. Our analysis also shows that under certain conditions the dominant industry form might be evolving towards a vertically integrated service provider.

Keywords: Mobile services, wireless services, mobile operators, quality of service, telecommunications

JEL Classification: L15, L16, L43, L96