Mobile Phones Expected to Trigger Italian

A new report by Forrester Research, Inc. predicts that mobile phones — not PCs — will drive the growth of Italian e-commerce. Over the next three years, Italy is expected to narrow its e-commerce gap with other European players through a combination of new mobile services and partnerships.

The study found that Italy’s struggle to keep pace with European Internet growth has been due to low PC penetration, limited IT spending among businesses and foot-dragging in telecom deregulation.

Recent Developments Signal Change

Nonetheless, Forrester says that there are three current factors that will quickly transform Italy’s e-commerce arena from bust to boom:

Mobile phone use continues its upward spiral. This month, Telecom Italia Mobile announced a surge in mobile phone subscriptions, with 481,000 new users in July alone. This increase brings the operator’s total customer base up to 16.5 million. Such skyrocketing growth helps Italy retain its lead as Europe’s largest cellular market with more than 25 million subscribers. Another boost is on the way with second-place Omnitel speeding Wireless Application Protocol Internet phones to market this fall.

New services link mobiles to the Internet. This month, Omnitel launched its new 2000 portal, which dynamically delivers over 150 services via the Internet to mobile phones and regular phones. Leveraging partners like Microsoft and other commerce partners will enable users to access online services from news updates to bank accounts across multiple platforms.

A crowd of Internet hopefuls is assembling at Italy’s borders. Following the success of Internet ventures such as free service provider TiscaliNet, new players are making forays into the Italian Internet space. Additionally, venture capital firms like Milan-based Net Partners and firms like Softbank/Vivendi joint venture @Viso vow to grow U.S. and European pure plays in Italy. Meanwhile, Italian companies are preparing some offerings of their own — a consumer portal from Mediaset, online information products form Seat Pagine Gialle and Net business services from L’Espresso.

Concentrate On Critical Mass

Big players will shift time, money and talent away from the Web in order to target services at the critical mass of Italians already using mobile phones. According to Forrester, new entrants such as Alta Vista will initially forego PC versions altogether and try to leapfrog ahead of rivals like Yahoo! by developing mobile-only offerings.

Shift To PCs

Nonetheless, as Italian consumers learn the value of the Internet and e-commerce, Forrester predicts that they will begin to buy PCs in order to extend their Web experience. In anticipation of this trend, PC makers will ramp up partnerships with cellular operators. Additionally, the report predicts that Dell Computer and TIM will cut a deal enabling access bundles, PC discounts encouraging multiyear mobile subscriptions and cross-promotions in TIM’s retail stores.