HANDHELD DEVICES DRIVE A FLURRY OF WIRELESS SERVICES. BUT IS ANYONE OUT THERE?

Blame Jonathan Bell for the Knoxville (Tenn.) News-Sentinel’s foray into the wireless world.

Last year, the Internet developer picked up a handheld Palm Pilot personal organizer. After dutifully entering his contacts and schedule, Bell stumbled across AvantGo software allowing users to download content from a variety of publishers to handheld devices. Several big newspapers—The New York Times and San Jose Mercury News among them—provide news via AvantGo, and Bell started thinking big.

AvantGo wasn’t “looking at papers our size,” recalls Jack Lail, the paper’s online-media division director. “But we signed up to see if anybody would use it.”

Launched last year, the slimmed-down, text-only AvantGo versions of the paper’s knoxnews.com and govols.com World Wide Web sites draw a small but loyal following of several hundred handheld users daily. How loyal? “If we forget to post it, they notice,” Lail says.

Much the same accounts hail from several dozen papers across the country. An early adopter or two buys Palm Pilots or pagers; before you know it, their paper is available in a pint-sized package.

“Maybe one-half to two-thirds of the [Web staff] here have Palm devices,” acknowledges Steve Uurtamo, software-development supervisor for the The Arizona Daily Star’s azstarnet.com. “Tech-savvy Web nerds are more into this than the public, [but] the number of people will grow.”

Hundreds of users may not be much to crow about, yet the wireless user base is poised to explode. Be they Palm Pilots or other handheld computers, pagers or cellular phones, the equipment is ubiquitous and cheap—well under $500 and far outpacing PC price cuts. One study predicts that within two years, wireless Internet users will exceed their wired counterparts. Sound farfetched? Already more than 75 million Americans subscribe to cellular services; another 40 million use pagers, according to International Data Corp. of Framingham, Mass. Although few currently have wireless Internet access, the upgrade path suggests that it won’t be long before their ranks outnumber the estimated 35 million U.S. households with Internet access, IDC argues.

Familiar adversaries—the same folks who threatened to eat publishers’ lunch in the online city-guide space—now make threatening wireless moves. Most notable is America Online Inc.’s Digital City business unit, soon available to wireless users in 60 markets. Ticketmaster Online-CitySearch’s wireless unit isn’t far behind, with an affiliate network of wireless providers and content developers. While Microsoft Corp. divested itself of its once-feared Sidewalk last summer, it now partners with wireless providers to take its msn.com family of services to the airwaves.

Then consider the carriers themselves—the telcos of the world who don’t want to simply sell shovels during what could potentially become the second Internet gold rush. Few dream of being full-fledged content providers. However, most plan to be far less passive than your typical twisted-wire ISP by selling the prime real estate on that tiny handheld screen to the highest bidder. And who has more money—Yahoo! or a daily?

“You’re dealing in local space, [but] there are deals negotiated on a national level that may impact or preempt what you’re doing,” says Edward A. Canale, director of strategic planning and new media at The Sacramento Bee.

New-media executives insist that the time has come for publishers to put experimentation ahead of concrete business plans—even the wireless providers don’t really have those yet, anyway.

Early measures of the market show a favorable climate: Cox Enterprises Inc.’s Access Atlanta logged 5,200 subscribers during an unpromoted three-week trial of its Access Atlanta Everywhere wireless service. AvantGo downloads already account for 1 million page views a month across KnightRidder.com’s sites. And while few people are talking about business models, much less profits, strangely familiar arguments resurface.

“It’s a way to build your brand, and build your franchise—even if there isn’t a direct revenue model at this point,” Lail says, echoing exactly what people were saying about the wired Internet just a few years back.

PARTNERING: PUSH VS. PULL

By reaching out to wireless-technology partners, publishers are beginning to build their franchises. They caution, however, that few technology providers believe in the value of local content. “Most of the deals are being done on a national basis,” says Canale. But about six months ago, the Bee was contacted by Airtouch, a national wireless provider that decided to differentiate itself from other carriers by providing local news. SacBee.com already had been working with AvantGo, but jumped at the opportunity to be the first thing central Californians see when they turn on their cell phones or pagers.

Still in early stages, the deal with Airtouch, recently merged with Bell Atlantic to become Verizon Wireless of Irvine, turns the emerging wireless model on its head. Instead of paying the carrier for placement, SacBee.com gets a cut of the wireless-data subscription fee, around $5 a month for cell-phone users, with a guaranteed minimum. Canale says it’s too early for specific numbers, but suspects the agreement bodes well for other publishers.

“Deal from a position of strength,” he urges. “Every wireless carrier is going to deliver national and international news, sports and business....Local [content] will be a big driver.

“That’s a good theory,” he adds, “but we haven’t been at it long enough to prove or refute it.”

The Bee may be the only U.S. newspaper in an exclusive relationship with a wireless provider, but several dozen partner with AvantGo. The San Jose service got its start by allowing Palm Pilots to download content while tethered to users’ PCs, but has extended its reach to wireless devices of all stripes and sizes. Users, however, must remember to sync their Palm Pilots or instruct their devices to download content daily—the old “push vs. pull” argument from the Web.

The San Jose service claims a user base in the “hundreds of thousands” and charges neither end users nor publishers. Its managers want to enter revenue-sharing deals with some publishers, though execs at most AvantGo-powered papers haven’t begun considering advertising or commerce opportunities.

Other providers offer a similar technology-neutral approach. AnyDevice.com counts Access Atlanta Everywhere among its partners. As its name suggests, it does the heavy lifting in sending wireless content to pagers, cell phones, handheld devices and standard PC e-mail. The service is free, but a disclaimer on the Cox site warns users that their own wireless carriers may assess connection charges. Along with news content, Access Atlanta Everywhere includes traffic updates and severe-weather alerts, delivered according to user criteria.

“If users want traffic updates e-mailed at 4:38 p.m., Monday through Friday, then we’ll e-mail traffic updates at 4:38 p.m.,” says General Manager George deGolian.

Strategy.com takes a similar approach, emphasizing people-pertinent news flashes such as stock-price swings or company-specific news. Already Belo, The Washington Post and The Wall Street Journal have entered partnerships with the service (Presstime, April 2000, p. 12).

Not all wireless devices are meant to be carried from car to coffeehouse. Some, including devices under development by Intel Corp. of Santa Clara, Calif., and Gateway Inc. of North Sioux City, Iowa, are intended for home use, primarily to provide a pervasive Internet experience separate from that PC in the study.

Last year, Advance Internet and The Oregonian partnered with Intel to see whether household users of a wireless “Web tablet”—larger than most handheld devices but smaller than a newsmagazine—would increase online use. The answer? Yes, but only if content is personal and relevant, giving users reasons to pick up the tablets and begin reading.

THE SCARY QUESTION

Those mixed results beg a question—what if publishers build a wireless-news service and nobody cares?

Bite-sized screens of most devices, only capable of displaying 30-to-150 words, make reading even short stories difficult. Worse, the devices’ limited text entry means that few users will have the patience to enter search criteria or browse.

While news-site managers acknowledge these limitations, few do more with their handheld content than strip out formats, much as they would when sending stories to a wire service. For about an hour a day, one SacBee.com producer trims content for Verizon users, but the staff still posts full text to AvantGo.

“Our next hire will be dedicated to platforms other than the Internet,” Canale says. “We anticipate massaging the content so it is platform specific, with different versions even for cell phones and pagers.”

Still, a nagging suspicion exists that handheld devices might be more like wired versions of Yellow Pages than ultra-portable newspapers. “Is it significantly easier than picking up a copy of the paper?” asks Uurtamo. “I don’t know. Is it cheaper? Not necessarily, with the wireless [service] cost.”

Indeed, Forrester Research of Cambridge, Mass., argues that Yellow Page-style directories remain the information most desired by cell-phone users, the first choice of 90.6 percent of those surveyed. Melinda Gipson, NAA’s director of new-media business development and author of a white paper on wireless technology (see www.digitaledge.org), maintains that newspaper content as it’s envisioned in print, and even on current wide-screen Web sites, won’t work.

“Newspaper content isn’t portable,” she writes. “It must be...sliced up and offered as activities users can do.” Coupons, directions, directories and comparison-shopping services, as well as classified-notification features that e-mail users when, say, a house matching selected criteria comes on the market, rank among the best potential uses, she contends.

Services such as strategy.com’s stock-notification alerts offer one current example, but on a national level that could be duplicated by newspaper rivals. An application being tested by azstarnet.com hints at a local, more newspaper-centric alternative. The site’s movie section marries reviews and user comments with theater times; the AvantGo application allows users to access that data while, say, standing in line at the multiplex.

Sensible enough. But here’s the key: Users will select information they want—theaters, movies, times—on their PC before venturing out with their handheld device. That way, what they see on that tiny screen is exactly what they want, and they don’t have to waste time typing in search criteria with a numeric key pad.

“They need to select the things that are important in advance,” says Uurtamo. “Having access to wire feeds and stock feeds allows newspapers to provide these kinds of applications. But they need market heft to roll them out.”

The industry now shifts its considerable weight in that direction. In the wake of an NAA-sponsored wireless-industry summit last fall, McClatchy Co.’s Nando.net will launch a wireless-applications server for testing. NAA technology staffers are developing filters to convert Web-based extensible markup language, or XML, news and classified formats into WML—wireless markup language, an emerging standard for wireless content.

And present-day uncertainty provides perhaps the greatest incentive to experimentation. “I don’t know where wireless is headed,” Canale says. “but that’s even more of a reason to jump ahead of it.”

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