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Struggling for a Slice of the Wireless Pie

Consumer services: Pizza-ordering system tested by Domino's and Motorola highlights hurdles of m-commerce.


You're hankering for a pizza and have a cell phone in hand. Why not go online?

That's the deal Motorola Inc. is pushing.

The Schaumburg, Ill., cell phone giant, searching for ways to sell more Internet-enabled handsets, has developed a "three-click" mobile pizza ordering system for Web-enabled phones, which Domino's Pizza tested last year in Las Vegas.

Results from that trial show the wireless industry is set to revolutionize the pizza delivery business. Or perhaps the findings merit more study of the concept.

The answer depends on whether you ask Motorola or Domino's.

"This is easier than ordering over [a regular] phone, especially repeat orders," said Tim Krauskopf, a vice president of Motorola's Internet software and content group.

"Ordering online is more difficult than picking up the phone," countered Matt Maguire, Domino's vice president for information services.

The differing responses highlight the hurdles purveyors of "m-commerce," or mobile commerce, must leap before winning the hearts of restaurant and retail executives, not to mention consumers.

M-commerce, like its older cousin e-commerce, is expected to offer companies a new sales channel that could transform how consumers get information, entertainment and products, including pizza. Yet the hype about how m-commerce can turn cell phones into electronic wallets and let stores fire off instant messages to nearby shoppers hasn't translated into changes in consumers' habits.

And that's unlikely to happen any time soon.

Wireless analysts said the most popular m-commerce offerings for consumers in the U.S. during the next couple of years probably will be downloadable games and ring tones.

"It gives the consumer a chance to dip her toe in m-commerce without diving in," said Adam Guy, a wireless analyst with Strategis Group.

More elaborate offerings will be constrained by outdated infrastructure, conflicting standards, security concerns and device limitations.

"It's got to get to the point where the application is so easy that people say, 'This is easier than dialing,'" said Adam Zawel, a wireless analyst at Yankee Group in Boston.

That's the challenge Motorola is taking on in the pizza business.

Motorola wanted to develop a shopping "engine" that can be used for various m-commerce applications.

Krauskopf said the company decided to test its software in one industry and settled on pizza because it is a $30-billion market, already has strong telephone ties and includes many repeat orders.

For pizza outlets, Krauskopf said, the concept clicks because it cuts down on the number of employees needed to enter orders and reduces errors in order entry.

Yet the concept faces serious logistical issues.

The biggest barrier from the consumer point of view, Krauskopf said, is getting people to program their phones with their favorite combinations of toppings, address and billing information, so they can quickly enter repeat orders.

Many pizzerias often present their own limitations, particularly if they don't have computer-based ordering systems installed.

In the test with Domino's, Motorola had to set up a simple version of the ordering system for locations that didn't have the computer systems. Users could see a menu and specials but still had to make a call when they were ready to place an order.

Many businesses still don't have Internet ordering systems.

For example, Pizza Hut offers online ordering in only three places: Columbus, Ohio; Kansas City, Mo.; and the Dallas-Fort Worth area.

Manish Patel, chairman and co-founder of Where2getit Inc. in Northbrook, Ill., said that though his firm develops Internet store-location search pages and maps for companies such as La-Z-Boy Inc. and Reebok International Ltd., clients have expressed little interest in building m-commerce capabilities.

"At this stage, no one is really moving," Patel said.

That doesn't mean, though, that some companies aren't getting ready.

Donatos Pizzeria, which is owned by McDonald's Corp., has decided to use Motorola's m-commerce offering.

"We're probably a year away from really pushing it," said Tom Krouse, senior vice president of marketing at Donatos. "Our hope is it just grows on the front end of this wave."

Donatos has drive-up windows where customers can pick up orders, and Krouse expects the ability to click orders into cell phones will be popular with people who use that service.

Still, Donatos will have to clear technological hurdles before it can offer the service in its 200 locations as well as get franchisees on board with the concept.

"The plan would be to make it available to all customers, but you have to make sure that everybody is set up properly," Krouse said.

Ensuring that the infrastructure works and then converting customers to use the service take much more time than cranking out pronouncements on the hype machine, a lesson well learned by e-commerce pioneers.

Domino's Maguire said every vendor who visits him asks how online ordering has grown in recent years. He turns around the question, asking whether they would order pizza online.

"They start thinking about the logistics of it all, and they say they would still call," Maguire said.

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