Business Aspects of the Internet of Things - ETH Zürich

Business Aspects of the 

Internet of Things 

Seminar of advanced topics, FS 2009, 

Florian Michahelles (ed.) 

This report summarizes technical and business opportunities 

of the internet of things. All articles have been written by 

students participating in the Seminar of advanced topics in 

spring 2009. 

http://www.im.ethz.ch/education/FS09/iot_sem 

The Internet of Things has emerged both as vision of research and business practice. As the 

ownership of the term is not clearly defined, also a clear definition is missing. Clearly, ITU’s 

report “Internet of Things” has provided great popularity to the Internet of Things. It explains it 

as the capability of items to share information about themselves. The main driver is RFID, but 

as technologies progresses various others, such as sensors, might become feasible soon. 

This is pretty much in line with EPCglobal and the Auto-ID Labs claiming to architect the 

internet of things. The focus here is on a world-wide infrastructure allowing to share itemlevel 

supply-chain data across companies for increased process efficiencies. Then, there is 

the IPSO alliance, backed by the major internet backbone technology providers, fostering the 

application of IPv6 to objects, and a number of other initiatives, also branded under the term 

‘web-of-things’, running items and objects as web-servers and, as such, using web 

technologies to manage the expansion of the internet to the real-world. 

Eventhough a clear and commonly agreed definition of the Internet of Things does not exist, 

there is a huge variety of topics bound to this vision. It was the goal of this seminar which 

took place in Spring 2009 with 17 students with backgrounds ranging from business to 

computer science and environmental engineering, to shed some light on these topics. The 

seminar was organized in a ‘conference style’ which meant, first, for each student to present 

one topic in a 15min talk in class and to manage a subsequent discussion both on business 

as well as technical terms. Second, each student was asked to compose one paper which 

then was peer-reviewed by three other students plus the instructor of the course. 

These proceedings present a selection of the most compelling papers of the course. The 

following articles cannot be regarded as scientific contributions, but they provide concise 

summaries of related work in the field and hopefully serve as helpful introductions to the 

Internet of Things for novices, practitioners and other student interested in this field. 

Thank you very much to all students visiting “Business Aspexts of the Internet of Things” in 

spring 2009 at ETH Zurich, details to be found here: 

http://www.im.ethz.ch/edu/FS2009/iotsem 

Florian Michahelles Zurich, Switzerland, June 23, 2009

Table of Contents 

Business Aspects of the Internet of Things 

Seminar of advanced topics, FS 2009, Florian Michahelles 

Mobile as a Personal Computer 

Anar Gasimov 

3 

RFID for Track & Trace of Baggage in Airports 

Stéphanie Nguyen 

8 

Smart Home 

Jingzhi Xu 

13 

Input Techniques for Mobile Phones: keyboard, sensors, barcodes, RFID, HCI 

Afet Musliji 

19 

End User Programming in Internet of Things 

Özge Kökçü 

23 

User-Generated Content 28 

Niroshan Balasubramaniam 

Monetization of Mobile platforms 

Avinash Vankadaru 

34 

Business Aspects of the Internet of Things: Mobile Marketing 

Gilad Geron 

39 

Why Mobile Payment still has some way to go in Switzerland 

Stefan Wengi 

45 

Persuasive Technology in Motivating Household Energy Conservation 

Yi Bing Tan 

52 

Roomba to Roomie: Robots are entering our homes and our lives 

Zacharias Annu 

59 

Promising Business Applications of Vehicular Communication Systems 

Michael Steiner 

66 

Things and Services 73 

Sanjin Goglia

Business Aspects of the Internet of Things, Seminar of Advanced Topics, ETH Zurich, FS2009, Florian Michahelles (ed.) 

Abstract 

Mobile phone has become indispensable in modern 

life. Its increasing popularity rises the question about 

what will be the place of mobile phone in the future. 

The trade-off between mobile phone’s reduced 

capabilities (e.g. small screen, low processor power) 

and its unique advantages (e.g. geo-localization, user 

awareness) make this question more challenging to 

answer. In this paper we will see the different 

capabilities of mobile phones and analyze at which 

extent those capabilities can evolve and contribute to 

mobile phones future status as a personal computer. 

1. Introduction 

Mobile has evolved from being merely used for voice 

calls and short messages to a ubiquitous platform used 

for social and commercial purposes [6]. The expansion 

of mobile web (3G, 3.5G), advances on mobile 

hardware (e.g. bigger screens, better processing power) 

and new services/tools facilitating mobile application 

development are the three main factors contributing to 

this trend. 

The definition of mobile can vary from one source to 

other. Some define it as mobile device to communicate 

and exchange data through mobile or wireless 

networks [1], others define it as battery operated digital 

device with computer-like capabilities [2]. In this 

article we will refer by mobile to pocket size PC which 

can be seen as a device combining mobile phone 

functions such as sending and receiving calls and 

messages with those of Personal Digital Assistant 

(PDA). 

There is a wide range of devices between a desktop PC 

and a mobile. Laptops, Notebooks, Netbooks, 

Deskbooks are all PCs of different sizes each adapted 

to special situations. Mobile can also be considered as 

a part of it, however, its unique capabilities such as 

user-closeness or location awareness, and its special 

business configuration (e.g. Mobile Network 

Operators, device manufactures) make it a full-fledged 

domain. Mobile can act as a PC at some extend, it can 

also become the primary computer device in coming 

years [1], but it is important to note that mobile and PC 

Mobile as a Personal Computer 

Anar Gasimov 

Swiss Institute of Technology Zurich 

agasimov@ethz.ch 

3 

are not concurrent of each other. Turning mobile 

phones into PC's is not an achievable goal. Mobile 

phones are used in context, in mobile settings, and thus 

service specific needs (e.g. schedule, communication, 

navigation, location-based services etc.). In this regard, 

the main questions are: what are the main differences 

between a mobile and a PC and how mobile can be 

improved to be used instead of PC in many situations. 

Those main questions are analyzed from three aspects: 

hardware, software, and business logic. 

2. Mobile versus PC 

a) Hardware 

Mobile device is composed of about 20 different 

components e.g. CPU, screen, Bluetooth, GPS 

receiver, SimCard slot, etc. The basic technology of 

those components are the same in all mobile models, 

but their interfaces and connection models change from 

one model to another. Each mobile model has its 

nonstandard shape, thus manufacturers have to adapt 

the components to fit in that shape. This embedded 

configuration of mobile offers some advantages and 

disadvantages compared to PC (Table 1). Let us 

consider each of the missing points of mobile hardware 

separately and see how they can be improved. 

Mobile PC 

• Portability 

• Special 

capabilities: 

input 

• Near Field 

• 

Communication, 

Audio, 

Photo/Video, 

Barcode, Tagging 

Built-in GPS 

Table1: Advantages of Mobile and PC 

• Large screen 

• Ergonomic 

keyboard 

• Long battery life 

• Processor power 

• Standard protocols 

• Bigger storage 

Battery Life 

Even physically smaller, mobile has relatively higher 

battery life than current notebook computers when it 

comes to basic mobile functionalities such as 

conversation and messaging. However, there is still 

room to improvements to allow mobile perform like a 

PC.


There are three ways of solving battery problem: 

making hardware which consumes less energy, 

improving the battery itself, and developing new 

facilities which make the battery charging easier. The 

first and the second suggestions have been exploited 

for many years. In other words, small improvements on 

that direction are constant but big changes are not 

frequent. The last suggestion is more interesting as 

there is a big improvement potential. Currently each 

mobile model has its own charger. This trend seems to 

change as a consortium of mobile manufacturers are 

agreed to make an ecological universal charger by 

2012 [7]. Once the most of the mobiles use the same 

charger, those chargers can be installed in different 

places such as home, office, train station, bus, etc. 

Universal charger is also a first step for a universal 

docking station for mobile. 

Small screen 

The size of the screen is a subjective argument as it 

also determines the 

device’s total size. Many 

mobile models are forcing 

this trade-off by using the 

total front panel of the 

device for the screen 

(iPhone, HTC Diamond). 

In this regard, there is not 

an ideal screen size adapted 

for all usages. Watching a 

movie requires a very big 

screen, sending an email can be done on a small 

screen, and all day office work needs a middle sized 

screen. 

In this context, an ideal 

screen should have a 

flexible size: small while 

carrying and big while 

using. It can be partially 

solved by beamers and 

docking stations (Figure 1, 

3) as it is already the case 

for notebooks. Another 

solution is using foldable 

screens (Figure 2) even if 

it is still in early research 

stage. This solution can 

accommodate both bigger 

screen and small device 

issues. 

Input 

Mobile’s small size makes 

it less comfortable for data 

Figure 1 Mobile Beamer 

Figure 2 Foldable 

screen 

Figure 3 Docking 

Station for mobile 

devices 

Figure 4 Projected 

Infrared keyboard 

4 

input. Extended keyboard solutions such as projected 

keyboards, Bluetooth keyboards are already available 

but not very popular among users. The main reason is 

while using a bigger keyboard the mobile device’s 

screen is far from user and therefore unreadable. In this 

regard, external ergonomic keyboards have to be used 

with conjunction with a bigger screen. Docking 

stations is also the most suitable solution to provide 

external screen, keyboard and also mouse for mobile 

devices. 

Processor power 

There is a trade-off between processor power and the 

battery life. This problem is the same as for 

notebooks. Thus, there is not real solution as we would 

always want instantaneous/fast processing and 

unlimited battery life. Processor chip manufacturers 

besides increasing the processing power, optimize 

them to consume less battery power. The processing 

speed of some new mobile models have already 

reached the level of few year old notebooks (e.g. 

Toshiba TG01 with 1GHZ processing power). 

Standard protocols / extension 

The hardware of a PC has passed a long 

standardization period. Currently desktop PCs can be 

assembled with a minimal knowledge in computer 

science. Even small notebooks are composed of 

standard CPU, peripherals, input/output ports, etc. This 

standardization is more complicated for mobiles due to 

their small size and custom shapes. Each company and 

in most cases each mobile model has its own hardware 

specifications. 

The lack of standardization 

of mobile hardware is the 

green line which separates it 

from PC family. 

The improvements on this 

direction can start by putting 

on mobiles standard 

Figure 5 Mobile with 

USB port 

input/output ports such as USB. With a mobile having 

a USB port, any hardware can be plugged to mobile 

with the corresponding driver. 

Storage 

The storage difference between mobile and PC is 

fading as the cost of high capacity memory cards drop. 

Memory cards with 16, 32 GB capacity are now 

available for a low budget. Those capacities are more 

than enough to store and run a large set of applications. 

The demand for more space is generally for achieving 

purposes which can be done using other devices than 

the mobile (e.g. PC, external/network disk).


b) Software 

Solving the hardware problems demands big effort 

from mobile device manufacturers and it is hard for 

small companies to contribute. In contrast, mobile 

software market is open and there is still much to do a 

in that area regarding the available technologies. 

Internet factor 

The latest revolution in mobile came with new mobile 

telephony communication protocols such as 3G. Larger 

bandwidth and a flat rate connection made mobile 

internet accessible to a larger population (Figure 7). It 

opened a new horizon for internet based applications 

(e.g. Limbo, Bedo, etc.). This step to forward has been 

determinant for mobile in its new role as a PC. There is 

a big probability that mobile will become the primary 

device to access the internet in the future [3]. Many 

utilities which were in the past required a notebook 

(e.g. email, instant messaging, small amount payments) 

are now more suited for the mobile. 

User interface and input 

As the size of the mobile device cannot go bigger, the 

potential of improvement resides in the user interface 

design and the possibility of using other input methods 

than a keyboard. User interface is the key point to 

make people shift a part of their activities from PC to 

mobile. According to statistics (Figure 6) the IPhone 

market share has increased more than 500% in one 

year. It is a good example of how the user interface 

design can be crucial when choosing a mobile device. 

Figure 6 Smart phone market share 

Internet surfing is one of the most used PC-like activity 

of mobile. Mobile web users as PC web users prefers 

shorter surfing sessions over long ones [5]. Surfing 

time can be significantly shortened by innovative input 

methods. Nearly every mobile have a build-in audio 

and video input capabilities. They can be used as new 

generation input devices. With applications such as 

Shazam mobile user can record couple of seconds of a 

sound and the application will search for corresponding 

music title using the tone matching. Kooaba is another 

5 

Figure 7 Mobile internet (pages downloaded), source Opera 

type of application which uses image input to find the 

corresponding information in the database. Those 

techniques are enhanced to other areas of image 

processing such as face recognition, optical character 

recognition, augmented reality, etc. Being able to 

recognize a Chinese text and automatically get 

information about what is written using the mobile 

phone is the dream of most tourists. 

The information on the screen can be also arranged in a 

way to let user access the desired functionality with 

minimal number of clicks [8]. 

Mobile OS 

Mobile Operating System market is globally shared by 

five systems which are Nokia Symbian, Apple iPhone, 

Microsoft Windows Mobile, RIM, and Linux. In 

contrast with PC OS, mobile OS have many 

incompatibility issues between different versions and 

devices. This is due in part to custom hardware 

specifications of each mobile device. For example as 

the keyboard structure for each mobile device varies 

from one model to other, the underlying software 

which uses the keyboard becomes incompatible when 

changing the OS. 

New open mobile OSs such Android contributes to 

standardization by pushing the existing mobile OS 

companies (Symbian, iPhone) to either be more open 

or to propose better standardized API. 

c) Business Aspects


The business configuration of mobile market is slightly 

different from PC. In the PC market the roles are 

shared between actors such as OS developers 

(Microsoft), microprocessor (Intel, AMD) and 

peripheral manufacturers (Logitech, Samsung, etc.) 

and internet service providers (Google, Yahoo). In 

contrast, in mobile market Mobile Network Operator’s 

are have far more power than other actors. They decide 

which model with which capacities should or should 

not go to the market. In this configuration sometimes 

good solutions can be stopped if they are not 

interesting for MNOs. 

From statistics (Figure 8) we see that even if the 

mobile communication cost decreases, the average 

monthly bill is stable over years. In other words, 

MNOs have to make users pay for the infrastructure 

(satellite, antennas, etc.) one way or another. 

Emerging Mobile Virtual Network Operators are the 

first step to make the mobile market more liberal. 

MVNOs act in the same way as the MNOs exept that 

they do not own the underlying infrastructure. Another 

obstacle in this liberalization process is the SimCard. 

Currently SimCard is the black box controlled by 

MNOs. If a SimCard can be replaced by a software 

solution such as a username and password, the mobile 

will definitively be the most popular PC. 

Figure 6 Average local monthly bill for mobile, source: CTIA 

Internet of Things Aspects 

Making mobile act like a PC means more internet 

connected computer in the future. Mobile can replace 

any other electronic device if the required hardware is 

present. For example, mobile has a camera, it is small, 

and it has an internet connection. Moreover, a mobile 

phone is cheaper than a good quality CCD barcode 

scanner. This will tremendously increase the number of 

internet connected “readers”. Coupled with new 

6 

tagging methods such as Microsoft Tag, internet and 

location based systems, mobile’s evolution as a PC 

will contribute to the expansion of the internet of 

things. Imagine 2 billion people able to read any 

barcode/tag and instantly retrieve/proceed the 

contained/linked information. 

3 Conclusions 

There will be certainly more mobile users than PC 

users in the future. This is mainly due to poor countries 

where people cannot afford to buy a mobile and a PC. 

Mobile devices will act more and more like PC. 

As the flat rate mobile internet becoming a standard, 

mobile will be the first device to access to internet. 

Mobile’s future place as a PC will pass by hardware 

and software standardization starting by liberalization 

of mobile market. The first battle will be between the 

mobile and small size notebooks. We can already see 

that a part of activities which in the past were done in 

the notebooks are shifted to mobile (e.g. email). New 

generation of notebooks with as very small screen (e.g. 

7 inch screen) including a SimCard slot are already on 

the market. 

From hardware point of view the biggest evolution 

should be the mobile docking station. It can either 

follow the same scenario of notebooks (each company 

with different solutions) or start directly with 

standardized solutions. 

And finally, each device has its area of predilection. 

For example, it was predicted that the new home 

cinema facilities will make people go less to cinemas 

but it has not affected much the cinema frequentations 

[4]. In this regard, mobile’s future status as a PC will 

not change the configuration of current PC market. All 

the intermediate devices in between will continue their 

existence. 

References 

[1] Mobile Phones Will Become The Primary Personal 

Computing Devices. John J. Barton, Shumin Zhai, 

Steve B. Cousins. s.l. : IEEE Workshop on Mobile 

Computing Systems & Applications, 2006. 

[2] Exploring the Implications of M-Commerce for 

Markets and Marketing. Sridhar Balasubramanian, 

Robert A. Peterson, Sirkka L. Jarvenpaa. 4, s.l. : 

Journal of the Academy of Marketing Science, 2002, 

Vol. 20.


[3] The Future of the Internet III. Janna Quitney 

Anderson, Lee Rainie. s.l. Pew Internet & American 

Life Project, 2008. 

[4] Mediametrie, Media in Life. Study on Cinema 

frequentations in France. 75 000 Cinéma de 

Médiamétrie. s.l. : mediametrie.fr, 2007 

[5] Mobile web surfing is the same as web surfing. 

Martin Halvey, Mark T. Keane, Barry Smyth. 3, New 

York : ACM, 2006, Vol. 49. 

[6] In-Stat. US Mobile Social Networking and the 

Millennial Generation. s.l. : In-Stat Mobile Consumer 

Service, Reed Elsevier, 2008. 

[7] BBC News. Universal charger for phones plan. 

http://news.bbc.co.uk/1/hi/technology/7894763.stm 

[8] Robbins, D. C., Lee, B., and Fernandez, R. 2008. 

TapGlance: designing a unified Smartphone interface. 

In Proceedings of the 7th ACM Conference on 

Designing interactive Systems (Cape Town, South 

Africa, February 25 - 27, 2008). DIS '08. ACM, New 

York, NY, 386-394. 

7


RFID for Track & Trace of Baggage in Airports 

Stéphanie Nguyen 

ETH Zürich – Department of Management, Technology and Economics 

snguyen@student.ethz.ch 

Abstract 

Contributing to the growing trend of the internet of 

things, RFID has been replacing barcodes as the 

technology for track and trace of baggage in airports. 

With the growing complexity of airports and the 

disadvantages of barcodes, such as low read-rate, 

airport baggage mishandling rates has been 

increasing significantly. Despite the benefits of RFID, 

many airports have been facing roadblocks concerning 

a global standard of UHF frequency, the investment 

required for the implementation and setting up the 

infrastructure. To overcome the roadblocks, the 

International Air Transport Association (IATA) has 

provided support for a smoother transition to RFID 

with their Baggage Improvement Programme which 

provided some focus on global RFID implementation. 

With most of the roadblocks out of the way, a global 

adoption of RFID for track and trace in airports is on 

its way. 


By 2010, one third of the world's population is 

expected to be on the internet and there is a staggering 

amount of data intelligence being driven by the rapid 

proliferation of smart sensors and RFID tags [1]. Radio 

frequency identification (RFID) is a technology that 

uses wireless readers to access data encoded in chips. 

It has evolved into a reliable, cost-effective technology 

used for personal identification, asset management, 

security, logistics, inventory control, and many other 

operations, without needing human intervention [17]. 

It enables computer systems to identify objects, as well 

as understand their status. After overcoming much 

controversy, RFID’s value proposition makes it clear 

that it is a growing part of the web of identify that is 

growing [20]. The value proposition is especially high 

when it comes to baggage handling in airports. The 

increasing complexity of the system and increasing 

baggage mishandling is putting pressure on the 

8 

industry to improve the technology, leading the way to 

using RFID for track & trace in airports. 

This paper aims to identify the need of better 

baggage handling and how RFID can be used as a 

solution. The Hong Kong International airport will 

provide an example of an RFID implementation in 

airports. This will lead to a comparison between the 

current barcode system and RFID and what benefits 

can be achieved. Finally, the paper will look at some of 

the current roadblocks for a wider adoption and how 

the industry is overcoming them. 

2. Background 

2.1 Airport baggage handling 

Since 1992, barcodes have been used in airports for 

the identification of baggage. During baggage check-in 

at the airport, a baggage tag with a barcode is printed 

which includes all relevant data, such as flight and 

destination. This tag is then attached to the baggage 

and serves as identification until the final destination. 

There are several problems associated with using 

barcodes on luggage. The problems include: 

‐ The barcode requires optical sight to be read by 

the barcode scanner. 

‐ Barcode scanners can read only one barcode at 

a time. 

‐ The average read-rate is very low at around 

85%. 

‐ The paper on which the barcode is printed is 

easily crumpled or torn. 

‐ Information cannot be overwritten – changing 

or adding information requires a new barcode 

which needs to be printed. 

According to industry statistics, 42 million items of 

luggage were delayed or lost in 2007, at a cost of $3.8 

million 1 to airlines [6]. In 2006, the industry paid $1.21 

billion in direct compensation, although passengers 

have not yet taken advantage of the increasing liability 

1 Monetary units are expressed in U.S. dollars


of airlines [14]. The baggage handling system is 

becoming more complex due to the safety regulations, 

increasing number of passengers and tighter turnaround 

times between flights [16]. The growing 

complexity and problems at airports is driving the 

transition to a new technology. 

2.2 RFID technology 

An RFID tag includes a microchip connected to an 

antenna. The data is read using a reader which 

transmits digital data to a computer. The figure below 

depicts this process. 

Reader 

Computer 

System 

Antenna 

Figure 1 - RFID technology [7] 

Transponder 

Table 1 - RFID trials and implementation [14] 

9 

The RFID Journal defines RFID as “a generic term 

that is used to describe a system that transmits the 

identity (in the form of a unique serial number) of an 

object or person wirelessly, using radio waves” [2]. 

Along with barcodes and other technologies, they are 

considered automatic identification technologies which 

have been developed to increase efficiency of manual 

data input and improve data accuracy [2]. Contrary to 

what many people think, the technology is not new and 

it dates back to World War II where it was used to 

identify and authenticate allied planes [7]. 

3. Implementation 

Especially in such a complex setting as an airport, 

it is important to take the environment into 

consideration when implementing RFID. For example, 

metal, electrical noise, extreme temperatures, liquids 

and physical stress can create a challenge and may 

affect performance [7]. For this reason, the 

environment can only be assessed using field trials, so 

by 2007 several trials were already performed. IATA 

summarized the trials and implementations in table 1. 

Upon completion of a trial, many airports have moved 

on to a full implementation, such as the Hong Kong 

International Airport, while some have just abandoned 

the project.


3.1 Hong Kong International Airport 

A good example of a RFID implementation project 

which started as a pilot and is currently fully 

operational is the Hong Kong International Airport. 

With a passenger throughput of 48.6 million in 2008, 

HKIA is one of the world’s busiest airports. By 2008, 

they announced that all of its check-in counters would 

print integrated RFID baggage tags [18]. 

The main driver for RFID implementation at HKIA 

was to boost security and improve baggage handling 

efficiency. They wanted to reduce required manpower, 

as well as reduce short ship rate and baggage transfer. 

In 2004, a pilot implementation was started. A year 

later the project went live, and by 2008 it was 

completely operational [19]. 

The RFID technology is used in parallel to their 

existing barcode system. When checked-in and transfer 

luggage arrives at the luggage-handling conveyor, they 

are fitted with a smart label bearing a 10 digit IATA 

number which becomes the bag’s “license”. The 

“license” includes information such as airline and 

flight number and is read using a barcode scanner. The 

information, which is stored in the barcode, is 

transferred to the RFID tag. RFID readers throughout 

the baggage handling process are then used to ensure 

the correct flow of the bags to the airplane [19]. 

Reengineering was required to accommodate the 

214 new readers, 500 antennas and the change in 

software. The total cost amounted to $50 million, but 

costs never represented an issue. The support of the 

local civil authorities and the airlines ensured that the 

project was self financing [19]. 

The result of the implementation was higher 

customer satisfaction through a lower rate of 

Table 2 – Barcodes vs. RFID capabilities 

10 

mishandled luggage. The productivity of the airport 

increased by 17% due to higher luggage sorting 

capacity, reduced manual labor and increased 

passenger security. The only concern that arose was 

due to the possible health risks of RFID from exposure 

to radio waves, but experts insured that it was not 

anything to worry about [19]. 

Since the implementation of RFID at the Hong 

Kong International airport, there has been many more. 

By early 2008, more than 30 airports had a trial or full 

implementation of RFID. In December 2008, Lisbon 

international airport became the world’s first airport to 

completely replace the barcode with RFID. All 

baggage are now tagged and tracked with RFID and 

barcodes have been completely eliminated. Then 

Italy’s busiest airport, Milan’s Malpensa Airport, 

became the first airport in Europe to implement a 

comprehensive RFID baggage tracking across the 

entire baggage handling system [5]. 

4. Results 

RFID provides many benefits over the current 

barcode system. Table 2 below summarizes the 

capabilities of the two methods. The implementation of 

RFID involves benefits to three stakeholders: the 

airlines, the airports, and the passengers. [14] For the 

airline, a $733 million saving is expected every year, 

of which $343 million would be attributed to a read 

rate improvement. This saving estimate is a direct 

result from the reduction of baggage mishandling costs 

incurred by airlines. For the airports, expected benefits 

are the optimization of operating costs, the ability to 

better manage the infrastructure, enhancement of 

safety and quality control. Finally, the passengers’ 

benefits will be seen through the reduction of 5.7 

million claims, the faster resolution of baggage 

problems, and accurate/timely information [14].


5. Overcoming roadblocks 

5.1 Standards 

Leading the airline industry, the International Air 

Transport Association (IATA) was created about 60 

years ago by a group of airlines. They currently 

represent 230 airlines, which consists of 93% of 

international traffic [11]. In 2008, with nine airlines 

and nine airports, IATA has launched a Baggage 

Improvement Programme (BIP) to reduce the rate of 

mishandled baggage by improving handling processes. 

Part of their focus is on the identification of baggage 

using RFID to ensure passenger and baggage are 

reunited at their final destination [13]. They are able to 

do that using their ability to create industry wide 

standards, attracting the helping efforts of airlines, and 

focusing on a mutually beneficial approach for 

everyone involved [10]. 

The International Organization for Standardization 

(ISO) and EPC Global have developed standards for 

RFID technology to define an efficient platform on 

which industry can operate and advance [7]. Although 

there are many different RFID frequencies, the UHF 

Frequency Band was chosen by IATA for the aviation 

industry because of its proven interoperability, large 

reading distance, low cost, high information transfer 

rate, and compatibility with a broad spectrum of 

materials [9]. 

In November 2005, IATA approved the 

recommended practice RP1740C for the UHF 

electronic bag identification, based on three standards: 

ISO/IEC 18000-6C (EPC Gen2 protocol), ISO/IEC 

15961 and ISO/IEC 15962 [15]. IATA also 

recommended a business case for the industry and a 

transition plan for the technology that promotes global 

interoperability. The recommendation was provided in 

the Passenger Services Conference Resolution Manual 

[21]. 

5.2 Cost and infrastructure 

Today, a major roadblock for the implementation 

of RFID in airports is still the investment required. 

There are two areas of costs associated with RFID in 

airports. The first one is the cost of the equipment (tags 

and readers) and the other one is the cost of the 

integration into the system. 

Considering the cost of the equipment, there are 

currently many different manufacturers, which provide 

it at various costs; some have previous experience in 

RFID implementation in airports [16]. With the price 

of tags still around 10 cents each, it would cost the 

11 

airlines about $300 million annually for 3 billion bag 

tags. On the positive side, the cost of tags is decreasing 

as the number manufactured is increasing [16]. For 

example, increasing manufactured quantities from 

100,000 to 1,000,000 can reduce the cost by 40%. 

Another 25% saving can be achieved with 10,000,000 

tags [16]. In addition, tags of the range 7-8 cents have 

already been introduced several years ago. Then earlier 

this year, a Chinese RFID tag-and-reader company has 

announced an EPC-compliant inlay (aka tag) for 5.8 

cents each for volumes of 5 million or more [4]. This 

price reduction could have a significant effect on the 

future speed of RFID adoption. 

The cost of tag printers and readers also needs to be 

taken into consideration. In 2007, the cost of RFID 

printers was between $1,600 and $1,800, while the 

readers range from $1,500 and $2,500 [16]. 

The airlines would also have to invest in the 

installation of the infrastructure. This includes the 

structure for readers, commission tests for readers, and 

Programmable Logic Controllers (PLC) integration. 

The total cost of implementation is in the range of 

$350,000 and $1,000,000 depending on the size and 

complexity of the airport [16]. Although the cost seems 

high, studies have shown that the system would 

provide a payback within two years [3]. 

Even if the investment is possible, building the 

infrastructure is another roadblock. With a larger 

amount of data available by using RFID, the 

complexity, burden, and cost of managing the 

information is increasing [14]. There is currently also a 

lack of skilled integrators to implement RFID, which 

has limited the number of full implementations 

possible. But contrary to popular belief, global benefits 

can be achieved with only 80 of the top airports 

equipped with RFID. This will cover 80% of all 

mishandled luggage [14] and save the industry over 

$200 million [21]. 

6. Conclusion 

Due to the increasing complexity of airports and 

number of mishandled luggage, the change from the 

traditional barcode system to using RFID technology 

for track and trace at airports has become a global 

trend. With the help of the International Air Transport 

Association, airports have overcome the roadblocks of 

RFID implementation, such as building the 

infrastructure and the investment required, in order to 

benefit from its main advantages. Although there is 

already a large amount of airports already equipped 

with RFID, the reduced cost of RFID chips is opening 

up the way for small airports to adopt the new


technology and leading the way to a more global 

benefit for everyone. Baggages at airports are quickly 

becoming part of the internet of things. 

10. References 

[1] Smart infrastructure of the Century. (2009, March 7). The 

Jakarta Post. Retrieved March 16, 2009, from International 

Newspapers database. 

[2] “What is RFID?”. RFID Journal. 2005. [Online] 

http://www.rfidjournal.com/article/articleview/1339 /1/129/ 

[3] Roberti, Mark. “Baggage Tagging Is a No-Brainer.”RFID 

Journal. 9 October 2006. [Online] 

http://www.rfidjournal.com/article/articleview/2706/1/2/ 

[4] SCDigest Editorial Staff. "The Five Center RFID Tag is 

Here, the Five Center Tag RFID is Here! Well, Almost." 

SupplyChainDigest. 29 January 2009. 

[5] “European airports deploy RFID‐enabled baggage 

tracking”. RFID News. 5 March 2009. [Online] 

http://www.rfidnews.org/2009/03/05/european-airportsdeploy-rfid-enabled-baggage-tracking 

[6]“ Software upgraded for baggage handling solution“RFID 

News. 21 October 2008. [Online] 

http://www.rfidnews.org/2008/10/21/software-upgraded-forbaggage-handling-solution 

[7] “Understanding Radio Frequency Identification (RFID)”. 

R Moroz Ltd. 4 November 2004. [Online] 

http://www.rmoroz.com/rfid.html 

[8] Zhang , Ting; Ouyang , Yuanxin; He, Yang. “Traceable 

Air Baggage Handling System Based on RFID Tags in the 

Airport”. Journal of Theoretical and Applied Electronic 

Commerce Research. Vol 3. Issue1 April 2008. University de 

Talca - Chile 

[9] Dr. Scherrer, Darien. “RFID Regulation and Technical 

Issues”. RFID –visions and reality ETH Zurich. 6 March 

2009. 

[10] “Baggage Improvement Programme (BIP)” IATA. 

1997-2009. Accessed: 20 March 2009. Available: 

http://www.iata.org/ 

[11] “About Us” IATA. 1997-2009. Accessed: 20 March 

2009. Available : http://www.iata.org/about/ 

[12]” IATA Introduces RFID Standard for Baggage Tags 

Annual industry savings projected at US$760 Million”. 

IATA. 18 November 2008. [Online] 

http://www.iata.org/pressroom/briefings/2005-11-18-01.htm 

[13] “Simplifying the business”. IATA. January 2009. 

12 

[14]” RFID for Baggage business case” IATA. 2007. 

[15] “INNOVATIONS and technologies” IER. 2007. 

Accessed: 20 March 2009. Available : http://www.ier.fr /uk/ 

market/air-transportation/~/uk/innovation/keeping-track-ofbaggage-with-rfid/index.html 

[16] “RFID in Aviation: airport luggage control”. 

AeroAssist. June 2008. 

[17] “Zebra’s RFID Readiness Guide: Ensuring a Successful 

RFID Implementation”. Zebra. 2008. 

[18] Hong Kong International Airport. Accessed 20 March 

2009. Available: http://www.hongkongairport.com 

[19] “Case Study: Hong Kong Airport - Baggage tracking 

implementation”. The Sectoral e-business watch. 2008. 

[20] Bite, Katalin Emese. “Minimizing the baggage loss at 

airports”. Periodica Polytechnica. 2008. 

[21] “RFID IN AVIATION”. IATA. 2008.


Abstract 

Have you ever dreamed of owning a house, 

which you can control all the things with one 

single click? The Smart Home provides this 

concept that, a house installed with of remote 

control and automation technology which make 

your life easier and more convenient. This 

technology has appeared for several decades; 

however, there is no large scale of adoption of 

this technology until now. This paper analyzes 

the Smart Home market from the demand side 

and supply side, and there are some 

opportunities of this technology to be promoted. 

However, there are still some roadblocks to 

adopt this technology as well. 

1 Introduction 

A Smart Home is a home or building (usually a 

new one), which is equipped with special 

structured wiring to enable occupants to 

remotely control or program an array of 

automated home electronic devices by entering a 

single command 

Smart Home 

Jingzhi Xu 

MSc Management, Technology and Economics 

ETH, CH-8092 Zurich, Switzerland 

jixu@student.ethz.ch 

[1] . For example, you can 

remotely control your heating and lighting 

system in your house by a touchtone phone 

when you are in vacation. You can also alarm 

the security system when you find some bad 

guys break into your house. First, this paper is 

going to give an overview of the concept of 

Smart Home and its main characteristics. Then 

the technology aspect of Smart Home is 

13 

introduced and its some key elements are 

discussed in details. Finally, the market aspect of 

Smart Home is also discussed from the demand 

and supply side, and the viewpoints of different 

roles are compared with each other. 

2 Background 

Smart Home uses electronic networking 

technology to integrate the various devices and 

appliances in the house, so that the households 

can control an entire home centrally and 

remotely, as a single machine. This technology 

actually offers significant improvements in the 

living standards of the elderly and disabled who 

may otherwise totally rely on home care without 

these technologies. 

There are four main features of Smart Home, 

which are remote access, safety and security, 

centralized control, and sustainability: 

With remote access, households can control 

their home via PC or telephone remotely. For 

example, if you forget to switch on/off some 

devices when you are away, or even simply want 

to switch on the HVAC system before you go 

back home, you can use your office PC or even 

a mobile phone to have a full access to your 

home automation system wherever you are. You 

can trigger on/off devices, lights, or activate 

programmed sequences such as vacation mode 

to give your house a lived in look, or simply


switch off the security alarm and open the door 

lock to enable relatives or Delivery Staff to enter 

your house. 

Safety and security is a main consideration 

regarding to the concept of Smart Home. The 

sensor network within the house and around is 

capable of detecting the unpredictable break-in, 

therefore alarming automatically and turning on 

the strong lighting system to let the households 

clearly see the situation at night. The centralized 

control system, usually in form of touch panel, 

makes the life of households much easier. With 

one single touch panel, you can control the 

home theater, music system, light controls, life 

safety and security system, etc [2] . 

The last but not the least is the sustainability, 

which should be realized by a typical Smart 

Home. Since the amount of energy consumed in 

the house accounts for a large proportion, the 

future home need to take considerations into 

save the energy consuming by 50% or even 

more, compared to conventional houses. The 

energy collected at solar panels or building 

material itself (such as multi-layer facade) can 

supply the heating or cooling during the winter 

or summer times. When households are not at 

home, the whole heating or cooling system will 

be stopped which will save much unnecessary 

energy waste. Another example would be 

rainwater collecting system can make use of rain 

to flush toilets. 

There are some examples of design of the 

concept of the Smart Home: the atmosphere 

transmission system, which has the capacity to 

record its own memories of living patterns and 

the residents’ preferred lighting, sounds, images 

and smells; Smart dressing table can create a 

perfect and convenient atmosphere for putting 

up make-up on quickly and effectively; Smart 

bed can be programmed to remember your 

preferred sound, smell, light and temperature 

settings to gently wake up all your senses and 

give you a good start to every morning; Smart 

14 

Universal Remote Control is capable of 

recognizing an object via an internal camera 

promptly displaying an appropriate GUI for any 

system in the Smart Home [3] . 

3 Smart Home Technology 

Smart Home technology is a collective term for 

information and communication technology 

(ICT) which are used in houses, where the 

various components or devices are 

communicating via a local network. The 

technology can be used to monitor, warn and 

carry out functions according to various 

different selected criteria. Smart Home 

technology also makes the automatic 

communication with the surroundings possible, 

via the Internet, ordinary fixed telephones or 

mobile phones [4] . 

There are some elements, which is applied in the 

market now: 

Sensors 

Sensor is a very important element used in smart 

house, measures a physical quantity and converts 

it into a signal which can be read by an observer 

or by an instrument. Sensors monitor and 

measure activities in the surroundings. Examples 

are movement and heat sensors, humidity 

sensors, bed mats, thermometers and smoke 

detectors. 

Actuators 

Actuator is a mechanical device for moving or 

controlling a mechanism or system. Examples 

are door or window and garage door openers, 

curtain and awning engines, automatic light 

switches and relays. Several of the components 

of environmental control systems are actuators. 

Controllers 

Controllers make choices on basis of 

programmed rules and occurrences. Controllers 

are microprocessors often built-in with sensors 

and actuators. They receive and process signals


from the sensor or other controllers. For 

example the controller of a thermometer can be 

programmed to send a message to switch off the 

electric heating system when the temperature 

� 

exceeds 22 . This message is received by the 

heating controller, 

� 

which will switch on the 

actuator. If on a hot day the temperature 

exceeds 27 , a message 

can be sent to the 

window opener to open the window. 

Network and Data Bus 

The network is the transmitter of the signals in 

the system. The most popular transmitters are 

power line, radio signals (RF) and to some 

extent optical fibers. All modern Smart Home 

systems have bus-based networks. In a busbased 

net all the units in the system can read all 

the messages. The system unit recognizing their 

own address reacts to the content of the 

message. A unit can receive a message 

individually or as member of a group. Hence, in 

one case a message can be submitted for one 

lamp to light, and in another case a message for 

all lamps to light. 

4 Smart Home Market 

4.1 Technology Adoption 

Figure 1 S-Curve of Different Technology 

15 

The adoption of new consumer products follows 

a standard pattern which called ‘S-curve’, as the 

graph shows above. At the early stage of the 

adoption of a new technology, there is a slow 

take-up in the early years, and then followed by 

a more rapid increase in adoption which moves 

the product into the mass market arena. Finally, 

as the market matures and take-up slows down, 

the gradient of the S-curve become shallower as 

it approaches a maximum level of market 

penetration. 

While most technologies follow the S-curve 

pattern of adoption, but they do so at different 

rates or speeds. For example, it takes 80 years 

for the telephone to reach 70 per cent of 

households while the television took only 15 

years. Similarly, the electricity has reached 50 

per cent market penetration after being in the 

marketplace for over 50 years, whereas the car 

has reached only 20 per cent penetration over a 

similar period [5] . The shape of the adoption cure 

depends on several different factors, such 

economical, social, technological factors, which 

is quite complex. Therefore, it may need a long 

time for the adoption of Smart Home 

technology; we may even need our next 

generation to improve this technology as well. 

4.2 Demand and Supply Side of Smart 

Home 

4.2.1 Demand Side 

The customers' interest in the concept of Smart 

Home has been mainly from the DIY and 

hobbyist segment of the market. Actually, many 

Smart Home websites and technical literatures 

are the preserve of these somewhat technically 

minded accumulative home improvers. The 

mature projects of Smart Home have only been 

limited to the academic researcher and wealthy 

home owners until now. Customers who buy 

Smart Home only relatively satisfied with their 

partial systems, typically integrating intruder


alarms, security lighting, and fire and security 

sensors. While some customers may be willing 

to pay additional money on a new or converted 

property to obtain limited functionality of Smart 

Home, however, there may be greater 

unwillingness to retrofit such systems into their 

existing residences because of the expected 

disorder. 

In recent years, there has been an increase in the 

building and conversion of properties that have 

embedded Smart Home technology. Moreover, 

there has been increasing access to the 

technology for ‘expert home improvers’ and 

‘DIYers’. There remains, however, a general 

lack of passion on the part of construction and 

property industries, manufacturers and suppliers 

to push or even properly promote this 

technology. The lack of common protocols and 

high initial high investment make the adoption of 

this technology hardly. 

4.2.2 Supply Side 

Technology of X-10 is introduced in 1979, 

which is less sophisticated level than today’s 

Smart Home technology. Twenty years on from 

X-10, there are two new technological drivers 

which could give new motivations to the 

concept of Smart Home: the appearance of 

powerful microprocessors and the increasing 

pervasiveness of new digital communications 

protocols. Microprocessors allow the electronic 

control of almost all mechanical appliances. 

Whereas washing machines, fridges and 

televisions were once controlled using 

mechanical devices, nowadays the microchip 

facilitates their control and operation by 

electronic means including remote control. The 

digital communications protocols such as the 

Internet and Bluetooth provide opportunities for 

standardizing communications between 

appliances and equipment, and for making the 

16 

interface between users and equipment more 

straightforward and easy to use [6] . 

There are some more opportunities from the 

supply side: many new technologies appear; 

wireless and power line are getting cheap and 

cheaper nowadays; more and more big 

companies start to take part in, which can 

improve the adoption of Smart Home 

technology; especially for Japanese and Korean 

residents, the living space is very limited, so they 

have more motivation to develop Smart Home 

technology, to improve their living standard. 

4.3 Consumer Attitude 

This survey is conducted by Joseph Rowntree 

Foundation in 2000 [6] . Four key features of 

Smart Home were tested out with participants 

using the following options: 1. remote access; 2. 

safety and security; 3. centralized control; 4. 

convenience. 

4 

3 

2 

1 

14% 

18% 

23% 

19% 

Views about the Smart Home 

36% 

28% 

40% 

47% 

13% 

16% 

13% 

25% 

22% 

13% 

20% 

11% 

16% 

13% 4% 

8% 

0% 20% 40% 60% 80% 100% 

Strongly Agree Agree Neither 

Disagree Strongly Disagree 

Figure 2 Views about the Smart Home 

Of the four features, security and safety aspects 

were the most popular with over two thirds 

agreeing with. The benefits of remote access 

also had wide appeal. Opinion was more divided 

on the benefits of convenience and centralized 

control. In both cases around half of those

surveyed indicated these features would be 

useful to them. Groups most likely to value the 

benefits of Smart Home were: those in work, 

men, and people aged 15–34, households with 

children and those who already have access to 

new technology in their house. 

The technical aspects of running a Smart Home 

caused concern among many of those surveyed. 

Three specific areas of concern were tested out 

with participants, which are: 1. system failure; 2. 

lack of control; 3. complexity. 

3 

2 

1 


16% 

15% 

22% 

Concerns about the Smart Home 

35% 

40% 

43% 

13% 

15% 

12% 

27% 

24% 

18% 

9% 

6% 

5% 

0% 20% 40% 60% 80% 100% 

Strongly Agree Agree 

Neither Disagree 

Strongly Disagree 

Figure 3 Concerns about the Smart Home 

People were most concerned about the system 

failing which around two-thirds agreed with. 

Around half were worried that the system would 

be too complex and a similar number said they 

would worry about the system being difficult to 

override. Older people were most concerned 

about potential technical problems which twothirds 

of those aged over 55 agreed with 

compared to 38 per cent of the young group 

aged 15–24. 

Therefore, people are more concerned with 

security and safety aspects regarding to the 

benefit of Smart Home. While system failing is 

most concerned by users with regard to potential 

problems of it. The suppliers need to consider 

17 

both viewpoints most from the consumer side, 

while they provide Smart Home to the market. 

4.4 Viewpoints of Industry Experts 

Architect is one of the most important roles 

during many parts of the design–build process. 

They have deep influence on the type of services 

and systems integrated into buildings. Architects 

believe that rising income and wealth will drive 

the market for advanced Smart Home 

technology. The view of building contractors is 

that advanced Smart Home will remain a rarity 

at the lower and middle end of the housing 

market. Some of them see the Smart Home as a 

‘fad’, and in some cases regard it as a distraction 

where they are building for the top end of the 

housing and apartment market. The specialist 

contractors and service providers are at the 

sharp end of the Smart Home industry, and they 

are generally very optimistic about the growth of 

similar smart solutions in the domestic home. 

Property agents and developers maintain that 

show-homes set up so that the technology can 

be demonstrated effectively provide the best 

hope of stimulating an interest in the Smart 

Home concept. The equipment manufacturers 

offer strong support for Smart Home 

technology. For example, Siemens and Sony are, 

along with the domestic appliance manufactures 

and ICT conglomerates, at the forefront in 

developing the common protocols and standards 

needed to speed up market development in this 

home technology (e.g., iLINK (IEEE1394) and 

HAVi) 

[7] . The experts from academic 

institutions and research organizations took the 

most positive stance towards the concept of the 

Smart Home. 

5 Conclusions 

The Smart Home has remained a dream for 

years just over the horizon. And the horizon 

keeps receding. Along the way, there have been


intriguing pilot projects and lab experiments, but 

nothing that justified the extra cost to 

consumers. Today, despite the spread use of 

broadband Internet and home networks, most 

consumers still remain skeptical about Smart 

Home technology. Mass market consumers have 

almost no interest in using technology for home 

automation or control [7] . 

Still, the percentage of households having 

broadband Internet are growing worldwide, if 

the government can guide the development of 

open standards in hardware and software, then 

the smart meters can communicate with a 

television set-top box, cell phone or PC [8] . 

Those devices will serve as remote controls that 

allow a person to see how much energy a house 

is consuming and suggest heating, lighting and 

air conditioning settings to save money. Once a 

technology platform is in place, the Smart Home 

market for intelligent appliances and other 

devices will take off [9] . Therefore, the whole 

industry will boom. 

However, there are many different industries get 

involved in, which makes it more complex than 

that only single industry can jump to start it, 

such as building construction/installation, 

automation industry, consumer electronics 

vendors, household appliance vendors, and 

computer and peripherals vendors. All in all it’s 

still a long way for Smart Home technology to 

adopt worldwide. 

References 

[1]Digital Image Communications, 

http://dicommunications.com/smarthome.htm 

[2] Bob Siegel, “The ‘Smart House’— Area 

homeowners opt for ‘home theaters’ and more”, 

welcomehome. 

18 

[3] Sang Hyun Park, So Hee Won, Jong Bong 

Lee, “Smart Home – digitally engineered 

domestic life”, Pers Ubiquit Comput (2003) 7: 

189–196. 

[4] Toril Laberg, Haakon Aspelund and Hilde 

Thygesen, "SMART HOME TECHNOLOGY: 

Planning and management in municipal services" 

[5] IPBusiness, 

http://www.fatpipeonline.com/departments.php? 

department_id=12&article_id=344 

[6] Mark Pragnell, Lorna Spence and Roger 

Moore, “The market potential for Smart Home”. 

[7] Vividlogic, 

http://www.vividlogic.com/product.php?cat_id= 

1&p_id=4 

[8] Steve Lohr, "The Smart Home Is Still 

Looking for a Market", The New York Times, 

January 6, 2009. 

[9] Victoria Haines, Val Mitchell, Catherine 

Cooper, Martin Maguire, "Probing user values 

in the home environment within a technology 

driven Smart Home project".


Input Techniques for Mobile Phones: keyboard, sensors, barcodes, RFID, 

HCI 

Abstract 

Input techniques linking mobile phones to humans 

and to things determine the way these devices 

communicate with the physical world. Requirements 

and constraints such as small screens, limited buttons 

and the mobile setting of the user on-the-go pose new 

challenges for developing appropriate input techniques 

that satisfy the user. Different input techniques 

including state-of-the-art are described in this paper 

and analyzed based on intuition of the users and 

functionality of the devices. Effects that different 

techniques might have on the development of new 

applications are also provided. 


The mobile phone is the most pervasive electronic 

device used by people all around the world. In 2008 

there were 2.5 billion mobile phones and about 80% of 

the world’s population had network coverage [2]. It is 

estimated that by 2015 the number of active mobile 

phones will be 5 billion [2]. 

Given the high demand for mobile phones and with 

the rapid advance of the technologies involved in the 

same mobile devices the mobile phone has evolved 

from a simple mobile communication device into a 

multifunctional device used by people for different 

purposes. A mobile telephone that provides additional 

information accessing features combining voice 

services with e-mail, fax, pager or Internet access is 

called a smart phone [4]. These additional capabilities 

of the mobile devices enable people to interact with 

things, places and other people in the real world. This 

brings us to the idea of Ubiquitous Computing or the 

Internet of Things for whose implementation the smart 

phone is the most promising device. This statement is 

supported by the fact that the mobile device is always 

Afet Musliji 

Management, Technology and Economics 

ETH Zurich, CH-8092 Zurich, Switzerland 

amusliji@student.ethz.ch 

19 

with the user. However, this does not necessarily imply 

that the user is always able to use the device raising the 

question of design challenges particularly the 

interaction techniques used for the same device. 

Mobile Human Computer Interaction (HCI) studies 

these challenges. 

2. Mobile HCI - Design Challenges and 

Requirements 

Mobile HCI is a multidisciplinary approach that 

addresses the design of mobile user interfaces from 

different viewpoints. Aspects such as user psychology, 

application design, social usability and communication 

technology are all taken as inputs in mobile HCI 

research. 

The mobile phone is meant to always be on the 

disposition of the user. As such, many design 

challenges and constraints are brought in the design of 

mobile devices. The issue of input techniques as part of 

the design and the possibilities emerging from breakthrough 

techniques are studied for the purpose of this 

paper. The major constraints of this nature that are 

identified are: small screens and limited buttons of 

mobile devices resulting from their small size, the 

limited attention of the user in a mobile situation and 

the limited time that the user has to learn a new 

interaction technique. 

Contrary to these requirements, most of the 

conventional mobile devices are used under conditions 

of high cognitive and attention demand; the software of 

devices is ignorant of the surrounding environment and 

events and natural gestures of use are missed. 

2.1 Small Screens and Limited Buttons 

The pervasiveness of mobile phones implies 

handsets of relatively small size limiting the space


available for both screens and buttons, which make up 

the interface for interaction. 

2.2 Limited Attention of the User 

The mobile phone is used on-the-go and therefore 

gets only a limited attention of the user. However, 

today many mobile applications on smart phones 

require the full attention of the user. These applications 

simply ignore the surrounding environment of the user. 

The user should be able to use a mobile device while 

doing other activities such as walking or speaking to 

another person. The mobile device is therefore under 

the continuous but not full attention of the user. 

2.3 Limited Time to Learn 

The lifetime of current mobile or smart phones is 

relatively short. In addition, the turnover of mobile 

devices is relatively high compared to other electronic 

devices. These two facts together imply that users 

frequently change their handsets and buy new ones. 

Users often change their handsets with every new 

subscription whose durations vary between 12-24 

months. Many times, users are forced to learn a new 

input technique when they face a new device [2]. 

Therefore, there should be standards for the type of 

interaction for handsets from different manufacturers 

and different models of handsets from the same 

manufacturer and the input techniques should be easy 

to learn. The same techniques would be easy to learn if 

natural gestures of people are included in the 

interaction with mobile phones. 

3. Scenarios and Techniques 

In order to describe some of the techniques that 

address the requirements of mobile HCI, we will 

propose different scenarios of mobile phones users in 

their everyday life and show how these specific 

techniques are used to effectively perform the required 

task. 

3.1 Location Finding – User Friendly Interface 

The first scenario described involves a mobile user 

who would like to see her next tasks and appointments 

on the calendar of her smart phone and would want to 

spot the locations of her meetings on the map [2]. The 

scenario and its implementation are described in the 

paper about TapGlance, which is a design proposal for 

mobile phone user interface. 

The user has a brief look at the calendar by 

pressing and holding a number keypad with the 

20 

possibility of having memorized the key for the 

calendar application benefiting from spatial memory. 

Figure 1. A Preview of the TapGlance Interface [2] 

She is then interested in the location of her 

meetings on her list and decides to fully open the 

calendar application by tapping the same number key 

on the keypad. She notices that the locations of her two 

next meetings are in different places and wants to 

locate them on the map. The user changes the view 

style of the application and selects the map view style 

with double tapping a single number key on the mobile 

keypad. Again, she can memorize the key for the 

transition of the view. 

3.2 Mobile Phone Users Facing Different 

Environments – Light and Temperature 

Sensors Combined with a Touch Screen 

The contexts of mobile device use are far more 

varied and potentially compromised, than the contexts 

in which we interact with desktop computers [6]. For 

example, a person using a mobile device on the beach 

may struggle to read the device’s screen due to glare 

caused by bright sunlight, while a user on an a cold 

place with gloves on is unable to accurately press keys 

or extract a stylus. 

The first problem can be solved with the help of 

light sensors that would detect the intensity of light 

striking the screen of the mobile device based on which 

the brightness of the screen would be modified. 

Whereas for the person who needs to use her mobile 

phone with her gloves on and possibly with reduced 

motion ability of her fingers, the device should detect 

the outside temperature and adjust the display on the 

touch screen of the device to make the interaction 

possible. 

3.3 Using a Mobile Phone for Physical 

Browsing – Internet of Things


The idea of the Internet of Things is that every 

object becomes a smart object having a tag, which 

provides a hyperlink to the virtual world. A tag may be 

for example a barcode, RFID (radio frequency 

identifier) tag or an IR (infrared) beacon. Based on the 

tag information, the user can then for example load the 

page corresponding to the URL to his device and get 

electronic information from a physical object. This is a 

powerful paradigm, which adds the power of World 

Wide Web to the interaction with physical objects [7]. 

The mobile phone or the smart phone is the most 

suitable device for interacting with these objects. The 

main interaction methods that can be used are 

scanning, pointing and touching. 

A person can use the scanning interaction technique 

in order to find out which objects in her vicinity are 

possible to be controlled with a mobile phone. The 

object might or might not be in the sight of the user. 

The services provided by the tags will then be 

presented on the user's UI device. Thus the presence 

of the tags is communicated to the user and the user 

can then choose the object of interest by using her 

mobile phone. Effectively, this means choosing a 

physical object in the digital world [7]. 

Figure 2. ScanMe [7] 

When an object that the user wants to interact with 

is visible, then pointing would be a natural way to do 

it. The user points to the tag on the object with a 

mobile phone, which can use IR (infrared), laser beam 

or Radio Frequencies. 

21 

Figure 3. PointMe [7] 

Finally, the interaction technique involving 

touching would use RFID tags on the object whose 

information would be accessed by bringing together 

the mobile device with the smart object. This technique 

is suitable for a person who is shopping and needs 

additional information about the product that she is 

interested in buying. The hyperlink on the RFID tag of 

the product provides access to the page where the 

consumer can learn more about the same product. 

These entire interaction techniques enable the 

mobile phone become a universal remote controller. 

4. Research Area 

With the latest trends [6] in society and technology 

of increasing amount of personal computing done away 

from the desktop; the increasing capabilities of eversmaller 

devices; the congruence of computing 

capabilities onto mobile phones and the overall ageing 

of the population, mobile HCI research becomes ever 

more important. 

Mobile personal computing brings the physical 

location of the user to be considered for a comfortable 

and normal usage of the device. The amount of light 

and the ambient temperature have a dramatic effect on 

the overall performance of the mobile phone and 

thereby customer satisfaction. Situational impairment 

[6] stemming from such physical conditions should be 

better understood so that solutions to such impairments 

can be incorporated into new devices. This also applies 

for ageing users of mobile phones, whose ageing 

related impairments affect their user experience. 

The small size of mobile devices and the variety of 

those handsets offered on the market bring the 

requirement for common standards on input 

techniques. Users of mobile phones would prefer to 

learn once and use the same input technique 

everywhere [2].


The greater computing capabilities and the 

increasing pervasiveness of the mobile phone or the 

smart phone imply that mobile human computer 

interaction is an interesting and a very important 

research area. Mobile HCI research will try to find new 

technologies and techniques to increase the 

effectiveness of the pervasive computing device – the 

mobile phone of the future. 

5. Conclusion 

In summary, we can conclude that input techniques 

for mobile phones should be developed in accordance 

with the specific requirements of the mobile 

environment. The issues faced are addressed with 

technological solutions such as different keyboards, 

sensors for different purposes, barcodes and RFID 

tags. 

In this paper, the challenges faced in designing and 

selecting appropriate input techniques for mobile 

phones were discussed. The design issue of mobile 

HCI gains even a greater importance considering the 

abundance of the mobile phone all over the world and 

its potential as a future ubiquitous computing device. 

The design requirements stem from the nature of the 

mobile device and the usage of the device not 

neglecting the environment that surrounds the users. 

Based on these challenges different scenarios of 

mobile users were identified and solutions using stateof-the-art 

technologies were proposed based on 

research and already developed applications on this 

field. The paper ends with an overview of the mobile 

HCI research area and the problems that it strives to 

solve. 

6. References 

[1] Enrico Rukzio, Gregor Broll, Karin Leichtenstern and 

Albrecht Schmidt. Mobile Interaction with the Real World: 

An Evaluation and Comparison of Physical Mobile 

Interaction Techniques. Ambient Intelligence, LNCS 4794, 

2007. 

[2] Robbins, D. C., Lee, B., and Fernandez, R. 2008. 

TapGlance: designing a unified smartphone interface. In 

Proceedings of the 7th ACM Conference on Designing 

interactive Systems (Cape Town, South Africa, February 25 - 

27, 2008). DIS '08. ACM, New York, NY, 386-394 

[3] Smart phones: how to stay clever in a downturn. 

http://www.deloitte.co.uk/TMTPredictions/telecommunicatio 

ns/Smartphones-clever-in-downturn.cfm 

[4] CEVA Glossary of Terms. 

http://ceva-dsp.mediaroom.com/index.php?s=glossary 

22 

[5] Ken Hinckley, Jeff Pierce, Mike Sinclair, Eric Horvitz. 

Sensing Techniques for Mobile Interaction. Microsoft 

Research, One Microsoft Way, Redmond, WA 98052 

[6] Jacob O. Wobbrock. The Future of Mobile Device 

Research in HCI. Human-Computer Interaction Institute, 

School of Computer Science, Carnegie Mellon University, 

Pittsburgh, PA 15213 USA. CHI 2006 Workshop 

[7] Pasi Välkkynen, Ilkka Korhonen, Johan Plomp, Timo 

Tuomisto, Luc Cluitmans, Heikki Ailisto*, and Heikki 

Seppä. A user interaction paradigm for physical browsing 

and near-object control based on tags. Mobile HCI 

Conference 2003


End User Programming in Internet of Things 

Özge Kökçü 

Department of Technology, Management and Economics, ETH Zurich 

koekcueo@student.ethz.ch 

Abstract 

Web-enabled cell phones, sensors, different design 

tools, public APIS, PDAs, toolkits are becoming 

pervasive and cheaper day by day. Moreover, it is 

simpler to learn how to use them. On the other hand 

they are designed for a general user with specific 

needs (lack of customization). This fosters end-users 

who are mostly non-professionals for developing 

their own applications for their devices. The aim of 

this paper is to focus on end user programming in 

internet of things. First of all, the definitions of end 

user and end user programming will be stated to 

understand the concept better. Then, it will 

concentrate on end user programming in internet of 

things with specific examples such as Exemplar, 

Lashups and Chief Cook Robot. Finally, after 

discussing the advantages and disadvantages of 

adding end user programmability feature to products, 

the future work in internet of things will be mentioned 

in brief. 


With the help of internet, information sharing 

accelerated rapidly. Users can reach any information 

they want very easily and quickly. Furthermore, 

involving the users in the product development phase 

is the new trend. Therefore, end user programming is 

becoming pervasive and it brings the flexibility for 

users to make additions to their products according to 

their own specific needs. Since users know their 

problems best, it will be very beneficial for both users 

and product developers to add end user 

programmability feature to the products. End user 

programmability in the framework of internet of 

things is a progressing research field which aims to 

involve users in product development to reduce the 

23 

related costs. Before getting in the subject one has to 

know who the end users are and thus in the next 

section the definition will be given. 

2. End Users 

End users are the users of a program. They can be 

artists, receptionists, teachers, designers, students, 

animators, accountants, in brief; everybody who uses 

computer can be an end user. End user programmers 

write applications but this is not their primary job. 

They may have different backgrounds in 

programming. They perhaps take a course in college 

or learn it from their friends or they may not have any 

knowledge at all. 

Scientists and physicists were the first end user 

programmers. It was very difficult for them to learn 

programming with assembly language. Therefore, 

Fortran was launched in 1950s which made their life 

easier. They were able to develop their own 

applications easily and quickly. Then, the next group 

consisted of people who wrote spreadsheet macros. 

Lotus was the main program that they used. Database 

builders followed spreadsheet macro writers quickly. 

They wrote programs for data storage and for 

retrieval of customer information to keep track of 

their customers. Finally, with the internet boom in 

mid 1990s, almost everyone became an end user 

programmer [6]. Information sharing accelerated with 

internet boom and easy access to data helped people 

to develop their own applications. 

As stated in EUSES (End Users Shaping Effective 

Software) web page, there were 2.75 million 

“professional” programmers in the US, it was 

expected that the number of end user programmers 

would exceed 55 million by 2005 [8].


3. End User Programming 

Before defining the end user programming, it will 

be more appropriate to define programming first. 

Programming is the creative art of instructing a 

computer what you want it to do. Simply, it is 

defining a sequence of commands to a computer to 

perform a specified task. With the advance of 

technology the nature of programming is changing 

rapidly. Everyday, lots of new tools emerge to allow 

users to design new applications and to do 

programming. As a result of this, more and more 

nonprofessional people are being included in the 

world of programming. The emerging trend in 

programming is to increase the number of people 

who can do programming for their own usage. More 

and more products are trying to integrate scripting or 

some sort of macro languages. This concept is being 

described as “end user programming”. The definition 

of end user is clear but the use of “programming” in 

this context creates confusion. End-user 

development, end-user customization and end-user 

software engineering are other concepts that are used 

to prevent this confusion. 

In the context of this paper, end user 

programming is the programming done by the end 

users who are not professional programmers and do 

not have any educational background in 

programming [7]. With the help of end user 

programming, the power of software is increased 

significantly since the users are not restrained by the 

capabilities of the software. The internet boom made 

it possible to access lots of technologies easily and 

quickly. This leads users to new ways to develop 

applications and programs. 

There are different approaches for end user 

programming such as programming by 

demonstration, visual programming, natural-language 

syntax and forms-based programming. Programming 

by demonstration means allowing users to 

demonstrate their actions and inferring programs that 

correspond to those actions. Visual programming 

refers to providing a visual interface to programmers 

such as dataflow diagrams, flowcharts and screenlayout 

systems. Natural-language syntax is making 

the programming language similar to a spoken human 

language. Cobol and HyperTalk tried this approach. 

Finally, forms-based programming means 

programming by filling out a set of forms that query a 

user about the types of inputs and results she/he 

wants [7]. 

Typical software with end user programmability 

feature should have an editor, an interpreter or 

24 

complier, error checking and debugging tools, 

documentation and version management tools at 

least, as the bare minimum requirements [7]. 

There are lots of software programs available for 

users that have end user programmability feature. 

LabVIEW (a functional measurement application 

with analysis and a custom user interface), 

Mathematica (to monitor the movements of the stars, 

create interactive graphs of stock prices, or 

manipulate digital photos, etc), Citrus (Graphical 

structured editors for code and data), Barista (to 

create of a new class of highly visual, highly 

interactive code editors), Exemplar, etc. This paper 

will give detailed examples from tools that are used 

in internet of things. 

4. End User Programming in Internet of 

Things 

End user programming in internet of things is a 

relatively new concept and there are limited 

applications available to users. However, there are 

serious ongoing researches. Progressively more 

diverse set of sensing technologies is appearing in 

smart products and research projects. In this context, 

different research groups such as HCI (Human 

Computer Interaction) in Stanford University are 

trying to develop prototyping tools that allow 

designers to gain insight into the design space of 

sensor-based interactions more rapidly[3]. In the 

following subsections, applications with end user 

programmability feature will be discussed to illustrate 

the concept more concretely. 

4.1. Chief Cook Robot 

This robot is developed in EPFL (Ecole 

Polytechnique Federale de Lausanne) in Learning 

Algorithms and Systems Laboratory (LASA). It is a 

good example of programming by demonstration to 

clarify the concept of end user programming. It 

imitates the basic actions demonstrated by people. 

Manipulation of objects and reproduction of gestures 

are the main imitation tasks that are performed by 

this humanoid robot. To illustrate, it can cook an 

omelet by whipping eggs, cutting ham and granting 

cheese.


Figure 1. Body gestures are recorded by motion 

sensors. Sensors gather data about body position 

independent from environment [9]. 

Information flow in the system starts with the 

human performing the action (see Figure1). After 

that, robot gets the signals and decides what to 

imitate by first reducing the dimensionality and then 

making probabilistic data encoding. Next step is 

determining the task constraints and how to imitate 

the action. Finally, the task is reconstructed in data 

space and robot imitates the action. 

There are three ongoing researches for this 

project: learning task constraints, dynamical control, 

and general inverse kinematics. Besides that, the 

researchers are concerned with biological principles 

to improve the robustness and flexibility of the robot 

[9]. 

4.2. Exemplar 

Exemplar is a prototyping tool that takes sensor 

data as input and gives constructive events as output 

for interaction design. It also uses the programming 

by demonstration technique. First of all, end users 

perform the action with the sensor. Then, the program 

generates corresponding signals which can be 

reviewed by the user from the computer screen. 

Finally, user can review the result by demonstrating 

the action again. Moreover, it is a very powerful tool 

that can author individual events that depend on 

multiple sensors and multiple events for a single 

sensor. To illustrate, Exemplar can be used to 

prototype an accelerometer based control for existing 

game in less than 30 minutes [3]. 

Exemplar made a study with 12 participants. The 

participants belonged to different ages, sexes, and 

educational backgrounds. Although they had some 

human computer interaction design experience, none 

25 

of them was an expert in sensor programming. The 

aim of the study was to assess the ease of use of 

Exemplar. Participants were given 3 tasks to 

complete. The first two tasks were relatively easy 

compared to the last one. The results were quite 

satisfying. The first two tasks were completed by 

everyone and they at least completed a part of the 

third task. After the study, participants indicated that 

Exemplar was successful in decreasing the time 

required to build prototypes, facilitating rapid 

modifications, enabling more experimentation and 

helping them to understand user experience. From the 

study as a whole, it was concluded that majority of 

the participants spent most of their time on designing 

rather than implementing. Furthermore, they defined 

two main shortcomings in Exemplar. First one was 

that users were not able to see the events (available 

build-in functions) that they do not use but still 

active. Second one was the training examples were 

hard to find after they started their implementation 

since they were pushed too far off-screen [3]. 

However, developers of Exemplar have overcome 

these shortcomings recently. 

4.3.Lash-Ups 

Lash-up is a toolkit that end users can use to 

develop location aware web services for their cellular 

phones. Both cellular phones with internet 

connections and public APIs for web services are 

becoming pervasive. This will increase the usage of 

the lash-ups. Lash-up toolkit solves the main problem 

of previous mash-ups which is identifying the user’s 

location without asking for any inputs from the user 

[2]. 

This toolkit has two main components: server and 

client. Server has the data for available lash-ups for 

users. Client resides on the user’s cellular phone. 

Client gathers location information and sends it to 

lash-up server and server searches for relevant lashups 

and sends back the list of relevant lash-ups in 

which the user can choose whatever he needs. 

There can be several applications of lash-ups. 

They could be used as reminder service. After doing 

the necessary settings, whenever the user enters a 

predefined region, lash-up server could remind him to 

do something such as buying gasoline for his car. 

Moreover, they can be used for searching web 

content with entering location data. For example, 

users can find out the nearest markets around without 

entering input. 

Developers of lash-ups are trying to improve it 

further. Now, they are trying to develop new tools to


make it easier to develop Lash-Ups for users. Besides 

that, they are working on the content they send to the 

end users. They are trying to make it as relevant as 

possible and to increase the quality. Moreover, they 

are exploring new ways for identifying group 

behaviors and personal preferences of individual 

users. Lastly, in Lash-up distribution, they are trying 

to use supplementary attributes of users such as time 

of day and place, etc [2]. 

5. Pros & Cons 

The costs and benefits of adding end user 

programmability feature to your product depends on 

how much control and programmability you plan to 

maintain for users. Benefits are worth to consider. 

First of all, users know their needs and problems best. 

It is impossible to address the needs of every single 

user’s specific needs. Therefore, adding end user 

programmability feature will make the product 

simpler and more reliable. Product will just have the 

general features needed. Allowing users to add their 

programs would give them freedom and 

responsibility at the same time. Instead of blaming 

the developers of the product, they would try to solve 

their problems on their own. Furthermore, serious 

users will realize the missing parts of your product 

and they will be able to participate in the 

improvement of your product [7]. 

On the other hand, the managers and developers 

of the product will fear the loss of control on the 

performance of the product. Users can decrease the 

performance with their applications and then blame 

the product for operating slowly. Moreover, the users 

may be slow adaptors and may not be used to 

programming. Therefore, detailed documentation and 

training will be needed for the beginner users which 

mean extra time and resources. Also, users will not 

be aware of their limitations and some of the 

programs that they will develop may do unintended 

and damaging things. Another disadvantage is the 

different versions of the product may confuse the 

users. Even if radical changes are done in the 

product, users will still want their programs to work 

in new versions [7]. 

Warren Harrison, a professor in Portland State 

University, approaches end user programming from 

the security perspective. He points out that many ebusinesses 

have bankrupted because of Web sites 

written by end users who learn Perl or HTML on 

their own [6]. End users are not aware of the 

importance of securing their applications. In response 

to this, the concept of end user software engineering 

emerged. End user software engineering cares for 

26 

reusability, security, and variability besides the 

programming. 

6. Future Work 

End user programming in internet of things is a 

relatively new concept and it is difficult to find a lot 

of information in this concept. Exemplar and Lash-up 

are good tools for this topic. Developers of both 

Exemplar and Lash-up are still trying to improve 

their products. Besides these, many other new 

applications can be developed. Developing a product 

where people could use RFID tags to keep track of 

their stuff may be another possible application. Users 

will place RFID tags into their stuff and through a 

computer program they will be able to define where 

their products are and keep track of goods that they 

borrowed to other people. As chief cook robot 

developed in EPFL [9], applications that can be 

configured by programming by demonstration will be 

other useful and easy to use tools for end users. These 

robots can be used for doing small daily works of end 

users. 

7. Conclusion 

This paper introduced the concept of end user 

programming in internet of things which is one of 

today’s important research fields. Applications like 

Exemplar, Lashups and Chief Cook Robot are 

different examples from this field. They are 

developed in universities and there is still room for 

improvement. Involving users in product 

development by giving them the chance to make 

additions to the product will both add value to the 

product and lower the costs for producers. On the 

other hand, adding end user programmability will 

impose additional costs and has some cons such as 

detailed documentation and training will be needed 

and applications developed by end users may cause 

unexpected and unintended damages. End user 

programming in internet of things is open to 

discussion and improvement. 

References 

1) Hartmann B., Klemmer S. R., Bernstein M., Abdulla 

L., Burr B., Robinson-Mosher A., Gee J., “Reflective 

Physical Prototyping through Integrated Design, Test, 

and Analysis”, Standard University HCI Group, 

Standford, USA 

2) Brandt J., Klemmer S. R. “Lash-Ups: A Toolkit for 

Location-Aware Mash-Ups”, Stanford University 

HCI Group, Stanford, USA, 2006. 

3) Hartmann B., Abdulla L., Mittal M., Klemmer S. R., 

“Authoring Sensor-based Interactions by 

Demonstration with Direct Manipulation and Pattern


Recognition”, Standard University HCI Group and 

The MIT Media Laboratory, 2007. 

4) Riehle D., “End-User Programming with Application 

Wikis: A Panel with Ludovic Dubost, Stewart 

Nickolas, and Peter Thoeny”, SAP Research, SAP 

Labs LLC, CA, USA. 

5) Wong J., Hong J. I., “Making Mashups with 

Marmite: Towards End-User Programming for the 

Web”, Human-Computer Interaction Institute, 

Carnegie Mellon University, Pittsburgh, USA. 

6) Harrison W., “From the Editor: The Dangers of End- 

User Programming”, Software, IEEE, Volume 21, 

Issue 4, July-Aug. 2004 Page(s): 5 – 7. 

7) End-User Programming Homepage. 

http://www.cs.uml.edu/~hgoodell/EndUser/ 

8) EUSES (End Users Shaping Effective Software). 

http://eusesconsortium.org/ 

9) EPFL Learning Algorithms and Systems Laboratory 

http://lasa.epfl.ch/ 

27


Abstract 

Internet has enabled major revolutions. One of this, 

was to give back the power to the people. We discuss in 

this paper how the development of new platforms like 

Wikipedia or Facebook, entirely created by users, is a 

landmark in the world of Web 2.0, setting user-content 

at its core. We review the different types of usergenerated 

content as well as their recent evolution. We 

then understand how product recommendations made by 

consumers through user-generated platforms can enable 

us to make better buying decisions, notably in the frame 

of shops, by using the mobile interface Apriori. 


Web 2.0 is currently one of the most widely used 

buzz word in the Internet industry. This term describes a 

new generation of web interfaces enabling users to read, 

share and write content over the web. User-generated 

content (UGC) like Facebook or YouTube are 

challenging the traditional media. Encarta, a private 

endeavor from Microsoft to build a digital encyclopedia 

has now been ruled out by users preferring free and open 

contents like Wikipedia [1]. During the Asian Tsunami 

in 2004, personal blogs from tourists who survived the 

earthquake have been able to inform citizens around the 

world about the happenings, faster and with more details 

than the websites of CNN or BBC [2]. Traditional media 

have found themselves losing a bit of their supremacy, 

losing their roles as gatekeepers of published content – 

Internet has finally given back the power to the people 

[3]. 

In this paper, we address this new paradigm changing 

the consumers into creators. We will first define what a 

user-generated content is and give an outlook of the 

different types of UGC. We will then understand the 

different sociological, economic, legal and technological 

drivers that have permitted the fast development of 

UGC. After that, we will understand how product 

User-Generated Content 

Niroshan Balasubramaniam 

ETH Zurich, balasun@student.ethz.ch 

28 

recommendations are being used by UGC based 

websites to improve their business model. We will from 

then on discover how Apriori, a mobile platform, and the 

Internet of Things, could facilitate product 

recommendations. We will then conclude this paper by 

summarizing the key points that we learnt and address 

the next challenges of user-generated content. 

2. Defining user-generated content 

There is currently no standardized definition of usergenerated 

content (UGC). The studies on the social, 

economic and cultural impact of these platforms are just 

at their premises. The OECD defines UGC as fitting the 

following requirements: i) a content which is made 

publicly available, through internet, ii) boasting a certain 

level of creativity and maybe the most important point 

iii) contents created outside of professional practices [4]. 

Contrary to what we could think, most user-generated 

content outputs are created without expectation of any 

kind of profit. Nevertheless, the amount of people 

contributing to these platforms is growing at such a level 

that these latter are almost turned into databases 

containing an incredible rich value for companies who 

could use them as market-research-like data to 

understand the trends, needs, wills and interests of 

consumers [5]. People contributing to user-generated 

contents on the web are usually on the look for three 

main returns: connecting with people, a form of selfexpression 

and as well as to receive recognition or 

prestige for their work [4]. 

3. Forms of user-generated content 

Now that we have understood the basic requirements 

for a web content to be characterized as user-generated 

content, we would like to understand the different forms 

that these UGC can take. This is a rather difficult and


controversial exercise as different people could group the 

many UGC websites into different groups depending on 

their own interests. It is somehow also challenging to 

classify the various types of UGC as these involve more 

and more not only one type of media or activity but 

several. Facebook is for example a case where people 

can at the same time stay in touch with people, share 

videos as well as create groups with information on a 

topic. Nevertheless, for Steve Rosenbaum from 

AlwayOn [6], a source of information for technology 

savvy consumers, we can split the world of usergenerated 

content in seven groups according to their 

main use (fig. 2). 

Fig. 1: The different forms of UGC (source: [6]) 

We first have the media websites like Youtube, where 

users can freely upload and share their own videos. We 

then have the chat interfaces to better connect with 

people like Facebook or Linkedin where we can even 

develop contact with totally new people. Then we have 

platforms to share personal information which targets 

mainly the family or friends like with Flickr where you 

can easily upload all your private pictures. Next, we have 

an industry growingly using UGC to make money, the 

Ecommerce platforms like Ebay. People can also meet 

with people sharing common and specific interests, 

29 

through websites like Meetup. To end this classification, 

we have two groups using blogs as layout, the news and 

the voices, mainly used to inform people. Blog news are 

now competing with websites like CNN or BBC and 

usually deliver more specific, personal and quicker 

uploaded news than the latter. Voices are usually famous 

bloggers who have become famous personalities through 

the web in the recent years by providing their views on 

political, social or economic trends. 

To understand the user-generated content 

phenomenon, it is interesting to analyze the amount of 

users for different websites. In Table 1, we see that the 

trend of UGC is generally moving towards blogs and 

social networks, the two most personal types of usergenerated 

content. It is also interesting to note that an 

impressive 70% of internet users are actual consumers of 

UGC, and this amount will be steadily growing in the 

next few years. 

Table 1: User-Generated Content Consumers 

2008-2013 (% of Internet users, source [7]) 

Based on numbers from 2008, we can note the 

impressive amounts of people visiting famous UGC 

website such as MySpace, Wikipedia or Facebook. More 

than just purely numbers, these websites are extremely 

dynamic and competitive: if we compute the site 

analytics for the unique monthly visitors for Facebook, 

Google.com and Microsoft.com, we see that for the 

month of March 2009 only, Facebook records more than 

90 mio visitors, while Google and Microsoft have 

respectively 140 mio and 60 mio visitors [8]. This 

figures are even more impressive if we consider how 

often one searches for information on Google.com or 

how established are websites like Microsoft.com. In the


last one year, Facebook boasts a 200% increase versus 

5% for Google. But success does not necessarily mean 

continuity: Myspace, the former big star of UGC is now 

losing its trendy image and has lost more than 10% 

visitors in the last year and this decrease continues. A 

few numbers characterizing this glorious past are given 

in figure 3 from which we can understand the big change 

of dynamics recorded after just one year: MySpace was 

at that time described as the most popular and ever 

growing UGC website – fact that is no more the case. 

This should be a signal for creators of new social 

networks. Even if the attention from massive amounts of 

people is rather easy to catch, it is difficult to last in this 

world of UGC where new ideas are popping up every 

day. Unfortunately, very often, these websites do not last 

long enough to be able to monetize and capture the value 

of their large pool of consumers [9]. 

Fig. 2: Monthly visitors of UGC websites in 2008 

(source: [6]) 

4. Drivers of user-generated content 

We have seen now the different forms that UGC 

could take and understood the high dynamics 

characterizing this field. It is of central interest to 

identify the different drivers which have brought us to 

this status enabling so many user-generated contents to 

blossom in the World Wide Web. According to the 

OECD [4], we can spot four major drivers which have 

shaped this change: i) Technological, ii) Social iii) 

Economical, iv) Legal. 

30 

Technological drivers. This driver is maybe the most 

important of the four drivers. Broadband has rapidly 

been taken up by many households starting from late 

90s. This has enabled users to upload and download 

massive amount of data. High speed internet has enabled 

people to integrate large videos or pictures to their 

websites and make the use of internet much more 

enjoyable and interactive. As a second step, we can note 

the incredible advances that happened in the hardware 

industries as well as the multiplication of a number of 

consumer electronics goods enabling people to share 

content ever more (digital cameras , digital video 

recorder, new generation mobile phones,…). Third point, 

maybe one of the least noticeable but the most important, 

the development of interfaces and online applications 

enabling users to create, post and upload content in a 

very easy and rapid way. 

Social drivers. A significant amount of people using 

internet nowadays are users that are often called the 

“digital natives”: people born with the new IT era, for 

whom watching TV over the internet or using MSN or 

ICQ to chat is simply the norm [10]. These people have 

substantial IT skills and are predisposed to contribute 

content to the World Wide Web. This younger group is 

also very often the most exposed category of people 

using social networks and following easily new trends. 

Economic drivers. These drivers partly follow the 

technological drivers. Indeed, as technology improves, 

internet connection or consumer electronics are 

affordable by a growing percentage of the population. 

More than that, new ideas to monetize social networks 

and user-generated content are pushing more and more 

companies to start a UGC-like platforms, enabling them 

a novel way to market their brands, leveraging notably 

on viral marketing campaigns. Examples abound but one 

exemplifying case is maybe the ketchup company Heinz 

which has recently launched a campaign to let 

consumers create their own advertisement, with a 

comfortable money prize for the best. These home-made 

advertisements are now being uploaded on their website 

as well as one Youtube where they record a significant 

audience. 

Legal and institutional drivers. This driver is key in 

the development of UGC as one need to make sure that


his creation will remain his, be it a luxurious painting or 

simply an upload of an amateur picture on Facebook. It 

is also a challenge as we should give property rights to 

creator without making it to restrictive as this would lead 

to a lower rate of sharing among users. A good example 

of intermediate solution is the Common Creative (cc) 

standard which requires the users to strictly mention the 

name of the actual creator of the picture, text or video 

but also let them freely share and distribute this content 

to any third party. 

We summarize the impact of these four drivers in the 

following scheme. 

Fig.4: Four drivers leading to the current world of UGC 

5. Product recommendation 

User-generated content are not only useful to connect 

with people or to share knowledge, but they have also 

been proven successful in driving sales, notably in the 

frame of e-commerce platforms such as Ebay or Amazon 

[11]. Indeed, one of the major challenges that these 

websites have faced at the beginning of their venture was 

to gain the trust of their consumers [12]: how could a 

consumer be sure that a person living 3000km away 

from him will indeed send the MP3 player or T-shirt he 

ordered? E-commerce companies have developed 

platforms for consumers to create content notably on 

recommendations of products and sellers of these 

products. In many such platforms, the fact that people 

31 

could even rate the recommendations has made them 

ever more reliable. 

There are mainly two types of product 

recommendations: the product ratings and the product 

reviews. The first one is usually used to give a brief 

approval on the quality of a good, by giving a rating on a 

one to five stars scale. The second, reviews, are a tool 

used to give more precise and comprehensive 

information on the experience with this product and 

consist of a text of usually 100-200 words. 

It is interesting to notice that some companies like 

Epinions.com, have even based their business model on 

these recommendations [13]. This website has indeed 

created a full database containing thousands of reviews 

and ratings of different kind of goods and services. The 

main interest for a potential buyer of a product would be 

to gather more information on the product to actual real 

experiences of people who are not linked to the company 

selling the product and thus who are unbiased. 

Other similar websites include hunch.com, 

ratings.net, reviewcentre.com, kelkoo.com and 

edigitalresearch.com. 

6. UGC + Internet of Things = Apriori 

In the frame of the internet of things, where electronic 

components and objects are linked by wireless 

connections, User-Generated Content can help as an 

interface between consumers and the goods that they are 

interested to buy. 

If we now consider the tens of different products for 

one category like olive oil or MP3 player, both boasting 

an incredible various range in terms of quality and price, 

we understand the possibilities of product 

recommendations as enabling the consumer to make 

better buying decisions. Usually, a typical consumer will 

not try to look for much information when it comes to 

but in a shop. Nevertheless, it is believed that 3 out of 4 

buying decisions are made in the shop themselves [14]. 

Thus, to enrich a consumer’s information on a product, 

in an easy way, researchers at ETH have came up with 

Apriori, an interface connecting mobile phones, the 

products and a database of recommendations. Mobile 

phones are indeed always accessible for a consumer even


in a shop and have a high penetration rate among people 

- usually more than 90% in big cities [114]. 

The program enables mobile phone phones, through a 

specific headset, to recognize the product pro thanks to its 

bar code e or in the future thanks to RFID tags. By 

connecting cting to Apriori, consumers can access existing 

recommendations ations on the same pro product, which are 

usually ratings rather than reviews as this tool is much 

more convenient for a quick buying ddecision. 

The same 

consumers can also submit product uct ratings from 

anywhere, enriching the database atabase ever more (figure 5). 

Fig.5: Apriori enables recognition an and submission of 

recommendation on products ucts (source (source: [14]) 

There would be standard criteria, usually valid vali for 

most products, s, like the price/quality ratio, ratio but also more 

specific criteria that could be added by the consumer 

himself like the quality of headsets sets for an Ipo Ipod. This 

would also require the presence of a moderator mo who, as it 

is done currently in Wikipedia, delete elete or amend amen non- 

relevant rating criteria. One ne potential future application 

would be to connect Apriori with exisiting databases 

such as Epionions.com, to enrich even more user 

experiences [14]. 

One can doubt oubt in general on the quality of these 

recommendations and might address ress the issue of 

reliability of ratings, in the frame of a world worl growingly 

lead by companies monitoring and orchestring the image 

that they project. This could be prevente prevented by leveraging 

other forms of User-Generated Content, the social 

networks. Indeed, , in the future, we might be able to filter 

the recommendations ations coming only from our close circle 

of friends, s, by for example taking the ratings coming only 

from people who are connected with you on Facebook. 

Someone who is interested in having the view of 

professional computer scientists on n the buying of a new 

32 

laptop could for example filter the ratings coming from a 

social network used by specialists of the field fiel for 

example. 

7. Conclusion 

Web 2.0 sets user-content content at the heart of its 

development. From a state where creators and consumers 

were split into two worlds, , internet has been able to give 

the power to consumers to become creators. Platforms 

like Wikipedia are nowadays almost as trusted as 

professional traditional encyclopedia and proven that 

free did not mean poor-quality. quality. Facebook is today 

becoming almost a second d operating system, next to 

your first one, be it Windows ows or Apple, enabling you to 

access data, send information, to upload uploa videos from 

your desktop and a growing amount of functions. Blogs 

created by simple persons are nowadays nowa competing with 

CNN.com or BBC.com, the tra traditional gatekeeper of 

information. We have seen in this article the different 

types of UGC as well as the four drivers having secured 

the development evelopment of user contents contents, technological, social, 

economic as well as legal drivers rivers. We have then focused 

on e-commerce commerce platforms using UGC as a tool to make 

their services more reliable and an we concluded our 

research by presenting Apriori, a platform connecting 

user-contents, contents, mobile phones an and recommendations to 

help consumers to make better buying decisions. It is 

interesting to see that all the different types of UGC, be 

it a simple blog or writing a complicate complicated article on 

quantum physics on Wikipedia, Wikipe has finally given back 

the power to the people. eople. We create the world worl of 

tomorrow. 

Nevertheless, major challenges persist in this new 

paradigm, such as the level of trust that one can put on 

these information being ing written by non-professional, 

non 

notably on topics like science or medicine. One can also 

address some privacy issues s as user-generated content is 

not always meant to be shared share with anybody: websites 

like facebook or Flickr reveals very private information 

that is indeed difficult ifficult to control. More than that, more 

emphasis should be put on giving some forms of rights 

to the creators of UGC, through for example the 

common creative standard. . To conclu conclude, this whole new

sets of social networks might have a difficult time in the 

future to survive and be more than a periodic trend. As 

we have seen in this paper, monetization of social 

networks and UGC is a major issue for many of these 

platforms. 

References 

[1] Microsoft closing Encarta online encyclopedia, March 2009 

http://www.physorg.com/news157661569.html 

[2] Tsunami Blogs Help Redefine News and Relief Effort, 

January 2005 

http://news.nationalgeographic.com/news/2005/01/0126_05012 

6_tv_tsunami_blogs.html 

[3] Online Collaboration Boosts Power of the People, January 

2009 

http://discoveryfuel.com/collaborative-design/online- 

collaboration-boosts-power-of-the-people/ 

[4] Web 2.0, Wikis and Social Networking: OECD study on 

user generated content, October 27, 2007 

[5] Marketing with user-generated content, The McKinsey 

Quarterly, A. G. Shenkan and B. Siche, November 2007. 

[6] 2008, the Year of Nano-Networks 

http://alwayson.goingon.com/permalink/post/22841 

[7] User-Generated Content Draws Fans. February, 2009. 

http://www.emarketer.com/Article.aspx?R=1006895 

[8] Compete.com, April 2009. 

http://siteanalytics.compete.com/facebook.com+myspace.com/ 

?metric=uv# 

[9] Who’s Worried About Facebook? Not Twitter, February 

2009. 

http://gigaom.com/2009/02/08/whos-worried-about-facebook- 

not-twitter/ 

[10] User-generated content drives half of U.S. top 10 fastest 

growing web brands. Nielsen / Netratings, August 2006. 

http://www.nielsen-online.com/pr/PR_060810.PDF 

[11] Digital Natives, Digital Immigrants, On the Horizon, Marc 

Prensky, MCB University Press, Vol. 9 No. 5, October 2001 

[12] Flaws with the eBay Trust model, November 2005 

http://benmetcalfe.com/blog/2005/08/flaws-with-ebay-trust- 

model/ 

[13] http://www.epinions.com/about/ 

[14] APriori: A Ubiquitous Product Rating System, F. von 

Reischach, F. Michahelles, Workshop on Pervasive Mobile 

Interaction Devices (PERMID) at Pervasive 2008, Australia, 

May 2008. 


33


Abstract 

Social community platforms had great success on the 

Internet and even created the term Web 2.0. Currently, 

some of the platforms are expanding their applications 

to mobile phones and other new platforms specifically 

designed for mobile devices allowing them to find 

friends, share data and do many other things by 

connecting to the world of internet of things. This 

paper will provide a characterization of Mobile 2.0 

and broad classification of its present day services. 

Later we look into the different conceptual ways of 

monetizing these services with appropriate examples. 

This paper explains the reader about fundamental 

concepts present behind the business models adopted 

by many successful and unsuccessful companies. At the 

end we look at some of the challenges faced during this 

monetization process and finally come up with some 

do’s and don’ts before you make up your own business 

model. 


Mobile social community platform in its most common 

usage means a range of mobile software programs 

often web based, which allow users to interact and 

share data with other users or services. The social 

networking phenomenon is leaving the confines of the 

personal computer. [1] 

New powerful and well connected mobile devices are 

allowing people to send round-the-clock updates about 

their vacations, their moods or their latest haircut. 

Mobile is going to be the next big internet 

phenomenon. It holds the key to greater access for 

everyone – with all the benefits that it entails. The 

phenomenon of leveraging mobility and the handset to 

enhance user’s relationships and lifestyle via webenabled 

communities and other two-way interactions, 

is fast gaining traction with mobile network operators, 

headset manufacturers and application developers as a 

Monetization of Mobile platforms 

Avinash Vankadaru 


ETH Zurich, CH-8092, Switzerland 

vavinash@student.ethz.ch 

34 

way to drive differentiation and enhance user 

experience. Advances in operating systems, browser 

technology, search capabilities and user interface, have 

enabled high profile Mobile-Web deals. With high 

interest from operators in all countries and increased 

data usage, Mobile Web 2.0 is poised to alter the way 

people interact with their phone and their world. 

However, fragmentation in the devices and systems, 

combined with questions about user experience and the 

business models that will effectively monetize Mobile 

Web 2.0, has led to some serious doubts about the 

maturity and success of this phenomena. 

Looking back at the internet and social network boom, 

we can observe that year on year many services have 

vanished from the frontier because they could neither 

make any money out of them nor could get the critical 

mass required to invest further .Even as of today most 

of the popular networking sites like Face book, 

MySpace, Skype [9] etc are in the red zone. As 

compared to the internet base application, mobile 

social networks and applications should be more 

careful regarding their products, services and their 

business models because Web 2.0 applications are 

blessed with the internet boom of 2000’s where in a 

vast amount of money has been invested in building up 

those undersea cables and connectivity, thereby 

making it really cheaper to use that bandwidth, so 

gathering a critical mass for survival has never been a 

problem. But in Mobile 2.0 services, it is expensive for 

the consumers even to send a short message [5]. So the 

startups should not think of building up the critical 

mass as done by Web 2.0 applications, but should 

provide useful and innovative services which can 

attract customers and also be able to retain them. They 

should go for monetization of those services from the 

initial stage otherwise they might not be destined to 

survive a longer gestation period and will soon be 

busted. Also choosing the business model is very 

crucial for the success of company and this aspect must 

be taken into consideration right from the beginning.


The current Mobile Web 2.0 is characterized by 

• More and more mobile operators migrating to 

flat-rate pricing schemes 

• Potential for using location based tagging 

• To enhance user generated content 

identification, and community networking, 

development of mobile browsers and widgets 

to manage the web experience on the device 

• Moves towards standardization and efforts to 

create a seamless web-mobile experience for 

long tail sites 

• High interest in mobile advertising as a new 

revenue stream for users and as an effective 

marketing tool. 

• Early adopters already demonstrating the 

potential for leveraging device features to 

enable on-the spot blogging. 

Additional characteristics of Mobile 2.0 in the future, 

• Making use of new sensor technologies 

(accelerometer etc) that will be adopted by 

mobile phones in the future and connecting to 

the Internet of things. 

• Mobile phone will be the first computer 

accessed by rural population in most of the 

countries and these services will help the 

internet penetration there by increasing the 

productivity. 

2. Monetization 

This paper will give a brief insight into the different 

possible conceptual ways of monetizing these 

platforms. They are defined as below 

a) Consumers pay 

b) Companies sponsor 

c) Advertising 

d) M-Commerce 

Almost all the new innovative ideas used by any of 

these Internet and mobile startup firms fall under either 

one of these categories. Many new services are using a 

combination of these ways, in order to make it more 

effective and it also seems working on the ground 

level. 

2.1. Consumers pay 

In the real world consumers paying for the resources 

they utilize is quiet normal, but in virtual world this is 

more or less a taboo till now for most of the 

stakeholders. The companies should be really 

35 

convinced of their services in order to make the 

consumers pay, because most of the consumers take it 

for granted that anything related to Internet is for free. 

But when used smartly using solid products and 

services this method can reap great benefits and 

provide the companies with a steady flow of revenues 

in regular periods, which improve the sustainability of 

such services over a long term. 

The most common tool used under this method is 

Subscriptions. Several companies like LinkedIn, 

Last.fm etc use it by offering premium services to 

people who are willing to pay for them. This goes 

along with Chris Anderson’s “Freemium” concept [2], 

wherein he proposes that a minority of people pay for 

the majority of the people, thus the company can get a 

steady source of revenues and can also create a huge 

customer base surpassing the critical mass, so that they 

can reap enormous profits from the traditional 

advertising. For services like mobile TV, live video 

broadcasting on mobile phones, tools like Pay per view 

or Pay per minute can be used which allows the user to 

acquire these services only when they need it, thereby 

giving them more freedom, and also help these 

companies to use their resources in a much more 

optimal way. A service like live video streaming using 

mobile phones offered by companies like Qik etc, can 

be offered to broadcasting companies (both print and 

TV) and other professional services. The growth rate 

of smart phones in US during 2008 has been around 

75.7% [6] and it has been the same trend all over the 

world. We can make use of this increased processing 

power and innovative hardware features to provide 

them with new applications and widgets at a premium 

price. Device and OS specific manufacturers had 

already jumped into this bandwagon by creating 

services like App store for Iphone, Ovi store for Nokia, 

Android market, Windows market place for mobiles, 

App catalog for Palm pre and Blackberry App world 

for Rim phones. Considering the growth rate of such 

devices and take into account the idea that mobile web 

will become the dominant access method in many 

countries of the world these services has enormous 

potential and the market research data shows that 

consumers are also willing to pay for them. 

Information services that can be directed to an external 

service company or the mobile operators can induce 

people who are handicapped of using such applications 

because of reasons like lack of broadband penetration, 

illiterate, mobile devices with stripped of features etc, 

thereby providing them with another source of 

revenues. Location based services will revolutionize 

the way we use our mobile devices and new social 

algorithms will have to be created to garner its


complete potential. The geographical information is 

considered as productive by consumers and are willing 

to pay for it [3].Data and Bandwidth transfer will also 

provide revenues for the mobile service operators and 

they can collaborate with third party application 

developers by profit sharing in order to optimize their 

revenues and bring in more people into their mobile 

service, which can create a network effect and 

indirectly impact its sales revenues in a positive way. 

2.2. Companies Sponsor 

The recent trend has been that companies are 

sponsoring some these applications and services for 

their own conceived interests. Application content 

integration is the biggest way in which companies are 

sponsoring. An ice cream popping game for mobile 

phones made by EA sports, featuring ice creams from 

Moven-pick is a perfect example for this. Tracking and 

building social media metrics will provide most of the 

fast moving consumer goods (FMCG) companies a 

strong edge over their competitors. Since these days 

mobile phones are considered as an extension of our 

self, there can be no better device that can collect 

contextual data and create a broad social metrics 

providing some useful consumer information for the 

real world companies. Similar to this is On-site web 

analytics which measures the performance of your 

website in a commercial context combined with other 

LBS helps the companies in organizing their resources 

in an optimal way. Also companies would like to have 

two-way communication with its customers i.e. 

Feedback, complaints etc, and those services which 

allow the consumers to have a two way contact will be 

promoted by the companies, for the better utility of 

both the parties involved. Custom build social 

applications [7] and its distribution is an other way 

through which companies market themselves and 

introduce new products for its potential target base. 

With the advent of sensor technologies being inducted 

by manufacturers into mobile phones, more specific 

information like time slept, the surrounding 

atmospheric conditions, physical body movements, etc 

about the customer can be transmitted to the 

companies in order to create customized products 

which increases the ROI for them. The most potential 

source of revenues I consider for these mobile 

platforms is targeting real world companies and 

providing them services using the internet of things 

and helping them to differentiate themselves from their 

competitors who could reap heavy benefits for all the 

parties involved i.e. customers, application developers, 

hardware manufacturers, companies etc. For examples 

some of these services can be like your car talking with 

36 

your mobile phone regarding the air pressure in the 

tires, gasoline level and the nearby gas stations talking 

with your petrol tanks and mobile phones, a network 

of automobiles connected to a virtual social network 

via their mobile phones and transponding information 

regarding climate and traffic conditions and so forth. . 

The possibilities are enormous and can only be 

bounded by imagination. So being able to provide such 

unique and productive services along with their 

products will allow the companies to differentiate from 

their competitors. 

2.3. Advertising 

It has been the traditional way of making money out of 

many of these Web 2.0 applications and has been 

successful to some extent with new approaches like ad 

sense, ad words etc, but blindly following those 

approaches on the mobile platforms, will not help your 

cause. The reason why we think Advertising can 

provide substantial revenues because of the ergonomic 

factors associated with mobile devices. The screen is 

limited [8], and any advertising in all its probability is 

bound to attract the attention of the consumer. In 

addition to this rather than dumping clinical ads on to 

the consumers irrespective of the situations which 

finally turn out to be futile, it would be very productive 

if this advertising can be made contextual thereby 

making it more useful for the customers [4]. It’s a 

translation of Google’s online virtual world strategy 

into the real world, using mobile phone connected to 

the world of internet of things. Again advertising by 

itself will not get revenues, but in conjunction with any 

of the methods stated above can be very effective way. 

Also as in the Web 2.0 services, you don’t need a 

critical mass on the mobile platform to secure ad 

revenues. Interactive advertising is a type in which the 

consumer is involved in the campaign either physically 

or virtually. With the help of mobile platforms, now it 

will be possible to make the consumer involve 

physically and mentally with this mode of advertising, 

thereby increasing his curiosity. Display advertising is 

the most common mode but if done in combination 

with other methods, will be more successful .Direct 

marketing and discount coupons can be more arable 

because of the contextual nature of the mobile phones. 

A beacon placed at the entrance of a retail showroom, 

sends you a message regarding new brand lines or 

individual discounts when you go pass through that 

shop in the same lane. Its impact is two way i.e. both 

on customer and showroom. Google tremendous 

success is integration of search engines and 

advertising. Similarly if contextual advertising is 

integrated into the physical world, the benefits are big.


2.4. M-commerce 

In simple terms Mobile Commerce is any transaction, 

involving the transfer of ownership or rights to use 

goods and services, which is initiated and/or completed 

by using mobile access to computer-mediated 

networks with the help of an electronic device or data 

transfer. This is the old new buzz in the town. The 

concept of using mobile phone in place of credit cards 

and hard cash was pushed long ago, when neither of 

such services nor the consumers were matured. But 

with the new technological developments both in hard 

ware and software specifications, the concept of 

Mobile commerce has come into tune once again. The 

different payment methods used to enable Mcommerce 

are 

• Premium-rate calling numbers, 

• Charging to the mobile telephone user's bill or 

• Deducting from their calling credit 

• Registration of a credit card that is linked to a 

SIM card. 

• Using encrypted microchips capable of data 

transfer 

Services like Mobile banking, Mobile ticketing, money 

transfer, Mobile payments, content purchasing, Mobile 

purchasing will have a huge influence on the means by 

which we do our day to day trivial commerce, and 

when summed up will become a big source of 

revenues for mobile platforms. 

3. Challenges & Conclusion 

All said monetization of mobile platform is not as easy 

as it seems, because of its unique characteristics. There 

is huge population which is not yet in the reach of 

these services [10]. Excess of players is a critical 

challenge that everyone faces because it is very easy to 

duplicate any new service and only requires limited 

resources in the initial stage, thereby denying the 

rightful owners their due share. Privacy is main 

deterrent for the free flow of any of these services and 

concerns over it mount as the developers move in. 

Ergonomics of mobile phone devices is also 

reasonable for the slow growth of such services, and 

this can be overcome by new input techniques [11], 

additional features and design changes is the software 

applications which makes the life of the user more 

comfortable. As the marketers move in the customers 

move out, and this phenomenon has repeated itself in 

our past experiences. So the arrival of such people 

should be finely integrated into the services. In case of 

37 

mobile community platforms the social network 

fatigue may soon creep in, thereby gradually 

decreasing the footprint of the consumers which will 

impact the advertising revenues, this can be overcome 

by constantly innovating your services and inducing 

your customers towards this platform for a more 

productive purpose. The rate and intensity at which the 

Mobile phones are integrating into our daily life 

provides entrepreneurs with enormous potential for 

providing products and services which were not even 

dreamt in the past by common man. Mobile 

communications has already changed our social 

behavior and be ready for many more surprises in the 

future.amt in the past by common man. Mobile 

communications has already changed our social 

behavior and be ready for many more surprises in the 

future. Findings of some studies states that the features 

added so far to mobile platforms are not considered to 

be adding value and useful by the consumers rather 

they are perceived as “gadgets”. This brings us to the 

basic and essential marketing concept that enterprises 

initially should try satisfy the needs of the customer 

and then the revenues will automatically flow. It is a 

futile attempt trying to create a unique business model 

for a service which is either not wanted by customers 

or way ahead of its time. 

The most important issue that the corresponding 

parties involved must consider are the human and 

social dimensions and these amazing opportunities 

would turn sour if the mobile platforms are only seen 

through the economics and technical lenses. Finally I 

would say that there is no single way to secure your 

revenues, it should always be a combination of 

different broad ways as stated above and the business 

model should be appropriate to the service you 

provide. Traditional approached will not solve your 

problems and you should tweak many of those 

methods to suit your service but at the same time you 

need not reinvent the wheel. 

4. References 

[1] Richard Han and et al, “WhozThat? Evolving and 

ecosystem for context aware mobile social networks “, 

IEEE Network, August 2008. 

[2] Freemium concept by Chris Anderson 

http://www.wired.com/techbiz/it/magazine/16- 

03/ff_free 

[3]Bharat Rao, Louis Minakakis, “ Evolution of 

Mobile location based services”, Communications of 

the ACM, Pages 61-65, December 2003. 

[4] Pieter Ballon, Nils Walravens, Antonietta 

Spedalieri, Claudio Venezia, “An Advertisement-based


Platform Business Model for Mobile Operators”, 12th 

International ICIN Conference, October 2008 

[5]http://en.wikipedia.org/wiki/Short_message_service 

http://mobilejones.com/2007/07/27/you-might-bepaying-1000-per-mb-for-sms/ 

[6]http://www.mobilemarketer.com/cms/news/research 

/2323.html, IDC 

[7] http://webdevstudios.com/services/social-networkapplications/ 

[8]http://sender11.typepad.com/sender11/2008/04/mob 

ile-screen-s.html 

[9]http://wapedia.mobi/en/Facebook 

[10]http://www.dri.co.jp/auto/report/rncos/rnruralindm 

ob07.htm 

[11]www.wiwi.uni-due.de/fileadmin/fileupload/I- 

PERVASIVE/mobilehci/01_MobileTextEntry_Scott- 

MacKenzie_mobileHCI2008.pdf 

38


Business Aspects of the Internet of Things: 

Mobile Marketing 

Gilad Geron 

Swiss Federal Institute of Technology Zürich, 

Department of Management, Technology and Economics, 

ggeron@student.ethz.ch 

Abstract 

As the development of mobile phones advances, new 

technologies are introduced to the users allowing them to 

communicate and interact with their peers in new ways. 

These new ways of interactions are viewed as a great potential 

for marketers, who can now target their audience 

with more precision and with more attractive and interactive 

contents. This paper aims to examine mobile phones 

as a marketing ground and how the emergence of new technologies, 

such as social networks, will affect the future of 

advertising. 


In the past, marketeers have used mass media mediums 

such as newspapers and television as their major channel 

for reaching large audiences. At the time, this approach 

had effective returns on investment because there were only 

a limited number of television channels and newspapers. 

However, these days, there are hundreds of television channels, 

which means that viewers are more scattered and the 

number of viewers per channel is smaller. This makes it 

more difficult to target a large number of viewers and therefore 

reduces the efficiency of advertisement campaigns on 

television. Moreover, according to Newspaper Association 

of America, there is a decrease in newspaper advertisement 

expenditure and an increase in online newspaper 

advertisement,[4] which may suggest that consumers are 

shifting their preferences towards digital sources of information 

(perhaps because the information provided digitally 

is updated at a much higher frequency). The changes which 

are occurring to the ’traditional’ mass media mediums require 

the conventional marketing strategies to adjust. The 

marketing world is in transition and mobile phones are becoming 

more and more the center of attention. The purpose 

of this paper is to explain why mobile phones are becom- 

39 

ing increasingly popular and to analyze the latest trends of 

mobile marketing. 

Before diving into the concept of mobile marketing, we 

will briefly define a couple of general terms of marketing. 

Marketing is an organizational function and a set of processes 

for creating, communicating, and delivering value 

to customers and for managing customer relationships in 

ways that benefit the organization and its stakeholders.[2] 

Marketing can be divided into 2 categories, push marketing 

and pull marketing. Push marketing is where the marketeer 

”pushes” promotional information or product to the audience. 

Pull marketing on the other hand, is where the marketeer 

generates customer interest to ”pull” the promotional 

information. 

Mobile Marketing is defined as the use of the mobile 

medium as a communications and entertainment channel 

between a brand and an end-user.[9] Mobile marketing can 

be used for various purposes, such as: 

• Communication channel - Using the phone’s communications 

capabilities in order to transmit promotional 

information to target audience. For example, a brand 

may choose to notify its customers about the release 

of a new product by sending them an SMS or MMS 

message with the promotional information. 

• Purchasing channel - Allow customer to carry out 

monetary transactions through the use of a mobile 

phone. An example of this channel is the use of a 

mobile phone to pay for merchandise or transfer funds 

from one person to another. 

• Relationships channel - Allow brands to build and 

maintain a relationship with their customers. For example, 

a brand may offer a customer care chat service 

through SMS or through mobile internet. 

• Delivery / distribution channel - Delivering a service to 

the customer by using a mobile phone. For example, a 

customer may choose to purchase a cinema ticket and 

receive the ticket on his mobile phone.


• Usage medium - This is an emerging aspect which is 

related mostly to smart phones. It involves using the 

mobile phone as one would use his personal computer. 

With the constant improvements in storage space and 

computing, mobile phones are becoming more and 

more like pocket-sized computers. An example of such 

usage is the downloading of novels onto the mobile 

phone. 

• Entertainment channel - Offering customers entertaining 

materials such as mobile games, music, movies, 

ringtones and alike. 

2 Background 

At the end of 2007 mobile marketing expenditure was 

estimated to be around 3 billion dollars. By the end of 

2011 mobile marketing expenditure is expected to reach 

19 billion dollars[7] and over half of brands are expected 

to spend between 5% and 25% of their total marketing 

budget.[3] These predictions show that companies consider 

mobile marketing to take an important role as part of their 

marketing strategy in the upcoming years. 

There are many reasons why mobile phones are becoming 

increasingly attractive for marketing purposes. One of 

the main reasons is their popularity. The number of mobile 

phones users is rapidly increasing and is estimated to 

have reached a staggering 4 billion users by the end of 

2008, which is equivalent to roughly 60% of the world’s 

population.[1] This fact by itself is enough to make mobile 

phones extremely desirable for marketeers, however, the 

real attraction lies in the characteristics of mobile phones. 

One thing which sets apart mobile phones from other 

mass medias is the fact that they are always turned on. 

Moreover, people tend to be ’engaged’ to their mobile 

phones in the sense that they carry their phones with them 

everywhere they go. This means that theoretically, the audience 

is reachable at all times. Mobile phones are considered 

as the first so-called ’private’ mass media and the 

second interactive media (the first is the internet).[10] What 

makes mobile phones so personal is the fact that all of one’s 

information is stored on it, such as all their friends’ and colleagues’ 

contact information, as well as all messages and 

communication records they had with their peers. Mobile 

phones are so personal, that a Wired survey carried out in 

2006 has revealed that 60% of married couples will not 

share their phone with their spouses.[10] This means that 

the accuracy in which marketeers can target their audience 

is extremely high, as we know exactly who is using it. Figures 

suggest that the accuracy of tracking audience on mobile 

phone is as high as 90% compared to 10% and less 

than 1% on internet and television respectively.[10] Due to 

the fact that personal computers are less abundant than mo- 

40 

bile phones (one personal computer per household versus 

one mobile phone per person) makes it harder to identify 

the real user and his behavior. Although television sets are 

more abundant than mobile phones, television is even less 

accurate media because it is practically impossible to identify 

who is watching the television at any given time and 

rely on polls in order to make estimates, which do not necessarily 

portray the customers’ real behavior. With mobile 

internet, every click that the user makes is sent directly to 

the provider and therefore can be tracked with extreme precision. 

For the reasons explained above, marketeers view 

the accuracy which mobile phones offer as a gold mine for 

marketing. Privacy issues in this field are very controversial 

and could be discussed at great length. In this paper, we 

will simply assume that the users are fully aware that they 

are being monitored and have given their consent. 

To put a cherry on top of the marketing heaven that mobile 

phones offer for tracking customer behavior, they also 

offer with pinpoint accuracy not only what the customer is 

doing but more importantly from where and when. This 

is the only media which can offer such vital information. 

Being able to know where the customer is at all times, has 

given birth to location based services. In mobile marketing, 

location based services applications are advertising or 

marketing services that use specific location information for 

delivering the right message to the right person at the right 

place AND time.[5] Examples of location based services 

are: requesting the location of a nearby business or service, 

receiving a step-by-step instructions on how to get to that 

location and being notified when approaching a certain location 

and/or person. These services give businesses a great 

channel on which they can communicate their location and 

offer real time information to the users. Mobile phones have 

many built in sensors which could be used to enhance location 

based services’ accuracy and experience. For example, 

the built in camera of the mobile phone can be used 

together with an image recognition software in order to create 

an interactive, real-time tourist guide. In the future, we 

can expect to see location based services becoming more 

sophisticated and using more and more sensors, allowing 

marketeers to target their audience with more precise and 

interactive content. 

3 Mobile payments 

Another characteristic which makes mobile phones attractive 

is the fact they have built-in payment capabilities. 

Over 12 million consumers in Japan alone are using 

mobile payment and more and more shops, kiosks and 

metro stations are getting equipped with mobile payment 

capabilities.[13] In South Korea all credit card companies 

enable their credit cards on the customers’ mobile phone by 

default and offer to send an ’old fashioned’ credit card by


mail if the customers request so.[10] Many mobile phone 

companies are now developing various technologies that 

could facilitate the mobile payment process. An example 

of such technology is Near-Field Communication (NFC), 

where a device can read data through radio signals when 

coming in close range with an NFC tag that stores the data. 

As these technology is still under development, we are still 

to face just how big this market will become. In the future 

mobile phone will have an immense impact on the way 

users shop and pay for their commodities. One could argue 

that the days of the wallet are numbered and that it is a matter 

of time before the ’e-wallet’ replaces it. Even though the 

adoption rate of mobile payment is rather high, it remains 

to be seen whether it could replace todays conventional payment 

methods. 

4 Mobile Applications and Entertainment 

stores 

The release of Apple’s iPhone had a significant impact 

on the way people viewed smartphones. Before its release, 

smart phones were rather sophisticated to use and were targeted 

mostly at business people as their main audience. Apple 

has managed to change this perception by providing a 

user-friendly interface and an attractive design and focused 

mainly consumers. Apple has also released the AppStore, 

which is an electronic market place where third-party mobile 

applications and games can be sold. The user may 

browse through the store and with a few clicks download the 

desired application or game directly onto his mobile phone. 

In the first month of its release, Apple has sold an average 

of $1 million a day in applications, totaling to about $30 

million.[15] This was a wake-up call for many companies, 

who have seen the true potential of smart phones. For example, 

search-engine giant Google has released its own mobile 

phone operating system known as Android and the Android 

marketplace, which have very similar characteristics to Apple’s 

iPhone operating system and AppStore. Other smartphone 

platforms, such as Symbian and Windows Mobile are 

also expected to come out with similar services in the near 

future. 

We will examine the pricing-model of the AppStore 

(other marketplace use very similar pricing-models). The 

way these digital marketplaces work is the following. A 

developer for the iPhone has to pay a one-time license fee 

in order to be able to run his developed applications on his 

iPhone. When the application is ready to be published, it 

is sent to Apple who checks the integrity of the application 

and determines whether it brings added-value to the iPhone 

and approves or disapprove the application. Once the application 

is approved it can either be published free of charge 

on the AppStore, in the case where the application is given 

away for free. Alternatively, in the case where a devel- 

41 

oper decides to charge for the application, Apple takes 30% 

commission for each transaction made by the user. This 

is a win-win situation for both Apple and the developers. 

Apple benefits are two-fold. Firstly, for each application 

which is released, the value-added of the iPhone increases 

and therefore becomes more attractive to potential buyers. 

Secondly, they make big revenues from operating the marketplace. 

For developers, Apple offers a cost-effective solution 

for sales and distribution of their software to millions 

of users. Since developers’ revenue is proportional to the 

amount of units of software sold, the software which is directed 

at consumers is designed to be more attractive to the 

user and contains more interactive interface in order to maximize 

their profit by attracting the biggest amount of consumers 

possible. Due to the popularity of these marketplace 

platforms, many brands nowadays, offer free software and 

advergames to promote brand recognition and customer engagement. 

Advergaming is an immersive mix of advertising 

and entertainment that takes the form of video games.[12] 

Successful advergames are likely to cause word-of-mouth 

effect, where happy gamers tend to recommend the game to 

their peers and therefore advertise the brands further. 

The mobile entertainment industry is not limited to 

games and software. Mobile music and videos are also a 

big source of income. In 2006, mobile music generated 

over 8.8 billion dollars[10] and is projected to reach 14.6 

billion dollars by 2013.[16] Moreover, ringtones are said 

to make up to 10% of the music industry revenues worldwide. 

These confounding figures, emphasize the potential 

of mobile phones as mobile entertainment devices. As mobile 

internet connection become faster and the subscription 

fees become flat, it is likely to see companies providing full 

videos delivered directly on the clients’ phones. 

5 Mobile Internet 

Mobile phones have now surpassed personal computers 

not only in number, but more importantly in accessing the 

internet. There are 405 million mobile internet users and 

these numbers are expected to double by 2013, according to 

eMarketer.[6] Big internet advertisement companies, such 

as Google, are now rushing to mark their territory and grab 

their share of the mobile internet market by using similar 

technology to the technology they offer on normal internet. 

There are some differences in the behavior of mobile internet 

compared to normal internet users. These are mainly 

due to mobile limitations such as internet speed, internet 

compatibility limitations and screen size. Mobile internet 

users have a more direct approach to internet and will normally 

use it for rather short periods of time in order to fetch 

important information that they desire to have on the spot. 

Due to these limitations, mobile marketeers need to create 

advertisements which do not interrupt the user yet attract


his attention. Therefore there is still no common method for 

advertising on mobile internet, however, due to the growing 

market size it is just a matter of time before a norm will 

appear. 

Mobile internet is not the only aspect of the internet 

which is advancing. Web 2.0 is considered as the second 

generation of the world wide web and came to light around 

the year 2004. The Web 2.0 concept is based on smooth, 

interactive interfaces, easy communication, secure information 

sharing and most importantly collaboration on the internet. 

Web 2.0 encourages people to find, share and produce 

information on the internet in order to maximize user 

experience on the web. People can share photos and videos 

and make them accessible to anybody in the world, and with 

the help of a mobile internet, from anywhere in the world 

and at any given time. 

Web 2.0 lets people create their own identity on social 

network such as Facebook. Facebook is a platform where 

users can create friends and groups of friends and share information 

between them. The users’ identities can be monitored 

and their behavior can be analyzed to provide the user 

with appropriate products and services. For example, if a 

user belongs to a group for weight watching, it is likely 

that he would be interested in related products and companies 

could advertise accordingly. In addition there are 

social shopping sites, where a user can recommend to his 

peers products and services which he likes. The user can 

create himself a reputation by getting reviewed by his peers 

who may deem the information provided as useful or not. 

Users with an extremely high reputation can be considered 

as ’Alpha Users’. The Alpha User is ”someone who loves 

to communicate with everyone and keeps the social group 

connected and informed. The Alpha User is also earlier in 

adopting most products and/or services than the peers on the 

same social network”.[14] Once identified, Companies may 

decide to sponsor Alpha Users and therefore letting them do 

all the advertisement, which will then trickle down the rest 

of the network. 

Another important thing to mention with social networking 

is that we can measure what we consume but more importantly 

with whom we consume it with. This is a very 

important piece of information as we know not only the size 

of the audience but also their association with one another. 

Companies may analyze the group behavior and therefore 

adjust their marketing campaigns in order to maximize their 

efficiency to the particular target groups. 

6 Pervasive Advertisment 

Pervasive advertisment is a special case of mobile marketing, 

where the scope of mobile devices extends to 

’things’ or pervasive computing objects. The principle behind 

pervasive computing is the opposite of virtual reality. 

42 

Virtual reality attempts to bring the person into the virtual 

world, whereas pervasive computing brings in virtual components 

and integrates them with the real world objects. 

An example of such a device is Microsoft’s Surface.[8] Microsoft 

Surface is a computing platform with a large interactive 

touch screen in the form of a table. This platform can 

recognize and access mobile devices when they come near 

it. Data stored on mobile devices (such as music, videos, 

photos, documents, etc...) can be viewed and manipulated 

on the Surface and transfered from one device to another 

with a simple drag-and-drop action. The ability to dragand-drop 

content to and from devices with such facility is a 

great advantage for marketeers. For example, a coffee house 

may adopt these ’smart tables’ and increase the value-added 

of its services by offering its clientele a new way of interacting 

and sharing with one another. The coffee house can also 

incorporate advertisements and promotions in the software 

of the table to increase brand recognition and sales. 

Similarly, this type of technology could be integrated into 

a ’smart billboard’. The obvious advantage these billboards 

have over traditional billboards is that they offer digital advertisement 

which is more attractive. A billboard may show 

a promotional video or offer digital coupons with GPS coordinates 

to all stores that offer the promotion, which can 

be easily dragged-and-dropped onto mobiles. The billboard 

advertiser can charge the companies on a per-dowbload basis. 

The beauty of this form of advertisement is the fact 

we can monitor all interactions with the billboard and build 

a ’preferences profile’ for each mobile phone (we may not 

know the identity of the owner, but we can see what he likes 

according to the content he downloaded). This information 

can be very useful to both the smart billboard advertiser and 

the companies using the billboard services. Since we know 

where the coupon was picked up and where it was used, 

we can monitor how effective each individual billboard is 

in real time. This gives leverage to the advertiser, who can 

therefore charge extra fees for this information. The marketing 

teams of the companies get more accurate feedback, 

which in turn can help them improve their marketing efficiency. 

To take this concept a step further, the billboard 

advertiser can make its services location aware. By using 

the preferences profile, the advertiser could target its advertisement 

more accurately at the audience in the proximity of 

each billboard. For example, if the majority of the people 

around a certain billboard have downloaded on their phone 

a promotion for product X, then show an advertisement 

of product X. This is just a simple, straight-forward solution 

and more complex algorithms and artificial intelligence 

could be applied in order to determine which advertisement 

should be showed at each scenario more accurately. Another 

use of location aware billboards is to offer a guidance 

service to the store of a certain coupon. In other words, 

let us imagine that a person enables the guidance option on


his mobile coupon. When he approaches a location aware 

billboard, the billboard should say for instance: ”walk 100 

meters in this direction”. This way the environment around 

the user changes as he walks through the streets and guides 

him towards the store. These are only a few examples of 

potential uses of pervasive computing devices and goes to 

show just how potent pervasive advertisement can be when 

used alongside mobile phones. 

7 Conclusion 

Since its invention, the mobile phone has evolved 

tremendously. The fierce competition in the mobile phone 

industry has led mobile producers to encapsulate more and 

more features and gadgets with every product cycle. Mobile 

phone are becoming smaller and more powerful. Clearly, 

the point where a mobile phone is used solely for making 

phone calls is ancient history. Nowadays, the mobile phone 

has become so advanced that it incorporates pieces of all of 

its mass media predecessors namely, the print, the record, 

the cinema, the radio, the television and the internet.[11] As 

each media was considered more powerful than its predecessor, 

the mobile phone is no different especially since it 

uses the other mass medias and can take advantage of all 

of their positive characteristics. With its wide reach, its fast 

adaption growth rate and its high level of interactivity, there 

is no doubt that the mobile phone is the dream device for 

marketeers. The options and opportunities for advertising 

are countless. 

In the future however, we can expect mobile phones to 

not only mash-up with hardware but also with software. 

As mobile phones have increasing computing power they 

will continue to join together different hardware, software 

and mass medias. For example, imagine a phone application 

which uses its phone’s camera together with barcode 

recognition software to read a product’s barcode then 

connect through mobile internet to a social network where 

users compare prices and reviews about the desired product. 

The result is a mobile social commerce and review 

framework.This application takes advantage of the phone’s 

computing power and imaging capabilities as well as profiting 

from the advantages of web 2.0 and social networks 

/ commerce. From a marketing point of view, this is an 

entirely pull marketing strategy and unlike other pull marketing 

strategies, it requires very little investment from the 

company’s behalf. Given the immense power of social networks, 

it is likely that we will see social mobile marketing 

becoming popular. 

Despite the popularity of mobile phones, it is very unlikely 

that mobile marketing will force other forms of marketing 

to disappear. Mobile marketing will become more 

main stream but marketing in newspapers and other medias 

are still effective. Perhaps other mass media forms will 

43 

be used to increase customer knowledge about mobile services. 

With their versatile capabilities, mobile phones can be 

used as a binding link to connect between reality and digital 

world. Using different technologies (such as, NFC, 

barcodes, wireless networks, GPS, image recognition software), 

real world ’tags’ can be linked to digital tags and 

therefore offer consumers a greater added value. Pervasive 

computing devices give us a glimpse into the digital 

world through everyday objects and allow us to interact 

with the digital world with extreme usability. As computing 

units become smaller and cheaper it is likely that more and 

more objects will become ’smart’ and incorporate computing 

chips in them, enabling new forms of interactions (and 

thus marketing opportunities) between mobile phone users 

and the environment. 

References 

[1] S. Acharya. Worldwide mobile cellular subscribers to reach 

4 billion mark late 2008. http://www.itu.int/ 

newsroom/press_releases/2008/29.html, 

September 2008. Accessed on the 28th of April 2009. 

[2] American Marketing Association. Dictionary. 

http://www.marketingpower.com/_layouts/ 

Dictionary.aspx?dLetter=M. Accessed on the 

20th of April 2009. 

[3] Cambridge Marketing colleges. Mobile marketing. 

www.marketingcollege.com/upload/52438% 

20MobileMktngMaster.pdf, May 2007. Accessed on 

the 26th of April 2009. 

[4] ComCorp. Increase online newspaper ad results 

to decrease on print ads. http: 

//www.comcorp.com/articles/news/ 

increase-online-newspaper-ad-results-to 

-decrease-on-print-ads/, September 2007. 

Accessed on the 25th of April 2009. 

[5] L. Fields. Location based services a marketers 

dream. http://www.mmaglobal.com/ 

articles/location-based-services-%E2% 

80%93-marketer%E2%80%99s-dream. Accessed on 


[6] Google. Google adwords - google mobile ads. http:// 

services.google.com/adwords/mobile_ads. 

Accessed on the 28th of April 2009. 

[7] D. Halperin. Mobile marketing and advertising to 

be worth $3 billion by 1q 2008, says abi research. 

http://www.businesswire.com/news/ 

google/20070410005730/en, April 2007. Accessed 

on the 28th of April 2009. 

[8] Microsoft. Microsoft Surface website. http://www. 

microsoft.com/surface/. Accessed on the 22nd of 

May 2009. 

[9] Mobile Marketing Association. http://www. 

mmaglobal.com/wiki/mobile-marketing. 

Accessed on the 28th of April 2009.


[10] A. Moore. Mobile phones as mass media: Models 

for content distribution - part 2. http://www. 

masternewmedia.org/media/mobile-phones/ 

mobile-phones-as-mass-media-white-paper 

-part-2-20070711.htm, July 2007. Accessed on the 

28th of April 2009. 

[11] A. Moore. Mobile phones as mass media: The upcoming 

technological revolution - part 1. http://www. 

masternewmedia.org/media/mobile-phones/ 

mobile-phones-as-mass-media-white-paper 

-2007076.htm, July 2007. Accessed on the 28th of 

April 2009. 

[12] L. Obringer. How advergaming works. http://money. 

howstuffworks.com/advergaming.htm. Accessed 


[13] W. Turler. Votre téléphone: bientôt un porte-monnaie. 

http://www.largeur.com/expArt.asp? 

artID=2078, may 2006. Accessed on the 28th of 

April 2009. 

[14] C. Valdecantos. Are you an alpha user? http: 

//consultantvalueadded.com/2008/06/19/ 

are-you-an-alpha-user/, June 2008. Accessed on 


[15] WallStreet Journal. Iphone software sales take off: Apple’s 

jobs. http://online.wsj.com/article/ 

SB121842341491928977.html, August 2008. Accessed 


[16] M. Walsh. Mobile music revenue to reach $14.6 billion. 

http://www.mediapost.com/publications/ 

?fa=Articles.showArticle&art_aid=100847, 

February 2009. Accessed on the 28th of April 2009. 

44


Why Mobile Payment still has some way to go in Switzerland 

Stefan Wengi 

Department of Management, Technology and Economics 

Swiss Federal Institute of Technology (ETH), Zurich, Switzerland 

stefan.wengi@iaeth.ch 

Abstract 

In 1998 first trials for mobile payments at a Coca 

Cola vending machine were done in Finland. Although 

the proliferation of mobile phones has been 

unprecedented in subsequent years and although 

mobile payment is often considered being a killer 

application, mobile payment is still a niche player at 

least in the Swiss market. This paper provides an 

introduction to mobile payment focusing on NFC 

based approaches. Using an analysis of the 

stakeholders it considers their different agendas and 

explains why mobile payment still has some way to go 

in Switzerland. Some possible deployment scenarios 

round up the analysis. 


According to [1] mobile payment can be defined as 

payments for goods or services initiated, authorized or 

completed from a mobile phone or similar device. 

For more than 10 years there have been predictions 

that mobile payment is basically just around the corner. 

Except for some countries in Asia (and lots of trials 

around the world) [2] these predictions have not 

become reality yet. In particular the situation in the 

Swiss market still seems to be quite difficult since 

there is no clear path of deployment on the horizon yet. 

This paper tries to shed some light on the various 

aspects of mobile payment. It focuses on the 

stakeholders with their different agendas and tries to 

deduce some reasons for the delays in the deployment 

of mobile payment in Switzerland. 

The paper is organized as follows: In section 2 we 

take a look at different mobile payment scenarios. In 

section 3 we explain Near Field Communication 

(NFC), which lies at the heart of proximity mobile 

payment. In section 4 we describe the topic of NFC 

payment systems and procedures. Section 5 provides 

an analysis of the four major stakeholders. In section 6 

we consider delaying factors for the deployment of 

mobile payment in Switzerland. In section 7 we sketch 

3 scenarios for deployment and in section 8 we draw 

our conclusions. 

45 

2. Mobile Payment Scenarios 

Complementing the definition of mobile payment in 

[1] the Smart Card Alliance [2] further distinguishes 

between remote mobile payments and proximity 

mobile payments. The most obvious differences 

between these two kinds are speed, convenience and 

the fact that proximity payment can use the existing 

payments processing infrastructure [2]. 

Kreyer et al. [3] proposed four types of relevant 

mobile payment scenarios out of which mobile 

commerce (MC) and stationary merchant (SM) are the 

most prominent ones that also promise a real 

improvement in customer value. 

Combining proximity and remote payment with the 

mentioned scenarios we end up with a classification 

scheme as depicted in figure 1. 

Figure 1. Classification Scheme 

The relative attractiveness of the four combinations 

presented in the classification scheme largely depends 

on today’s payment infrastructure in an economy. In 

emerging markets where the proliferation of automated 

teller machines (ATMs) and point of sale (POS) 

systems supporting cards is still relatively sparse 

people are already using remote payment schemes e.g.


based on SMS. However in countries like Switzerland 

these remote payment schemes seem not to be very 

attractive compared to the existing methods of 

payment. As an example paying for parking with the 

service offered by PostFinance and ePark24 requires 

dialing a phone number and performing 4 steps of 

entering data on the phone’s keypad [4]. 

Given this reasoning and given the fact remote 

payments can somehow be considered as a technical 

fallback for proximity payments the remaining parts of 

this paper are focusing on proximity mobile payment. 

Proximity payment using an NFC enabled mobile 

phone (see below) can be as simple as touching a 

designated area on a vending machine and pushing one 

button to authorize the transaction with the amount 

shown on the phone’s display. 

3. Near Field Communication (NFC) 

In order to grasp the potential of proximity mobile 

payment a basic understanding of Near Field 

Communication (NFC) technology is essential. 

NFC is a short-range, standards-based wireless 

connectivity technology based on radio-frequency 

identification (RFID) that can be used for proximity 

communication over a distance up to about 20 

centimeters [5]. Currently transfer rates of 106kbit/s, 

212kbit/s and 424kbit/s are offered with higher rates 

being expected in the future. When two devices 

communicate using NFC one of them must act as a 

reader/writer while the other then behaves like an NFC 

tag comparable to an RFID tag (chip containing some 

data and connected to an antenna). 

The NFC forum that at the end of 2006 had over 80 

members from industries such as mobile device 

manufacturing, infrastructure and technology vendors 

as well as payment providers is publishing standards in 

the area of NFC. Standards from ISO, ECMA and 

ETSI form the foundation of NFC specifications. In 

particular NFC is compliant with ISO 14443 the main 

international standard for smartcard interoperability 

making it possible for an NFC tag to act like a 

contactless smartcard. 

Envisioned applications of NFC do not only include 

payment but also things like ticketing, peer-to-peer 

communication or service initiation e.g. employing 

smart posters or product packages in stores. The main 

attractiveness of NFC in these fields of usages comes 

from the fact that people can use a simple act of 

touching or placing their device close to something in 

order to initiate a desired service. 

Since the bandwidth of NFC is comparably low 

many usage scenarios employ it for conveniently 

initiating communication. Thanks to the proximity 

46 

requirement this initiation process can cover various 

security aspects like authentication or authorization. 

For transportation of the actual workload the 

communication peers can then switch to a faster 

communication method. 

The availability of mobile phones with NFC 

capabilities is still relatively low. However according 

to sources on the Internet [6] vendors like Nokia, 

BenQ, Motorola, Samsung and Kyocera are offering 

NFC models today already. 

It is important to note that in addition to mobile 

phones many other devices like cash registers, other 

POS equipment, ATMs, posters, bus stops, vending 

machines, parking meters, entry systems and product 

packages are foreseen to become NFC enabled. 

Industry players like Innovision [5] expect the first 

mass-market adoptions of NFC technology in 

relatively low-financial value applications that build on 

existing payment and communications infrastructure 

thereby not requiring large investment in new back-end 

infrastructure. 

4. NFC Payment Systems and Procedures 

Today there are four main systems of payment 

being supported and used in Switzerland: (1) cash 

(bills & coins), (2) debit cards (Maestro & Postcard), 

(3) credit cards (MasterCard & Visa) and (4) Maestro 

eCash. 

From a technology point of view all their usage 

patterns can be supported by mobile payment systems 

based on NFC. These systems can be classified 

according to the amount being paid (micro vs. macro) 

and the NFC role of the mobile device (tag vs. 

reader/writer). For our analysis we are selecting 2 

plausible setups: (a) micro, tag and (b) macro, 

reader/writer. 

System (a) can be thought of as a competitor to cash 

and Maestro eCash. The human interaction on the 

mobile phone is reduced to a minimum and the NFC 

chip is working in tag mode e.g. containing some 

preloaded amount of money from which the charge is 

being deducted. Simply touching some reader area 

with the mobile phone and pushing a single button 

(e.g. for activation) performs payment. 

In the case of system (b) the mobile phone acts as 

some sort of terminal communicating with the POS 

infrastructure in reader/writer mode. The amount to be 

charged is read from the POS and the user can interact 

with the phone e.g. choosing options or authorizing 

payment. 

So far we have looked at the process, as it is 

perceived from the customer perspective. However this 

is only the tip of the iceberg because for all non-cash


payments there is a need for quite complex (back-end) 

systems making it all possible. In general the following 

processes can be identified: (1) issuing, (2) 

authorization, (3) batching, (4) clearing/settlement and 

(5) funding. In addition there are many supporting 

processes like renewal, replacement, chargebacks, 

services for merchants etc. Figure 2 shows a version of 

a credit card payment process illustrating the flow of 

transaction data and money (source: apacs.org.uk). For 

simplicity reasons the settlement between the 

cardholder’s and the retailer’s bank has been omitted. 

Figure 2. Credit Card Payment Process 

In principle today’s back-end systems could also be 

used for processing mobile payments. However mobile 

payment is adding new stakeholders (e.g. mobile 

operators) and some complexity to the provisioning 

process. 

The variety of mobile phone form factors and the 

fact that personalization needs to be done when the 

phone is already in the user’s hand are the two main 

issues that need to be addressed in provisioning 

In order to do that some services for provisioning 

and personalization over the air (OTA) have been 

developed. These OTA services mandated the 

introduction of a trusted service manager (TSM) who 

will be aggregating the applications from different 

service providers and perform card management and 

provisioning of secure elements to the mobile devices. 

On the handset itself it is of importance where 

sensitive data like payment credentials or even 

applications are being stored in order to protect their 

integrity and confidentiality. Three potential storage 

locations are proposed by the SmartCard Alliance [7]: 

(1) a secure element embedded in the handset, (2) a 

memory card (e.g. a miniSD card) or (3) the SIM card. 

47 

5. Stakeholders 

In comparison to established payment systems the 

set of stakeholders significantly grows when talking 

about mobile payment. The following two tables list 

the stakeholders as identified in [2] completed by 

banks as one important stakeholder that was left out in 

there. The stakeholders colored in green are basically 

those dominating today’s payment infrastructure. 

Table 1. Traditional Payment Stakeholders 

Stakeholder Role 

Consumers Using the mobile payment devices 

Issuers Issuing mobile payment capabilities 

Merchants Accepting mobile payments 

Acquirers Supporting merchants acceptance of 

mobile payments 

Payment networks Setting standards and promoting 

acceptance by all parties throughout 

Issuing and 

acquiring payment 

processors 

the network 

Processing payments acting on 

behalf of acquiring and issuing 

banks 

Banks Providing customers with accounts 

and the ability to transfer money 

between them 

Table 2. Additional Payment Stakeholders 

Stakeholder Role 

Mobile network Ensuring a supply of mobile phones 

operators (MNOs) with NFC capabilities and 

supporting payment services on 

their networks 

Chip and handset Supporting branded financial 

manufacturers applications 

SIM/payment Providing branded financial 

software developers applications 

Trusted service Provisioning the payment 

managers (TSMs) application to the mobile device 

(OTA) 

Proprietary payment Offering payment applications for 

application 

specific services (e.g. transit 

providers 

agencies’ payment systems) 

Specialty 

Adding additional value to mobile 

application 

payments (e.g. PayPal enabling 

providers 

C2C payments) 

All these stakeholders have their specific agendas 

with some commonalities: acquiring plus retaining 

customers and making money. 

Some industry observers consider mobile payment 

to be a disruptive technology since it allows simpler 

and more convenient solutions with different attributes 

that have not been valued by existing customers [7] 

[8]. Since Markides suggests that disruptive 

innovations are less likely to be driven by the customer 

side [9] we focus on the supply side in our analysis


below. However the customer eventually decides 

whether a mobile payment system will succeed on the 

market. In this decision the fulfillment of 3 major 

categories of requirements will play a crucial role: 

security, costs and convenience. 

Technology providers like hardware and software 

developers can be considered second line suppliers 

catering to the main stakeholders. For this reason we 

do neglect them in our analysis as well. 

A very important new stakeholder in the payment 

business are the mobile network operators because (1) 

they have massive direct customer contacts, (2) they 

provide the mobile handsets thereby dictating features 

and (3) they are looking for new ways to increase 

customer loyalty. 

5.1 Roles and Interests 

The following tables summarize the roles and 

interests of the four stakeholders that where identified 

as most important. 

Table 3. Mobile Network Operators (MNOs) 

Examples: Swisscom, Sunrise, Orange 

Role 

• Control the proliferation of NFC technology on the 

handsets 

• Dictate the hardware and software requirements to the 

handset manufacturers 

• Often certify and load the applications to the phone 

(although this is changing in particular with 

smartphones) 

• Will ultimately control which virtual cards residing in 

the wallet on the handset 

Interests 

• Making mobile phones more attractive and important to 

the users 

• Increasing customer loyalty 

• Decreasing customer churn 

• Increasing traffic on their networks 

• Getting a share of the transaction fees, boosting the 

average return per user 

• Encourage consumers to upgrade to new NFC-enabled 

phones 

• Making other use of the NFC-enabled handsets (e.g. in 

marketing) 

• No big interest to share customers with other entities 

Table 4. Merchants 

Examples: Migros, Coop, Valora, McDonalds, SBB 

Role 

• Charge for goods sold to customers 

• Offer different methods of payment to the customer 

Interests 

• Reliability of the payment system 

• Increased revenue: 

48 

o Ticket size 

o Number of transactions 

o Wallet share of the merchant’s own cards 

o Customer loyalty 

o Attracting new customers 

• Reduced expenses 

o Cost of downtime (contactless technology) 

o Cash handling expenses 

o Operational expenses (e.g. electronic receipts, coupons and 

customer cards) 

• Payment convenience, security and speed 

• Low transaction costs 

• Low investments in payment infrastructure 

• Simple setup and operation of payment infrastructure 

Table 5. Financial Industry: 

Banks, Issuers and Acquirers 

Examples: UBS, PostFinance, Cantonal Banks, Viseca, 

Six Card Services and Multipay 

Role 

• Providing customers with accounts and the ability to 

transfer money between them 

• Offering payment methods and means to customers 

• Issuing mobile payment capabilities 

• Positioned as the most trusted provider for financial 

services 

Interests 

• Keeping their benefits of processing payments 

• Keeping their revenue or having a compelling reason to 

share it 

• Increasing electronic payment transaction volume from 

replacing cash sales 

• Making proximity payment one part of their strategy 

Table 6. Payment Networks 

Examples: MasterCard, Visa, Eufiserv (PostFinance) 

Role 

• Setting standards and promoting acceptance by all 

parties throughout the network 

• Providing brands with a high recognition factor 

signaling payment acceptance 

Interests 

• Keeping their position as a core enabler in the payment 

industry 

• Increasing global market share in the payment industry 

• Increasing revenues through higher transaction 

volumes 

• Making proximity payment one part of their strategy 

5.2 Strategic Positions 

Following up on the roles and interest of the four 

main stakeholders we analyze their strategic position in 

the following tables. The method being used is a 

simplified SWOT analysis combining strengths with 

opportunities and weaknesses with risks.


Table 7. Mobile Network Operators (MNOs) 

Examples: Swisscom, Sunrise, Orange 

Strengths and Opportunities 

• Strong market presence 

• Large customer bases 

• Established procedures for customer billing 

• Control over handsets, their configuration and 

distribution 

• Close link to technology providers 

Weaknesses and Risks 

• No experience in the payment business 

• No experience in the banking business 

• Customer trust? 

• Dependent on handset manufacturers and standards 

• Market fragmentation (in particular internationally) 

• Market entry of MNOs complicates the overall picture 

of relationships 

• The established players might look at them as a threat 

• Various potential business models to choose from 

Table 8. Merchants 

Examples: Migros, Coop, Valora, McDonalds, SBB 


• Control over the POS 

• Generation of revenue (money flow) 

• Relations with established payment providers and 

systems 

• Bigger merchants: economies of scale 


• Significant investments in new POS infrastructure 

lately 

• Very efficient cash handling processes make it hard to 

justify investments in mobile payment systems 

• Waiting position due to the nature of disruptive 

technology 

Table 9. Financial Industry: 

Banks, Issuers and Acquirers 

Examples: UBS, PostFinance, Cantonal Banks, Viseca, 

Six Card Services and Multipay 


• Market presence 

• Large customer base 

• Part of the existing payment systems 

• Existing relationships and alliances 

• Highly optimized processes 


• Increased costs due to activities in the areas of 

customer service, device tracking, application and key 

management 

• No control over distribution and form factor of the 

payment device 

• Reluctance to deploy payment applications to customer 

owned mobile devices 

• Risk of MNOs taking over the role of banks in payment 

thereby establishing competition for the existing 

methods of payment 

49 

Table 10. Payment Networks 

Examples: MasterCard, Visa, Eufiserv (PostFinance) 


• Market position and presence 

• Large customer base 

• Existing relationships and alliances 

• Highly optimized processes 

• Strong position in setting standards for the payment 

industry 


• Risk of loosing market share to new entrants from the 

mobile communication industry or to new third parties 

• Loosing control over the form factor of payment 

devices 

• Increased costs to deliver payment technology to the 

payment network 

• High transaction costs for merchants may lead to the 

surge of alternative providers 

5.3 Analysis Summary 

Summarizing the analysis of the different core 

stakeholder reveals a very difficult situation with 

conflicting interests and a low probability of a 

seamless cooperation between the various players. In 

this situation a business model that delivers value to all 

stakeholders is an important requirement but very 

difficult to come up with. 

Looking at possible paths of development in the 

domain of proximity mobile payment the future role of 

the mobile network operators is key. 

Recent developments even augmented this fact with 

the full support of the ETSI-endorsed Single Wire 

Protocol (SWP) by the GSMA (the global trade group 

for the mobile industry). This aforesaid SWP standard 

is providing the interface between a handset's SIM and 

the embedded NFC chipset within the handset. This 

means that secured communication from within the 

mobile device to the handset has to be passing the SIM 

card. So even if the mobile network operator (MNO) is 

not selling the customer’s handset it can still control 

which applications e.g. for payment or ticketing can be 

downloaded to their subscriber’s SIM cards. 

In November 2008 the GSMA called for massmarket 

NFC handsets by mid-2009 [10]. Some 

industry observers doubt there will be any significant 

deployments of NFC phones until 2010 but in any case 

if the SWP standard prevails this will pretty much push 

MNOs into the pole position and new third party 

payment providers into a niche. 

Unfortunately the strengthened position of the 

MNOs makes the overall situation even more complex. 

In order for mobile payment to be successful on the 

market it should be standardized and comprise as little 

fragmentation as possible. However many scenarios 

being discussed, alliances being built and trials being


run (e.g. the one of Swisscom with Selecta and Legic 

[11]) only cover specific use cases and do not integrate 

all the stakeholder thereby risking market 

fragmentation. In terms of diffusion models for mobile 

payment a fragmented market automatically results in 

very little or reduced network effects which are crucial 

for the overall success of mobile payment. 

6. Delaying Factors and Countermeasures 

Following our analysis of the major stakeholders 

with their agendas we are trying to identify major 

factors, which could be responsible for further delay of 

NFC based payment scheme deployment in 

Switzerland. In the following table the individual 

factors are combined with potential countermeasures to 

alleviate the problems. 

7. Deployment Scenarios 

Considering the complexity of the overall situation 

it is quite difficult to come up with reasonable and 

sustainable scenarios for the deployment of proximity 

mobile payment in Switzerland. Of course the situation 

will also be influenced by international developments 

and alliances being built. The following three scenarios 

illustrate different setups in terms of orchestration and 

rollouts. 

7.1 MNO Centric 

In the MNO centric scenario the operators attack the 

existing payment systems by providing their customers 

the opportunity to be charged for purchases on their 

mobile bill. As an alternative prepaid schemes could be 

offered which also have the advantage of lower 

Table 11. Delaying Factors & Countermeasures 

Delaying Factor Potential Countermeasures 

Existing high standard • Wait for the breakthrough of 

and coverage of 

mobile payment schemes in 

electronic payment in other European countries 

Switzerland 

• Identify areas of usage where 

mobile payment promises the 

highest overall benefits (e.g. 

micro payments, parking, 

liquidity requirements on the side of the network 

operators. The Focus for the initial rollout would 

probably be on micro payments at vending machines 

and for services like parking. Direct alliances of MNOs 

with merchants are necessary to get this scenario 

going. In a second stage this payment system could be 

extended to support payments at kiosks, quick-serve 

restaurants and drive-ins. Even later macro payments 

vending machines) 

e.g. at the POS of retailers could be taken into 

Chicken and egg • Identify and promote 

consideration however this would probably require 

problem 

(no NFC enabled phones, 

additional use cases for NFC 

enabled phones 

alliances with the financial industry. 

no POS infrastructure) 

Swiss customers still • Very difficult to overcome in 

7.2 Soft Card 

prefer cash and retailers 

optimized there costs for 

cash payments down to 

the short term 

In the U.S. and also in Asia (e.g. Hong Kong and 

Korea) there is a significant momentum towards 

0.2% of the purchase 

contactless smartcards [2]. Products supporting this 

amount [12] 

technology include MasterCard PayPass and Visa 

Recent investment of • Include retailers in a later payWave. Many POS terminals in theses countries 

retailers (e.g. Coop and 

Migros) in new POS 

terminals 

Availability of NFC 

enabled handsets 

stage of the rollout plan 

• Develop an NFC extension 

module for existing POS 

terminals (if technically 

feasible) 

• Wait for the international 

breakthrough of NFC enabled 

handsets 

already support this method of payments and growing 

support is expected. 

Thanks to the smartcard support defined in the NFC 

standards payments at theses terminals can also be 

made with an NFC enabled phone holding an 

embedded soft card. This scenario enables a stepwise 

deployment with the mobile phones gradually taking 

Low interests of some • Introduction of services by over the role of contactless smartcards while make use 

stakeholders 

other stakeholders which of an established payment system. Since both 

Difficult to kicking off 

network effects 

eventually could lead to 

increased pressure 

• Implement a stepwise 

approach with a clever rollout 

MasterCard and Visa are very big global players it is 

very likely that their standards for contactless 

smartcards will be deployed in Switzerland some day. 

Small market in 

plan 

• Wait for the breakthrough of 

7.3 Big Alliance 

Switzerland does not 

encourage early adoption 

mobile payment schemes in 

other European countries 

A third scenario is an alliance of all major 

stakeholders. In particular this scenario would include 

50


the Six Group (former Telekurs) as an intermediary 

and service provider for merchants. The services 

offered could be based on existing payment systems 

and would provide the highest potential for network 

effects kicking in quickly. However it is questionable 

whether a business model satisfying all stakeholders 

can be developed. 

8. Conclusions 

In this paper we identified major factors that are 

responsible for the delayed deployment of mobile 

payment in Switzerland. In combination with the 

different agendas of the various stakeholders and the 

necessity for a business case that benefits all involved 

parties this explains some aspects of the problem with 

its high overall complexity. 

The presented scenarios for deployment (MNO 

centric, soft card and big alliance) can be regarded as 

possible rollout paths of the new payment method each 

with its own advantages and disadvantages. 

It remains to be seen whether one of these scenarios 

will prevail or if the Swiss market will await further 

developments in major European countries before 

making any bold moves. 

9. References 

[1] K. Pousttchi, M. Schiessler, D. Wiedemann. Analyzing 

the Elements of the Business Model for Mobile 

Payment Service Provision. Sixth International 

Conference on the Management of Mobile Business 

(ICMB 2007) 

[2] Smart Card Alliance. Proximity Mobile Payments: 

Leveraging NFC and the Contactless Financial 

Payments Infrastructure, Whitepaper 

[3] Kreyer, N., Pousttchi, K. and Turowski, K. (2002b). 

Standardized Payment Procedures as Key Enabling 

Factor for Mobile Commerce. In Proceedings of the EC- 

Web, E-Commerce and Web Technologies (Bauknecht, 

K., Quirchmayr, G. and Tjoa, A.M. Eds.), 400-409, 

France, Aix-en-Provence. 

[4] ePark24 (URL: http://www.epark24.ch, browsed 04-08- 

2009) 

[5] Innovision. Near Field Communication in the real world 

– part 1: Turning the NFC promise into profitable, 

everyday applications 

[6] Touchatag: What mobile phones are NFC enabled? 

(URL: http://www.touchatag.com/faq/what-mobilephones-are-nfc-enabled, 

browsed 04-08-2009) 

[7] J. Bower and C. Christensen. Disruptive technologies: 

catching the wave. Harvard Business Review, 73(1):43– 

53, January 1995. 

[8] S. Walsh. Roadmapping a disruptive technology: a case 

study. the emerging microsystems and top-down 

nanosystems industry. Technological Forecasting and 

Social Change, 71:161–185, 2004. 

51 

[9] C. Markides. Disruptive innovation: In need of better 

theory. Journal of Product Innovation Management, 

23(19-25), 2006. 

[10] Near Filed Communications World: GSMA calls for 

mass market NFC handsets by mid-2009. (URL: 

http://www.nearfieldcommunicationsworld.com/2008/ 

11/19/3235/gsma-calls-for-mass-market-nfc-handsetsby-mid-2009/, 

browsed 04-08-2009) 

[11] Legic Identsystems Ltd: LEGIC embeds badge and 

purse into NFC mobile phones. (URL: 

http://www.legic.com/en/dyn_output.html?content.void 

=6038, browsed 04-08-2009) 

[12] J.Ondrus, Y.Pigneur. Cross-industry Preferences for 

Development of Mobile Payments in Switzerland. 

Electronic Markets. 17:2,142-152, 2007 

[13] Innovision. Near Field Communication in the real world 

– part 2: Using the right tag type for the right NFC 

application 

[14] J.Ondrus, Y.Pigneur. A Systematic Approach to Explain 

the Delayed Deployment of Mobile Payments in 

Switzerland. Proceedings of the International 

Conference on Mobile Business (ICMB 2006) 

[15] J.Ondrus, Y.Pigneur. An Assessment of NFC for Future 

Mobile Payment Systems. Sixth International 

Conference on the Management of Mobile Business 

(ICMB 2007) 

[16] K.Pousttchi, M.Zenker. Current Mobile Payment 

Procedures on the German Market from the View of 

Customer Requirements. Database and Expert Systems 

Applications, 2003


Persuasive Technology in Motivating Household Energy 

Conservation 

Yi Bing Tan 

ETH Zurich, Department of Management, Technology and Economics 

tany@student.ethz.ch 

Abstract 

This paper reviews the role of existing 

persuasive technologies in overcoming the action-attitude 

gap with regards to household energy consumption. 

Persuasive tools in the form of smart meters and energy 

display devices empower households in curtailing energy 

consumption by providing continuous feedback, while 

Web 2.0, particularly social networking sites, is critical in 

reaching out to the masses to recruit households to the 

cause. These two mediums are complementary and 

should be used in conjunction to achieve persistence in 

energy savings. 


One of the most daunting challenges facing 

mankind today is sustainable development. Since the 

Industrial Revolution, global energy consumption has 

increased 450-fold, with the main bulk of energy coming 

from non-renewable resources such as oil, coal and gas 

[1]. While the general consensus is that this is essential 

for economic growth, the impact on the natural 

environment has undeniably and severely affected the 

ecosystems, and will also compromise human life and 

civilisation in the long run. It is therefore imperative that 

energy usage be curtailed and controlled to a more 

sustainable level. 

One of the main levers for sustainable 

development is technology. With technology so firmly 

embedded in the everyday life, there exists many 

opportunities for technology to influence user behaviour. 

However, to successfully carry out persuasion, there is a 

need to consider the psychology of human decision 

making process. This is particularly important to address 

the long-standing existence of an attitude-action gap [2]. 

While environmental awareness of issues such as global 

warming and climate change is at an all-time high, 

adoption of eco-behaviour is still limited to the 

environmentally-conscious. 

52 

This paper attempts to draw insights from 

various theories in social psychology to understand how 

persuasive technologies can play a role in motivating ecobehavioural 

change. While the adoption of eco-behaviour 

is evidently desirable in all aspects of life, I will limit our 

discussion to household energy conservation behaviour. 

In the first section, I will look at the effectiveness of 

various intervention strategies in household energy 

conservation, particularly the role of feedback, and how 

current technologies embedded in computing devices can 

bring about these strategies. Next, I investigate the role 

of Web 2.0 in carrying out persuasion on the web, 

particularly in recruiting the masses into adopting ecobehaviours 

as well as in helping to enforce a persistent 

behavioural change- that is, in making eco-behaviour a 

habit. 

2. Background 

2.1 Psychology of action-attitude gap 

There exist many theoretical frameworks under 

the study of environmental psychology that aim to 

explain the gap between environmental awareness and 

adoption of eco-behaviour. One model proposed by Blake 

[4] examines the barriers between environmental concern 

and pro-environmental behaviour. As shown in Figure 1, 

these barriers are namely individuality, responsibility and 

practicality. Individual barriers are related to the personal 

attitudes and value system of an individual; this 

represents the most significant barrier for people who are 

less than environmentally conscious. Responsibility 

barrier describes the ‘locus of control’ of an individual. 

This represents an individual’s perception of his ability to 

influence the situation through his own behaviour. The 

third barrier refers to social and institutional constraints 

that prevent people from taking up pro-environmental 

behaviour, such as lack of time, money or information.


Figure 1: Barriers between environmental concern and action 

[4] 

While there are many other factors which 

influence an individual’s decision in adopting ecobehaviour, 

this model is nevertheless useful in that it 

combines both internal and external factors. The 

responsibility barrier is especially pertinent in our 

discussion; given the scale of environmental degradation, 

most people feel that they cannot make an impact. Just as 

how people may not feel the urgency of environmental 

issues due to the slow and gradual process of ecological 

destruction, changing behaviours will not improve the 

situation overnight, and a sustained effort is needed. 

Thus, technology not only plays a role in empowering 

people to change, but also connects people to show that 

they can make a difference through a concerted effort. 

2.2 The role of persuasive technology 

While persuasion using technology may not be 

something new, B.J. Fogg was the first to formalize this 

concept in his book of 2003. Persuasive technology is 

defined as any interactive computing systems designed to 

change people’s attitudes or behaviours [5]. To illustrate 

the three roles computing technology can play, Fogg 

introduced the framework of the functional triad: 

computing technology as a tool, media, and social actor. 

The functions of these three roles are depicted in Figure 

2. While there exists some valid criticism against the 

invention of the idea of a ‘functional triad’ [6], the 

persuasion strategies listed based on each of these three 

roles, particularly the role of computers as a tool and 

medium, are nevertheless still useful and should be 

considered. A summary of persuasion strategies for these 

two corners of the function triad is presented in Table 1. 

53 

Figure 2: The functional triad: Computers in persuasive roles [5] 

Computers as Persuasive Tools 

1. Reduction: persuading through simplifying 

2. Tunnelling: guided persuasion 

3. Tailoring: persuasion through customization 

4. Suggestion: intervening at the right time 

5. Self-monitoring: taking the tedium out of 

tracking 

6. Surveillance: persuasion through observation 

7. Conditioning : reinforcing target behaviours 

Computers as Persuasive Medium 

1. Simulated cause-and-effect scenarios 

2. Simulated environments 

3. Simulated objects 

Table 1: Summary of persuasive strategies 

2.3 Households are an important target group 

Households represent an important target group 

when it comes to energy conservation. While the 

industrial sector may still be leading in CO2 emissions, 

tough measures exacted by governments worldwide have 

resulted in a gradual decrease in industrial emissions over 

the years. Emissions from the residential sector, on the 

other hand, have increased at a rate of roughly 1.5% 

annually. In 2007, this sector accounted for 20.7% of 

totally energy-related CO2 emissions in the US [7]. A 

similar scenario is observed in the U.K., where residential 

sector accounted for 23% of total greenhouse gas 

emissions that year [8]. As such, the aim is not only to 

curtail the rise of household emissions, but also to 

achieve persistent reductions in household emissions. 

3. Persuasion through devices 

3.1 Overview of intervention strategies 

Extensive studies have been conducted to 

investigate the effectiveness of intervention strategies in 

household energy conservation. One of the most 

important strategies is the role of feedback. Since energy 

use is invisible to the user, the idea of providing feedback 

about electricity usage is to educate residents and


empower them with the knowledge to control and curtail 

usage. A review of literature shows that direct feedback 

can generate savings from 5-15% [9], while anecdotal 

evidence describes savings as high as 40% [10]. The 

effectiveness of feedback has also been shown to be 

maximised when it is provided continuously in real-time. 

Other intervention strategies that have been proved 

effective are providing comparative or group feedback, 

goal setting and tailoring of information [11]. 

3.2 Smart meters and energy display devices 

These intervention strategies have been made 

possible on a large scale with the advent of smart 

metering and real-time energy display devices. Smart 

meters differ from conventional meters in their ability to 

continuously measure and record electricity, water or gas 

consumption in households. In addition, they will also be 

connected via a communications system for supplier 

metering purposes. This means that residents will have 

remote access to data, hence possibly paving the way for 

home energy management systems in the future [12]. 

Currently, there are 40 million smart meters in use 

worldwide, with 100 million installations planned for the 

next few years [13]. While smart metering is definitely 

desirable, as evidenced by government intervention 

worldwide to provide for it, its nation-wide 

implementation would take time due to the need to set 

common technical standards to ensure interoperability of 

meters [14]. 

The other alternative readily available now is 

real-time energy display devices. This range of persuasive 

tools is different from smart meters in that they only 

provide consumption data to consumers and not to 

suppliers. Typically consisting of an external reader/ 

transmitter and a display device, they are cheap and easy 

to install. To enhance its usability and attractiveness, 

these products are often designed to appeal to the 

aesthetics with their interfaces kept simple and intuitive. 

These devices are an example of self-monitoring 

persuasive strategy mentioned by Fogg. Devices such as 

Wattson have a cumulative memory feature which allows 

monitoring of energy usage over a period of time. This 

makes it easy for household to track peak electrical 

demands and adjust their energy consumption behaviour 

accordingly. The attractive and interactive design has also 

motivated users to conduct their own cause-and-effect 

simulations at home using Wattson as a persuasive media; 

case studies of Wattson users describe the fun of 

switching appliances off and observing changes in colour 

cues to identify the most energy-intensive appliance [15]. 

Some of these devices have set up an online community 

to support the adoption of eco-behaviour. An 

investigation of Wattson online community shows the 

number of connected devices, energy used per day and 

54 

the amount of money spent. While no further information 

was provided on its exact features, an online community 

definitely has huge potential to create long-lasting 

behavioural change. This will be further discussed later. 

3.3 Persuasive tools that utilise ambient display 

There also exist many innovative gadgets which 

utilise ambient displays to provide information about 

energy usage. One such gadget which stands out as a 

persuasive tool is the SmartSwitch invented by Stanford 

students. Incorporated with a network connection and a 

brake pad, the SmartSwitch judges the level of energy 

consumption in the house and provides resistance when 

the level of electricity usage is deemed high, making it 

harder for a switch to be turned on [16]. This technology 

not only provides intervention at the right time, hence 

fitting in with the principle of suggestion, it also 

reinforces the target behaviour of not turning on 

additional lights through operant conditioning, hence 

acting as a conditioning technology. The effectiveness 

can be expanded upon by incorporating an input for goal 

setting, where the level of electricity usage (at which 

resistance sets in) can be determined by households. 

Figure 3: Wattson and its computer interface [15] 

4. Persuasion on the web 

The drawback of devices and gadgets as 

persuasion tools is the implicit need for intrinsic 

motivation. Households have to want to change their 

behaviours in order for them to take the first step of 

purchasing (except in the case of smart meters) and to 

fully utilise the feedback mechanisms provided. 

Moreover, the persistence of thus-induced eco-behaviour 

is questionable. The few studies where follow-ups were 

included have shown that positive effects of intervention 

were not maintained [17]. Here, we propose Web 2.0, in 

particular social networking sites (SNS), as a complement 

to persuasive tools. We shall investigate its potential to 

persuade the masses, including the less than 

environmentally conscious, to adopt eco-behaviour, as 

well as its ability to engage individuals in eco-behaviours 

in a sustained manner.


4.1 Psychology of differential participation 

Before we can leverage upon Web 2.0 and its 

various persuasive technologies, it is useful to gain some 

psychological insights into how and why individuals 

participate in social movements. According to a study 

done by Passy and Giugni [18], social networks have 

three important functions: they structurally connect 

prospective participants to an opportunity to participate 

(i.e. recruitment); socialise them to a protest issue; and 

shape their intensity of participation. One crucial 

determinant of the intensity of participation is the 

perception of one’s contribution to the cause. If an 

individual feels that his involvement can have an impact 

on the cause, he would be motivated to participate more 

intensely. On the contrary, the collective effectiveness of 

the organization does not matter as much. Also, 

recruitment by informal networks characterised by 

interpersonal ties is more likely to elicit a higher level of 

participation than recruitment by formal means, for 

example through membership. Other determinants of 

participation level include: subject availability (amount of 

time households can spare for this activity) and the fit of 

the movement’s ideology with the life goals and activities 

of participants. 

Next, existing examples will be used to 

investigate how Web 2.0 makes use of persuasive 

technologies to appeal to the psychology of individuals 

and motivate them to engage in the environmental 

movement. 

4.2 Recruitment via mass interpersonal 

persuasion 

Web 2.0 marks a new era of using the web as a 

platform, with user participation, openness, and network 

effects as its key characteristics [19]. One of the key 

trends is the explosion of social networking sites. With 

45% of web users actively participating on these sites 

every day [20], this presents a new form of persuasion: 

Mass Interpersonal Persuasion (MIP). MIP refers to the 

empowerment of individuals to change attitudes and 

behaviours on a massive scale, particularly via online 

social networks [21]. Facebook is one of the largest SNS 

with more than 175 million active users [22]. Most users 

on Facebook are connected to friends in numbers from 

hundreds to thousands. This presents a huge target 

audience for social influence by any Facebook user. 

Combined with the automated structure available to all 

users, anyone can persuade connected online friends to do 

things with ease. 

One example of an automated structure is the 

events function, where users can create an event with a 

few clicks and invite friends to participate. This plays 

55 

upon the psychology of differential participation 

aforementioned; since people are being persuaded by 

people they know, the invitation becomes more credible, 

and hence people are more likely to accept and 

participate. Earth Hour is one such event created and 

reached massive scale worldwide. It achieved 1.1 million 

online social network friends to commit to switching off 

their lights for one hour on 28 th March. There is no way to 

check if every one of these online friends stuck to their 

commitment, but by leveraging on social networking 

sites, huge publicity was created. Landmark buildings 

such as Big Ben in London and Bird’s Nest in Beijing 

switched off their lights [23], and reduction in electrical 

usage was reported in various cities worldwide [24]. 

The power of SNS in recruiting masses can be 

attributed to the bandwagon effect: people often do and 

believe things just because many people do and believe 

the same things. Earth Hour is an example of persuading 

people who would have cared less about saving the 

environment into turning their lights off for one hour just 

because they were invited to, and because their friends 

were doing so. There are also other features on Facebook 

which can be just as effective in garnering totally 

unexpected behavioural changes from people. If, for 

example, Wattson users were to post updates on their 

status about how much fun they were having 

experimenting with the gadget, people who are less than 

environmentally conscious could be motivated to 

purchase one, just because they want to join in the fun! 

4.3 Achieving persistent savings through user 

engagement 

To achieve persistence in savings, there is a need 

to consider internal motivation as opposed to external 

incentives and controls [25]. Here I propose Web 2.0 as a 

platform for social reinforcement, for providing 

recognition and support through community building and 

group participation. 

The effectiveness of group participation in 

effecting sustained behavioural change has been 

demonstrated by EcoTeams in the Netherlands [26]. 

While the EcoTeams had a monthly meeting to exchange 

information about energy-saving options, the Internet 

makes it possible to do the same from the comforts of 

one’s home via online communities. The advent of Web 

2.0 has only increased the sophistication of these online 

communities, especially with regards to the sharing of 

user created content. Not only has the emergence of sites 

such as YouTube and Flickr allowed individuals to 

upload videos and photos, the introduction of folksonomy 

makes it easy for others to retrieve relevant content along 

natural axes generated user activity through tagging. The 

rise of blogging also makes it possible for anyone and 

everyone to share their thoughts and ideas, with the


complementing RSS technology allowing their audiences 

to subscribe to their webpage and receive notifications 

every time that page changes. The result is a ‘live web’, 

where things are happening all the time [27]. 

Do The Green Thing is one such community that 

actively engages members in adopting eco-behaviour. 

Users are encouraged to upload ‘brilliant videos and 

inspiring stories’ to help inspire others. Any green action 

can be twittered to the website and this will be reflected 

in the form of dialogue box on Google map to show who 

is doing what where [28]. This inadvertently creates a 

sense of involvement for the members as publicly 

acknowledging that they have made a difference, no 

matter how small and insignificant their action may seem. 

Members may then be motivated to do more green things 

since they now feel that their actions do indeed contribute 

towards the cause. Another example of the power of 

online community is 1BOG, acronym for ‘one block off 

the grid’. The aim is to organize communities to buy solar 

panels in bulk in order to get bulk purchasing discounts 

from suppliers, with the internet platform providing 

community support via knowledge-sharing [29]. 

The ease of creating content and having an 

audience for it can play an important role in helping 

households persist in their eco-behaviours. While active 

participation in terms of content creation and participation 

in online communities will still be contingent on subject 

availability (a determinant of participation level 

aforementioned), Web 2.0 as a platform increases the 

convenience and decreases the time and effort required 

for intense participation. Since members on social 

networking sites tend to associate with others who have 

similar values and interests [20], this makes it easier for 

households to find an online community that offers a 

better fit with their life goals and activities. 

5. Merging the two mediums 

In this section, the possibility of merging the two 

mediums, devices and the Web, to further increase their 

persuasive power in motivating eco-behaviour change is 

investigated. 

A critique against the effectiveness of real-time 

energy display devices is their lifecycle of usefulness 

[30]. After the initial excitement of the learning and 

exploration phase wears off, how many actually sustain 

their eco-friendly activities, such as unplugging the laptop 

every night? To prolong their lifecycle of usefulness, one 

possibility is to leverage on community support enabled 

by the web. 

As mentioned in section 3.2, online 

communities have a huge potential to support sustained 

behavioural change effected by real-time energy display 

devices. Firstly, households can set an energy saving 

target and announce it to their online community as a sign 

56 

of commitment. According to the goal-setting theory, 

having a goal can be an important determinant of 

performance, and the goal-performance relation is 

enhanced when there is a commitment [31]. The online 

community can help by allowing households to commit 

publicly to their goals, and provide support through the 

establishment of a network. The posting of energy data 

online will allow the community to help in monitoring 

and providing feedback to the household as well. 

Secondly, access to energy data of other households 

provides comparative feedback. This can increase 

effectiveness of energy conservation efforts [32]. This 

also complements the principle of surveillance suggested 

by Fogg, which theorised about an additional aspect of 

persuasion through observation of others. Moreover, the 

knowledge of being observed will have a Hawthorne 

effect on oneself, hence motivating households to commit 

to desirable eco-behaviour. 

The integration of real world objects with the 

internet is also another idea that has been in existence for 

some time. Made possible by recent advances in 

miniaturization, sensor and communication technology, 

the vision is for items to have their digital proxy, hence 

merging the green world (physical world) with the blue ( 

digital world), resulting in an internet of things [33]. One 

application is to allow real-time energy display devices 

to automatically upload household energy data onto the 

web. Tweet-a-watt is an innovative, first-of-its-kind 

device that incorporates a wireless module. This 

transmits data to a nearby computer and publishes 

household energy data to their Twitter 1 account [34]. A 

possible expansion on this idea will be allowing 

households to choose which online community they 

want to upload their energy data to. By linking energy 

data to a chosen community, particularly communities 

with a green focus such as Do The Green Thing or the 

Earth Hour group on Facebook, households will be more 

motivated to participate since they are already active in 

that community, with the community playing a critical 

supportive role in their eco-behavioural change. 

6. Conclusion 

Persuasive technology plays an important role in 

closing the action-attitude gap. Persuasive tools in the 

form of smart meters and real-time energy displays 

increase households’ locus of control by providing 

continuous information on energy consumption, hence 

targeting the barriers of responsibility and practicality. 

Social networking sites can overcome individuality 

barrier through mass interpersonal persuasion to recruit 

1 Twitter is one of the largest social networking sites which allow users 

to send messages to their online Twitter account from sms, web, mobile 

web, instant message, or from third party API projects.

even non-environmentally conscious households into the 

cause, whereas web 2.0 and the Internet of Things 

enhance the effectiveness of community support through 

increased connectivity and reduced efforts. 

One area of concern is the ethics of persuasion, 

particularly with regards to the use of surveillance 

techniques in monitoring household energy consumption. 

While the intention may be benign, it can also be viewed 

as an invasion of privacy. There are two points to note 

with regards to this issue. First, it is important that such 

surveillance technologies are designed with the intention 

of being supportive instead of punitive. Second, it is 

essential that households are aware of the persuasive 

intent of these technologies, that their energy 

consumption is being continuously recorded , and 

permission should be obtained before such information 

are uploaded to websites. 

The other area of concern is the profitability of 

business opportunities in this area. Currently, green 

persuasive technology remains confined to a niche 

market, where some may argue it is too small for the 

sustainable growth of a firm. However, the market for 

real-time energy display devices, though saturated, is an 

example of how a useful, well-designed gadget can be a 

successful hit, especially with growing environmental 

awareness amongst the public. 

In conclusion, persuasive technology 

incorporating psychological means has vast potential for 

promoting and building sustainable development. 

Appropriate guiding principles will be needed to prevent 

unethical misuse. These may not be an easy task, but will 

most certainly be useful for the sustainability movement. 

References 


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57 

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58 

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Roomba to Roomie: Robots are entering our homes and our lives 

Zacharias Annu 

Department of Management, Technology and Economics, ETH Zurich 

zannu@student.ethz.ch 

Abstract 

From appliances to room-mates, robots are slowly 

but surely entering our homes and our lives. If we are 

to go by Bill Gates’ prediction there would be a robot 

in every home by 2025. But given the costs and 

complexity needed to build consumer robots, this 

prediction could be termed a little ambitious. This 

paper aims to look into the different robots available 

in the market for home use, a brief insight into the 

experiences of some of the domestic robot owners and 

the challenges facing the consumer robotics industry. 

Finally the paper tries to hint on certain unanticipated 

risks and ethical problems linked to the field of 

consumer robotics, leaving enough room for 

discussions and further research. 


Robotics is set to bring a revolution in 

automation of the ordinary household tasks of 

cleaning, cooking, washing, gardening, household 

repair, and shopping. Most of the consuming tasks 

of ordinary life can be automated to some extent, 

leaving more time for leisure activities. Robots are 

even set to provide more variety to entertainment. 

Mobile robots that operate independently of 

the operator have arrived. Core robotics research and 

advances in robotic technology can be applied across a 

variety of robotic forms and functionality. With each 

new round of innovation, a type of technological cross 

pollination occurs that improves existing robotic 

platforms and opens up other avenues where intelligent 

mobile robots can be employed, effectively creating 

new markets.[1] 

The emergence of a market for intelligent 

mobile robots for use in homes presents many 

opportunities. Units used in homes are also useful in 

workplaces and public spaces, airports, under the sea, 

and on the battlefield creating synergies creating 

economies of scale that make systems more useful and 

inexpensive in all the various industry segments 

59 

impacted.[1] What is good for a robotic unmanned 

ground vehicle is also good for a robotic vacuum and 

lawn mower. Multiple technological, cultural, political 

and market forces share a quantum singularity that has 

brought mobile robotics to the point where consumer 

markets can evolve. This is a phenomenon that will 

have a major impact on the way we live our lives. [1] 

Manufactures and roboticists however have 

to put up with greater challenges that they face in 

making these gadgets more useful and acceptable to 

consumers. Their greatest challenge is probably in 

creating robots that are mobile, dexterous and socially 

intelligent. Currently in the market, we find a robot 

that has one of these features, but one that has all of 

these features is still in the confines of the laboratory. 

This explains why the first users of the vacuuming 

robot were puzzled by its Frisbee shape, so much so, 

that some preferred to call it an automized floor 

cleaner than a robot. These robots were definitely 

different to what people had been introduced to, by the 

numerous science fictions as early as in the 1930s. But 

that has not deterred people from interacting with these 

objects. We are seeing the phase where robots do 

things „for‟ us and are moving into a phase where 

robots will be doing things „with‟ us. Few robot 

enthusiast go a little further to claim that robots would 

be a part of the future family. Therefore it makes it 

more important for us to understand the social impacts 

of robotic technologies. 

The aim of this paper is to list the home robot 

applications currently available in the market, highlight 

few challenges the makers face and state few reasons 

of slow adoption of these gadgets which together could 

imply that the predictions of some ardent lovers of 

technology could be a little ambitious. This paper is 

structured as follows: after looking into generic 

applications, some interesting market figures of home 

robots are shown. Section 3 describes what the users 

expect; followed by what the manufactures and 

hobbyist can offer given the various constraints and 

challenges they are faced with. Section 5 briefly 

describes the other side of the story with a word of 

caution. The final section looks into the future of home 

robots.


2. Applications, market figures and 

projections 

Here are some benefits that home robots offer (or 

could offer) today. 

Cleaning & Housekeeping: Currently there are many 

models in the market that clean and mop the floor, 

clean swimming pools and clear gutters. Cleaners 

already on the market carry a battery of electronic 

sensors that are meant to prevent them dropping off the 

edge of the stairs, to bypass obstacles like furniture, 

and size up a room. Several home robots can even 

carry dishes and other small loads from room to room. 

This is seen as a help for the physically challenged and 

the differently abled. 

Security & Hazard Detection: Home robots could 

easily be tied into a computerized home security 

system, and the robot's mobility would allow more 

areas in the home to be protected. Robots in the near 

future will use advanced AI (artificial intelligence) to 

monitor our homes, make sure everything is 

functioning properly and watch out for intruders. It 

would be fairly easy to attach fire, smoke, carbon 

monoxide, and other detectors to a home robot. Every 

night the robot could "make the rounds" to ensure that 

everything is okay. [2] 

Helpmate and home companion: Just imagine that 

every morning your robot could roll into your bedroom 

and wake you up; once the robot senses that you are 

out of bed it will follow you into the bathroom and 

deliver up-to-the minute news, weather, sports, and 

stock market information. [2]. 

Home Automation: It would be a fairly easy task to 

connect a robot to a home automation system. The 

robot, linked to your PC, would then have access to 

lights, security features, and more. [2] 

Entertainment: Robotics is an exciting hobby for 

many people around the world. There are countless 

clubs, websites, and books that have been written for 

those who are interested in the topic. "Humanoid battle 

robots" are set to bring computer games alive. 

Education: A home robot could not only teach about 

robotics but also spatial navigation, mapping, dead 

reckoning, programming, and more. 

Child Care: The technology already exists to use a 

robot to check on the kids while we are away from the 

house. Now with improvements someone could 

“drive" the robot around from a remote computer and 

receive live pictures of everything that the robot sees. 

Pest Control: Small robots may one day scurry around 

our homes at night, locating and smashing cockroaches 

and other unwanted guests. [2] 

60 

Fetch & Find : Using robot vision and an arm, the 

robot would navigate to the kitchen, open the 

refrigerator door; grab a beer off a bottom shelf, close 

the door, and return. Robots could also have attached 

RFID readers and assist in searching tagged items for 

e.g. keys and cell phones when misplaced. 

The International Federation of Robotics 

Statistical Department, which is hosted by the VDMA 

(Verband Deutscher Maschinen- und Anlagenbau - 

German Engineering Federation) Robotics and 

Automation association, publishes the study World 

Robotics every year. The next few paragraphs present 

some highlights of the report released on Oct 2008. 

[3]. 

Home robots are produced for a mass market 

with completely different pricing and marketing 

channels. Up to the end of 2007 about 3.3 million 

vacuum cleaners and more than 110,000 lawn mowers 

were sold. The total value amounted to about US$1.3 

billion. As for entertainment and leisure robots, it is 

estimated that about 2 million units had been sold up to 

the end of 2007. It is expected that the crossfertilization 

of PC, home entertainment and robot 

technologies will become a very substantial business 

area in the near future. The total value of the stock of 

entertainment and leisure robots amounted to US$1 

billion. These are very low-priced robots. 

Fig 1. Current figures and projections. [3]


The market for robots for handicap assistance 

is still small, but is expected to double in the next four 

years. These robots have not yet taken off to the 

anticipated degree, given their potential with regard to 

both imaginable need and the existing technological 

level of the equipment. In a longer perspective, say in 

the next 10 years, and taking into account demographic 

shifts and advances in technology, assistive robots for 

disabled and handicapped persons as well as robotic 

prostheses are certain to be a key area for service 

robots. Some major research institutions are focusing 

on developing prototypes of this kind of robots and 

robotics-related devices. 

Projections for the period 2008-2011: about 

12.1 million units of robots for personal use to be 

sold. It is projected that sales of all types of domestic 

robots (vacuum cleaning, lawn-mowing, window 

cleaning and other types) could reach over 4.6 million 

units in the period 2008-2011, with an estimated value 

of US$3.3 billion. The size of the market for toy robots 

and hobby systems is forecast at about 4 million units, 

most of which, of course, are very low-priced. About 

3.2 million robots for education and training are 

expected to be sold in the period 2008-2011. Sales of 

all types of entertainment and leisure robots are 

projected at well beyond 7.3 million units, with a value 

of about US$1.8billion. 

The figures mentioned above indicate that the 

consumer robotics industry has a potential for growth. 

The price of these products in comparison to the 

perceived benefits that the products promise to offer is 

one of the main criteria for customers‟ purchasing 

decision. This could be the reason that the prices are 

expected to drop in future to attract the mass market. 

3. User experiences 

Ever since home robots have been in the markets, it 

has received mixed responses from users. Some see it 

as a boon and others have different opinions. iRobot 

Roomba vacuuming robots, is one of the best-selling 

consumer robots till date. The iRobot Roomba has 

been lauded by industry experts and consumers alike as 

the first true practical and affordable home robot. 

Many users have responded positively to this 

invention. Though initially users were a bit surprised 

and even skeptical of its form and capabilities, many 

now vouch that Roomba would liberate users from 

mundane household chores to spend more time with 

family and friends. 

61 

There have been numerous studies on Roomba. One 

such study [4] describes the expectations of people 

around Roomba. The participants of the study 

acknowledged that the Roomba was a robot but they 

made a distinction between it and “other robots” .This 

distinction seemed to be based on that fact that 

Roomba was a consumer product – thus implicitly in 

contrast with other robots that were either fictional or 

tools used in science. The most common expectation of 

robots given by participants in the study [4] was that a 

robot would be “intelligent”, had the ability to learn 

and gain knowledge of the environment over time and 

adapt its behavior accordingly. The fact that Roomba 

does not learn its environment quickly became 

apparent to participants though understanding how it 

navigated and maneuvered through space. The lack of 

intelligence limited the attributions to Roomba. 

Although nearly universally the Roomba did not match 

the general expectations of “a robot”, this seemed to 

have little effect on the actual use of the Roomba. Even 

those participants who expressed disappointment that 

the Roomba was not more intelligent, particularly that 

it did not seem to ever “figure its way around,” did not 

report using Roomba less because of this [4]. There 

were other interesting behaviors seen among the 

participants of the study. With Roomba to help, 

cleaning was a concern for everyone in the home, not 

just the female homemaker. To help Roomba clean, 

householders made physical modifications to their 

homes, a process referred to as roombarization. 

Common types of roombarizaion included clearing up 

wires, changing furniture layout, and tucking in rug 

tassel [5]. Users even named their Roomba and were 

very interested in how their pets interacted with it.


Fig 2. Nuvo [3] 

For all their purported helpfulness, home robots are 

largely about companionship as we see a new trend of 

markets emerging for robots that function as 

housemates or roommates. One such robot available 

is Nuvo, which has been marketed as a household 

helpmate and as a mobile baby monitor and security 

device, because it can relay photographs to cell phones 

that have access to the Internet. The increasing sales of 

such robots show that they have created a new type of 

enthusiasm among user. However this has created 

special interest among social scientists who study the 

human–machine interaction. Here is one such 

interesting user experience: [6] 

“Whatever its capabilities are, or will be, Nuvo has 

a hard time living up to the expectations set by 

1960's TV shows like "The Jetsons" and "Lost in 

Space." I found myself wanting Nuvo to provide 

magical servitude and sparkling wit. I wanted it to 

accidentally drop the salt shaker in the mixing bowl 

and then be able to laugh about it because it realized 

it was funny, or perhaps not laugh because it was 

annoyed at having made a mistake. I wanted it to 

know the difference between the two emotions, and 

the complex circumstances that can cause both to 

arise.” 

“I came to enjoy Nuvo's odd attention. When I 

came in from jogging, I looked across the apartment 

to see Nuvo facing me. When I said, "Nuvo, I'm 

back," it bowed to me, a traditional Japanese 

62 

greeting. I decided to sleep with Nuvo next to me 

on my large bed, plugged in and recharging through 

the night. Its blue power light slowly pulsated, as if 

it were breathing. My boyfriend called me the next 

day and asked if I was sleeping in the same room 

with Nuvo. When I told him we were sleeping in 

the same bed, there was an awkward pause.” 

Home robots are slowly moving from being just useful 

to something that‟s sociable, robots with the capacity 

to interact with people on psychological terms. This 

opens up a new world of questions. But these 

increasingly sophisticated devices challenge the idea of 

human relationships and the very purpose and 

importance of living things. 

5. Challenges faced by the manufactures 

We are moving beyond the stage where robots were 

used only in controlled and therefore relatively simple 

factory environments. The home is a much more 

complicated environment with more unplanned and 

unexpected elements that can show up. This presents 

numerous challenges to manufacturers and hobbyist 

alike. Bill Gates, the leader of the PC revolution 

predicts that the next hot field will be robotics. He 

envisions a future in which robotic devices will 

become a nearly ubiquitous part of our day-to-day 

lives.[7] He believes that technologies such as 

distributed computing, voice and visual recognition, 

and wireless broadband connectivity will open the door 

to a new generation of autonomous devices that enable 

computers to perform tasks in the physical world on 

our behalf. We may be on the verge of a new era, when 

the PC will get up off the desktop and allow us to see, 

hear, touch and manipulate objects in places where we 

are not physically present[7]. However the software 

giant does not shy away from pointing out the few 

challenges faced by the manufactures of domestic 

robots. 

One such challenge is that robotics 

companies have no standard operating software that 

could allow popular application programs to run in a 

variety of devices. The standardization of robotic 

processors and other hardware is limited, and very 

little of the programming code used in one machine 

can be applied to another.[7] Whenever somebody 

wants to build a new robot, they usually have to start 

from square one. The Microsoft Robotics Developer 

Studio (Microsoft RDS, MRDS) seems to be one 

solution to the problem. It is a Windows-based 

environment for robot control and simulation. It is


aimed at academic, hobbyist, and commercial 

developers and handles a wide variety of robot 

hardware. [8] 

The popularity of robots in fiction indicates 

that people are receptive to the idea that these 

machines will one day walk among us as helpers and 

even as companions. Nevertheless, although robots 

play a vital role in industries such as automobile 

manufacturing--where there is about one robot for 

every 10 workers--the fact is that we have a long way 

to go before real robots catch up with their sciencefiction 

counterparts. [7] One reason for this gap is that 

it has been much harder than expected to enable 

computers and robots to sense their surrounding 

environment and to react quickly and accurately. It has 

proved extremely difficult to give robots the 

capabilities that humans take for granted--for example, 

the abilities to orient themselves with respect to the 

objects in a room, to respond to sounds and interpret 

speech, and to grasp objects of varying sizes, textures 

and fragility[7]. Even something as simple as telling 

the difference between an open door and a window can 

be devilishly tricky for a robot. But researchers are 

starting to find the answers. One trend that has helped 

them is the increasing availability of tremendous 

amounts of computer power. [7] 

Another barrier to the development of robots 

has been the high cost of hardware, such as sensors 

that enable a robot to determine the distance to an 

object as well as motors and servos that allow the robot 

to manipulate an object with both strength and 

delicacy. [7] But prices are dropping fast and therefore 

we are able to see some recent forays into the home 

markets. If one wants to talk about burgeoning markets 

for robotics, there's a whole slew of teleoperated 

applications that are waiting to be tapped. But here is 

also an added problem. If the robot was able to wash 

up dishes on its own then this may be useful, but if it 

has to be told how to wash up, where each plate is, 

when to pick it up, when its clean, where to put it to 

drain etc by a teleoperator then that lessens its value. It 

looks like the same old problem robots have been 

coming up against for years. We need Artificial 

Intelligence of a sufficient standard to use the hardware 

designs available to us to their fullest extent. Until AI 

has reached this standard all the robots built for this 

sort of environment have to be focused on one 

"simple" task i.e. vacuuming or lawn-mowing. [9] 

While advances in technology are giving us 

answers to some problems, a major stumbling block is 

presenting a good business case for a domestic robot. 

Many inventions in the robotics field are seen as 

germination for further research, but 

63 

whether there's yet a market that could sustain itself, is 

still not clear. One example is the AIBO by Sony 

(Japan), the production of which was stopped in 2005 

because of reportedly unsatisfactory sales. On the other 

hand iRobots Roomba has been rewarded for putting 

customer‟s interest first. Roomba accomplishes a task 

customers care about and does so at a price 

competitive with other methods. No breakthrough 

technologies were required, just familiar components 

used in new ways. A simple set of principles helped 

designers provide value to customers by keeping the 

focus on the application, robot cost and functionality 

and the system complexity. [10] 

A burgeoning number of robotics innovators 

have been inspired by the success of Roomba to move 

beyond the primarily theoretical applications to which 

robots had previously been consigned and are now 

beginning to create robots to help people do real tasks 

in the home. The latest research and development in 

domestic robotics field is in sociable robots, an 

autonomous robot that interacts and communicates 

with humans or other autonomous physical agents by 

following social behaviors and rules attached to its 

role. [11] There have been some interesting 

discussions in the design of these robots. Many 

robotics engineers are working on humanoid forms, 

instead of pursuing more imaginative, mobile, 

futuristic designs, reason being that ordinary people 

(especially the elderly) might interact more 

comfortably with robots that have familiar shapes. In a 

country like Japan, with senescing demographics, the 

desire of an aging population for robots could be 

enormous, both as personal assistants and as 

companions. But roboticists have to remind themselves 

of the hypothesis of „the uncanny valley‟ (The name 

captures the idea that a robot which is "almost human" 

will seem overly "strange" to a human being and thus 

could result in a repulsive response [12]) to decide on 

the design and business case for such sociable robots.


Fig 3. Human-like robots could create an 

uncanny valley [12] 

6. Word of caution 

The scope of things one could possibly do 

with home robots is ever-increasing with advancing 

technology. Home robots are currently being used in 

all walks of life, from child-minding robots to robots 

that care for the elderly. These types of robots can be 

controlled by a mobile phone or from a PC, allowing 

input from camera "eyes" and remote talking from 

caregivers. Sophisticated elder-care robots like the 

Secom "My Spoon" automatic feeding robot; the 

Sanyo electric bathtub robot that automatically washes 

and rinses; and the Mitsubishi Wakamura robot, used 

for reminding people to take their medicine, are 

already in widespread use.[13] 

Despite this, no international legislation or policy 

guidelines currently exist, except in terms of 

negligence. People in the likes of Professor Noel 

Sharkey of the Sheffield University urge their fellow 

scientists and engineers working in robotics to be 

mindful of the unanticipated risks and the ethical 

problems linked to their work. [13] They believes that 

robots for care represent just one of many ethically 

problematic areas that will soon arise from the increase 

in their use, and that policy guidelines for ethical and 

safe application need to be set before the guidelines 

64 

set themselves. According to few experts like Prof. 

Sherry Turkle research into domestic robots has 

demonstrated close bonding and attachment by 

children, who, in most cases, prefer a robot to a teddy 

bear[17]. Short-term exposure can provide an 

enjoyable and entertaining experience that creates 

interest and curiosity. However, because of the 

physical safety that robot minders provide, children 

could be left without human contact for many hours a 

day or perhaps for several days, and the possible 

psychological impact of the varying degrees of social 

isolation on development is unknown.[13] At the other 

end of the age spectrum, the relative increase in many 

countries in the population of the elderly relative to 

available younger caregivers has spurred the 

development of elder-care robots. These robots can 

help the elderly to maintain independence in their own 

homes, but their presence could lead to the risk of 

leaving the elderly in the exclusive care of machines 

without sufficient human contact. [13] 

Since Artificial Intelligence is becoming 

more sophisticated and robots might be entering more 

households, there may be important negative effects on 

the human family system. People need to try and 

remember that robots are still computers driven by 

software and prone to crashing, hackers and such like. 

Many also believe that allowing robots to do simple 

everyday tasks would probably make us more 

dependent on them and even lazier. These are all 

realistic possibilities. These will cause a lot more 

discussion and debate about technology, ethics, and 

human life. 

7. Conclusion 

Although the home robot industry is predicted 

to grow, experts say that the adoption is slow. [14] In 

truth, the idea of robots in every home seems further 

away today than it did four years ago. The reasons are 

not entirely clear. It could come from a lack of interest 

among consumers, a lack of imagination among 

product developers, or a lack of tasks that could be 

done well by robots. [15] There is a need for more 

market study to understand consumer preferences. 

Also home robots are vying for a place in markets that 

can be easily substituted, for example people could 

choose a real dog for Aibo or could start buying 

wrinkle free clothes than buying a robot that could 

iron. 

The future, in time, will be far stranger. In 

five years, the home robots are going to be more selfsufficient, 

though not revolutionary. Given the average

development cycle for a new one, home robots in the 

next few years are going to be similar to today's. 

There will be more single-purpose robots taking care 

of dull, dirty, dangerous tasks that do not require 

significant manual dexterity. Robots are going to get 

smaller even as their range of capabilities keeps 

growing. They also will be networked so their 

information applications become mainstream. [16] 

Robots that serve as physical surrogates are going to be 

affordable and commonplace. While there will be 

exciting services of home robots in the offing, the 

question of adoption and acceptance cannot be 

answered. It seems that the multipurpose sociable 

robots will remain in the research laboratories for a 

while. Therefore the predictions of few about robotic 

surrogates and helpmates in every home will take a 

longer time to become a reality. However the consumer 

robotics industry can flourish with better designs and 

more single purpose robots like Roomba. 

8. References 

[1]http://www.electronics.ca/reports/consumer_electro 

nics/cl eaning_robots.html 

[2]http:// www.pioneernet.net/johnc/actuallydo.htm 

[3]http://www.worldrobotics.org/downloads/2008_exe 

cutive_summary.pdf 

[4] Forlizzi, J. and DiSalvo, C. 2006. Service robots in 

the domestic environment: a study of the roomba 

vacuum in the home. In Proceedings of the 1st ACM 

SIGCHI/SIGART Conference on Human-Robot 

interaction (Salt Lake City, Utah, USA, March 02 - 03, 

2006). HRI '06. ACM, New York, NY, 258-265. 

[5] Sung, J., Grinter, R. E., Christensen, H. I., and 

Guo, L. 2008. Housewives or technophiles?: 

understanding domestic robot owners. In Proceedings 

of the 3rd ACM/IEEE international Conference on 

Human Robot interaction (Amsterdam, The 

Netherlands, March 12 - 15, 2008). HRI '08. ACM, 

New York, NY, 129-136. 

[6]http://www.nytimes.com/2005/07/14/garden/14robo 

t.html 


65 

[7]http://www.sciam.com/article.cfm?id=a-robot-in- 

every-home&page=4 

[8]http://en.wikipedia.org/wiki/Microsoft_Robotics_St 

udio 

[9]http://www.readybot.com/ 

[10] Jones, J.L., "Robots at the tipping point: the road 

to iRobot Roomba," Robotics & Automation Magazine, 

IEEE , vol.13, no.1, pp. 76-78, March 2006 

[11]http://en.wikipedia.org/wiki/Social_robot 

[12]http://en.wikipedia.org/wiki/Uncanny_valley 

[13]http://www.sciencedaily.com/releases/2008/12/081 

218141724.htm 

[14]http://www.theage.com.au/articles/2004/10/28/109 

8667898044.html?from=storylhs 

[15]http://www.technologyreview.com/business/16503 

/page1/ 

[16]http://www.pcmag.com/article2/0,2817,2238195,0 

0.asp 

[17]http://mitworld.mit.edu/video/588


Promising Business Applications of Vehicular Communication Systems 

Michael Steiner 

Department of Management, Technology and Economics, ETH Zurich 

michaelsteiner@student.ethz.ch 

Abstract 

Previous research in the field of vehicular 

communication systems lead to the foundation of the 

CAR 2 CAR Communication Consortium in 2002, 

which is formed of major car members and suppliers in 

Europe and pursues the development and introduction 

of the underlying radio, networking and information 

technology. With the emergence of Car-2-X 

communication many innovative applications become 

feasible. After a short introduction into different 

categories in vehicular communication systems, this 

paper describes the technology and its basic 

architecture. Starting with safety and traffic efficiency 

application, that are the main motivations for this 

technology, it continues with some thoughts about the 

economic background around a future market 

introduction, which finally leads to a description of 

several business applications including navigation 

services, local commerce and insurance services. 


Vehicular communication systems are an emerging 

type of networks in which vehicles and roadside units 

are the communication nodes. They provide each other 

with information, such as safety warnings and traffic 

information. This field of technology is often referred 

to as car-to-x (C2X) communication, as in these 

systems a car communicates to several different 

counterparts or even another car. The terms car-to-car, 

car-to-infrastructure (public), car-to-enterprise (private) 

and car-to-home indicate the different possible 

communication pairs. 

C2X communication enables a great number of use 

cases in order to improve driving safety or traffic 

efficiency and provide information or entertainment to 

the driver. The first of these three use case categories is 

safety. The use case of collision warnings allows 

preventing rear-end collisions. During normal driving, 

the equipped vehicles anonymously share relevant 

66 

information such as position, speed and heading. In 

order to prevent an imminent rear-end collision, each 

vehicle monitors the actions of its own driver and the 

position and behavior of all other nearby vehicles. 

When the system detects a critical proximity, it warns 

the driver and he will have enough time to intervene 

and avoid a crash. The second category is traffic 

efficiency. Those use cases are meant to improve 

efficiency of the transportation network by providing 

information to the owners of the transportation network 

or to the drivers on the network. For example, an 

infrastructure constantly collecting data and predicting 

traffic congestion on roadways can deliver routing 

advices to the drivers that will shorten their travel time 

by using alternate routes that are not congested. The 

third category of use cases named infotainment and 

others is meant to capture the remaining use cases 

which are not directed at safety or traffic efficiency. 

Many of these use cases interact more directly with the 

vehicle owner on daily basis providing entertainment or 

information on a regular basis. Others are transparent 

to the driver but still perform a valuable function such 

as increasing fuel economy or allowing diagnostic 

information to be accessed more efficiently at a service 

garage. 

Figure 1 Use cases of vehicular communication [1]


Figure 1 visually recapitulates the communication 

pairs mentioned at the beginning. Where car-to-car 

mainly corresponds to the safety category of use cases, 

car-to-infrastructure communication supports traffic 

efficiency applications. Infotainment and other use 

cases are based on car-to-enterprise and car-to-home 

networks. 

Today, such C2X communication systems hardly 

exist, because of missing technology standards and 

high entry barriers for car manufacturers. Nevertheless, 

C2X communication is more and more understood as 

the next big step in vehicle technologies and many 

current projects are trying to lay the foundations for 

standardization and commercial exploitation. They 

contribute their results to a common consortium called 

“CAR 2 CAR Communication Consortium” (C2C-CC) 

that was founded in 2002 by six European car 

manufacturers. Its objectives are to create and establish 

an open European industry standard for C2X 

communication systems based on wireless LAN 

components, to guarantee European-wide inter-vehicle 

operability and also to push the harmonization of C2X 

communication standards worldwide [2]. 

The aim of this paper is to give an overview of the 

technology and its applications in the field of vehicular 

communication systems. Emphasis is on the business 

aspects and on innovative commercial applications. 

This paper is structured as follows. Section 2 describes 

the technological approach and its issues. Section 3 

outlines the motivational applications within the 

categories safety and traffic efficiency. Section 4 

provides the economic background which eventually 

leads us to the section 5 describing some promising 

business applications, before we finally conclude with 

section 6. 

2. Technology 

The feasibility of the broad spectrum of application 

scenarios stated above depends on a standardized open 

communication platform. In this section, we shortly 

describe the communication technologies and the 

reference architecture of the network among the 

different fixed and mobile nodes. 

The C2C-CC [2] derived the radio system for the 

car-to-car communication from the standard IEEE 

802.11, also known as Wireless LAN. As soon as two 

or more vehicles are in radio communication range, 

they connect automatically and establish an ad hoc 

network. As the range of such a single Wireless LAN 

link is limited to a few hundred meters, every vehicle is 

also a router and allows sending messages over multihop 

to farther vehicles. The routing algorithm is based 

67 

on the position of the vehicles and is able to handle fast 

changes of the ad hoc network topology. Hence, the 

main technologies used to implement vehicular 

communication systems are WLAN and GPS. In order 

to fulfill the specific requirements of fast changing ad 

hoc networks and for having communication protocols 

supporting both active safety and infotainment 

applications, the new WLAN standard IEEE 802.11p 

has been defined. Its initial draft will be published in 

July 2009 [3]. The standardization process of the 

frequency bands utilized has even reached a milestone 

in 2008, when the EU Commission has reserved an 

EU-wide frequency band for car-to-x communications 

applications [4]. According to the decision, a protected 

spectrum (5.875 – 5.925 GHz) has been allocated for 

safety and efficiency related messages. The first 30 

MHz in the frequency band are reserved for safety 

relevant applications and the remaining 20MHz can be 

used for further extensions. 

Having these base technologies for communication 

between vehicles and roadside infrastructures, the C2C- 

CC has defined a reference architecture as shown in 

figure 2. It comprises three distinct domains: invehicle, 

ad hoc, and infrastructure domain. As we will 

see later, each of these domains proposes different 

application scenarios. 

Figure 2 Draft reference architecture [5] 

The in-vehicle domain refers to a network logically 

composed of an on-board unit (OBU) and potentially 

multiple application units (AUs). An AU is typically a 

dedicated device that executes a set of applications and 

utilizes the OBU’s communication capabilities. An AU 

can be an integrated part of a vehicle and be 

permanently connected to an OBU. It can also be a


portable device such as laptop or PDA that can 

dynamically attach to an OBU. AU and OBU are 

usually connected with wired connections, but the 

connection can also be wireless, such as using 

Bluetooth. The ad hoc domain is composed of 

vehicles equipped with OBUs and stationary units 

along the road, termed roadside units (RSUs). OBUs 

form a mobile ad hoc network which allows 

communications among nodes in a fully distributed 

manner without the need for a centralized coordination 

instance. OBUs directly communicate if wireless 

connectivity exists among them, but even when no 

direct connection is possible, dedicated routing 

protocols allow multi-hop communications, where data 

are forwarded from one OBU to another, until it 

reaches the destination. The primary role of an RSU is 

the improvement of road safety, by executing special 

applications and by sending, receiving or forwarding 

data in the ad hoc domain in order to extend the 

coverage of the ad hoc network. Additionally, an RSU 

can be attached to an infrastructure network, which in 

turn can be connected to the Internet. As a result, RSUs 

may allow OBUs to access the infrastructure domain. 

In this way, it is possible for AUs registered with an 

OBU to communicate with any host on the Internet, 

when at least one infrastructure-connected RSU is 

available. An OBU may also be equipped with 

alternative wireless technologies and in such a way may 

also communicate with Internet nodes or servers via 

public or private hot spots. In case that neither RSUs 

nor hot spots provide Internet access, OBUs can also 

utilize communication capabilities of cellular radio 

networks (GSM, GPRS, UMTS, HSDPA, WiMax, 4G) 

if they are integrated in the OBU, in particular for nonsafety 

applications. 

3. Motivational applications 

As you could imagine now, the main motivations for 

vehicular communication systems are increased safety 

and traffic efficiency. The missions of all currently 

running C2X projects, and especially the C2C-CC, 

have in common that they name safety applications as 

one of their primary goals. In the following, we have a 

look at several ideas how to improve traffic safety and 

efficiency. 

When introducing the safety use case category, we 

already described the concept of cooperative forward 

collision warning. The idea is that when the vehicle 

detects a critical proximity evaluating the shared 

information about position, speed and heading of other 

vehicles, it warns the driver via visual, auditory or 

haptic displays. The pre-crash sensing use case 

68 

addresses the next step and assumes that a crash is 

unavoidable and will take place. Similar to the 

cooperative forward collision warning use case, it 

requires that all vehicles periodically share information 

with neighboring vehicles to predict a collision. Once a 

collision is no longer avoidable, the involved vehicles 

engage in fast and reliable communication to exchange 

information such as more detailed position data and 

vehicle size. This extra information provided to both 

vehicles enables an optimized usage of actuators such 

as air bags, motorized seat belt pre-tensioners and 

extendable bumpers. A third interesting safety use case 

is the hazardous location notification. It utilizes the 

network of vehicles to share information that relates to 

dangerous locations on the roadway, as for instance 

slippery roadways or pot-holes. For instance, a vehicle 

that experiences an actuation of its ESP (Electronic 

Stability Program) system retains information about the 

location and shares its knowledge with other vehicles in 

the surrounding area. These other vehicles can then 

provide the information to the driver or use it to 

automatically optimize its chassis or safety systems. In 

this use case it could even make sense to distribute the 

information through ad hoc networks including 

roadside units in order to reach further vehicles. Notice 

that all three safety use cases mentioned so far have 

some common characteristics. All vehicles involved 

need the ability to share information with each other 

and therefore must be equipped with car-to-car 

communication systems. That is why a reasonable 

market penetration is necessary in order to have a 

safety impact. On top of this, these use cases require an 

accurate relative positioning and vehicles need to trust 

the information they receive from other vehicles. As we 

see later, the requirement for trust will again be 

important when it comes to commercially exploitable 

business applications. 

Although the main motivation of vehicular networks 

is safety improvements, there are several other benefits. 

Vehicular networks can help in avoiding congestion 

and finding better routes by processing real time data. 

This in return saves both time and fuel and has 

significant economic advantages. The three prominent 

use cases in the category of traffic efficiency are 

shortly described in the following. First, there is the 

obvious use case of enhanced route guidance that we 

mentioned in the introduction. In this use case, the 

roadside infrastructure is collecting data and predicting 

traffic congestion on roadways throughout a large 

region. This information regarding current and 

expected traffic conditions helps the vehicle’s 

navigation system to inform the driver about expected 

delays or better routes that might exist. As this use case


is likely to route a number of people around congested 

areas, the overall transportation system becomes more 

efficient. The second traffic efficiency use case, green 

light optimal speed advisory, provides information to 

the driver in an effort to make their driving smoother 

and avoid stopping [6]. As a vehicle approaches a 

signalized intersection, it receives information 

regarding the location of the intersection and the signal 

timing. With this information, the vehicle calculates an 

optimal speed using the distance to the intersection and 

the time when the signal is green. When the driver 

travels near this optimal speed, the traffic signal is 

likely to be green and he will not have to slow down or 

stop. The effect of this use case is less stopping on 

roadways resulting in increased traffic flow and 

increased fuel economy for equipped vehicles. Finally, 

we have a look at the vehicle merging assistance use 

case that allows merging vehicles to smoothly join 

flowing traffic. When a vehicle enters an on-ramp to a 

limited access roadway, it communicates with the 

adjacent traffic that is already on the roadway. It 

receives advices for specific maneuvers from the traffic 

participants in order to allow a safe and non-disruptive 

merge into the regular traffic. 

Having these motivational applications in mind, we 

see that for many use cases a significant level of market 

penetration of C2X communication systems is 

necessary in order to work properly. This leads us to 

some economic thoughts provided in the following 

section. 

4. Economic background 

Although there is a strong motivation for vehicular 

communication systems by applications described 

above, there are some severe issues regarding the 

market introduction of C2X communication equipment. 

For consumer technologies there are two mechanisms 

that lead to a successful market introduction. Either 

there is a visible added value of the technology for the 

customer or a regulative order, which does not leave 

alternatives, requires its use. A significant improvement 

of road safety due to C2X communication might 

actually justify the latter. But the catch to a regulative 

introduction is that, to be issued, the effectiveness of 

the C2X technology has to be proven first. In case of 

technologies without network effects (like e.g. safety 

belts) this might be achieved by crash tests and the 

limited introduction in the field. But in case of C2X, a 

certain penetration in the field is required before the 

effects can be unambiguously shown. Hence, it cannot 

be expected that a regulative order on the basis of 

expected safety and traffic flow improvement is issued 

69 

before the penetration is reached. Owing to the network 

effects the situation is equally tricky when investigating 

the added value for the consumer. When a consumer 

can only take advantage of a technology once a certain 

market penetration is reached, he or she will not invest 

in this technology before this is the case, which again 

means that this penetration will never occur. 

The classical approach for the introduction of new 

consumer technologies, to rely on early adopters to 

refinance development costs, or – as usually done in 

the automotive industries – to introduce a new 

technology top down, first in upper class vehicles and 

then generation by generation in lower classed 

vehicles, is consequently unsuitable for C2X 

communication equipment. The general idea to solve 

this dilemma is stated in [7]. C2X communication shall 

be introduced with help from car-to-fixpoint 

communication (C2FC) applications, which cover also 

the use case category infotainment and others. The 

communication with fixpoints has the advantage that 

the fixpoints can be installed independently from the 

equipment rate of vehicles. Discussed fixpoint 

communication counterparts are traffic infrastructure 

(car-to-infrastructure), enterprises (car-to-enterprise), 

public hotspots, personal equipment and alike. 

This proposed annihilation of the network effects by 

focusing on C2FC applications is a step forward to 

introducing the technology. Still, to envision the 

introduction of car-to-car communication, necessary 

for most of the safety and traffic efficiency 

applications, with optional C2FC applications is also 

naive. In consequence, car-to-car communication can 

only be introduced as standard equipment. In order to 

answer the question, how the serial production would 

pay off for the manufacturers, the authors of [7] 

propose a model with two major parts. Firstly, every 

vehicle is equipped with a basic car-to-car 

communication unit that can generate and forward C2X 

messages. It does not need to include the capability to 

also interpret the messages for the use inside the 

vehicle it is installed in, because the motivation for this 

unit is solely to achieve as quickly as possible a 

sufficiently large penetration rate. Secondly, a variety 

of C2FC applications is offered to the customers. The 

sale of these options finances the cost of the respective 

C2FC application, as well as parts of the basic car-tocar 

communication units. 

Motivated by this economic background, we will 

have a look at several business applications in the 

following section, whereas applications that are not 

depending on a very high market penetration of the 

C2X communication system will particularly awaken 

our interests.


5. Business applications 

In section 3, we have already seen several use cases 

of the categories safety and traffic efficiency. Now, we 

introduce some use cases of the third category called 

infotainment and others. As mentioned before, these 

use cases have a particular importance regarding the 

successful market introduction of C2X communication 

systems. Taking the point of view of different 

stakeholders, we split the section into a customer, a car 

manufacturer and a part looking at interests of 

government agencies and insurance companies. Note 

that we distinguish again between C2CC applications, 

that need a car-to-car communication, and C2FC 

applications, where a car-to-fixpoint communication 

takes place, and therefore a single equipped vehicle is 

enough for the use case. 

5.1. The Customer 

When discussing C2FC applications, and especially 

their suitability as introductory applications, three 

criteria are of importance: The required coverage, i.e. 

distribution of fixpoint communication counterparts. 

Variations exist from “any limited are imaginable” (e.g. 

personal equipment, company parking lot) to 

“nationwide coverage, large” (e.g. SOS request, vehicle 

location). As second, there is the required networking 

behind the fixpoint communication counterparts. The 

range goes from “the units are not connected to any 

other information source, none” to “the units need to be 

connected to the internet” (e.g. at hot spots). The third 

criterion is the attractiveness of the application with 

respect to the price obtainable. The value highly 

depends on the user group (private driver, business 

driver, manager of fleet operation business). Naturally, 

those applications are specifically suitable as 

introductory applications that require little or no 

Figure 3 Categorization of C2FC applications [7] 

70 

networking, that are applicable in any limited area and 

that are very attractive to the user. Figure 3 categorizes 

a selected number of applications. 

The applications found in the lower left corner are 

those especially suited for the early C2FC market. We 

include also the car-to-hotspot and MP3 download 

applications into our discussion, as with their not 

unlikely market success they will move into the lower 

left corner of the diagram. Three of these promising 

applications are for transport companies: electronic 

transport documents, electronic tachograph and 

delivery control in production plants. All three are 

issues today. Hence, technical solutions exist or are 

sought after. The introduction of the electronic 

tachograph is even supported by legislation. This 

means that the earlier the C2CC communication 

interface is included in the concepts the better. 

Also car rental companies are today looking into the 

optimization of their processes. The use of wireless 

connectivity is already tested e.g. at the car rental 

return station at the Munich airport. Therefore also 

their needs bear a potential for introductory scenarios. 

Next to the car-to-hotspot and MP3 download 

application, of interest for the private user are car-topersonal 

equipment (address book and calendar 

synchronization, music download into the vehicle from 

mobile devices, etc.), car-to-home (comfortable 

download of route planning information, music transfer 

from the home PC into the car) and the use of 

information points. The latter could provide local 

information about e.g. parking space or tourist sites. 

Decisive for the acceptance of these applications are 

that they are very affordable, easy to use and that they 

do not cause an information overflow. 

For companies, drive through payment is a related 

application, although not suitable for the introductory 

scenario. C2FC based drive through payment can, in 

fact, be installed in isolated set-ups (e.g. petrol stations, 

drive-through restaurants), but it cannot be expected 

that anyone will do so before a certain penetration with 

C2CC units is in the market. 

5.2. The Car Manufacturer 

The direct business for the car manufacturer is to 

sell vehicles. As we have seen in section 4, the C2CC 

components cannot be marketed as a standard option to 

choose in order to reach a large market penetration. 

Therefore, car manufacturers should look for 

applications that allow them to counter finance the 

installation of the C2CC units by profiting from the 

wireless interface themselves, outside the direct line of


business. In the context of vehicular telematics the use 

of such a wireless connection for the car manufacturer 

has already been investigated. The respective keywords 

are customer and vehicle relationship management 

(CRM and VRM) [7]. 

A first advantage in the context of VRM is the 

capability for remote diagnostics that allow for more 

efficient new product development and more effective 

utilization of safety margins. They furthermore help 

with the choice of suppliers and the proof of reliability. 

The possibility to remotely fix vehicle failures reduces 

customer irritation and helps to avoid costly dealer 

interventions. Secondly, warranty and liability 

management can be improved, as problems can be 

noticed earlier and alternative ways to contact the 

customers exist. 

Looking at the CRM context, it is obvious that 

owing to detailed customer understanding and 

vehicle monitoring, suggestions for upcoming vehicle 

replacements with specifically tailored models are 

possible. On top of this, the customer contact can be 

occasionalized. Instead of mass mailings just those 

with likely interest can be informed about useful 

equipment, software upgrades and alike. Thus 

enhancing the customer’s seamless ownership 

experience is brand building. 

5.3. Other Parties 

It has already been mentioned that government 

authorities must have an interest in C2X 

communication, because of its potential to significantly 

reduce the number of accidents as well as to improve 

the traffic flow. Apart from road safety and traffic flow, 

there are other areas in which government agencies 

might profit from the C2X communication. The 

optimization of tolling is an urgent case all over 

Europe and it would be desirable to have a compatible, 

cross border, single contract, wireless solution for 

tolling. C2X communication systems could provide the 

necessary infrastructure. Law enforcement is a second 

field for governmental application. Where e.g. theft 

tracking would be generally accepted, the possibility of 

tracking speed and alike with help of C2X would 

jeopardize completely the acceptance of C2X 

communication systems. A strong interest of 

government entities is also in collecting statistical 

data for their purposes. Nevertheless, the same applies 

as for the car manufacturer; a not insignificant 

infrastructure is required. The only difference is that 

government entities have it in their hands to decide on 

the reuse of e.g. tolling infrastructure. 

71 

Beside government agencies, also insurance 

companies have an interest in C2X communication 

systems. When looking at the statistics it can be seen 

that depending on where and how much you drive, the 

probability to be involved in an accident varies 

considerably. E.g. if you drive only on motorways, the 

probability to be injured decreases by about factor four. 

Based on similar arithmetic some insurance companies 

adjust their fees according to the use of the car. This 

concept is called Pay-As-You-Drive (PAYD) and is 

described in more detail by [8]. 

6. Summary 

Vehicular communication systems are an emerging 

type of networks and many innovative applications, 

which we categorized into safety, traffic efficiency and 

infotainment and others, become feasible. Although 

today, such C2X communication systems hardly exist, 

C2C-CC has defined the technological architecture 

around IEEE 802.11 and on top of this has reached a 

milestone when the EU commission has allocated a 

protected frequency band for safety and efficiency 

related C2X communications applications. Prominent 

applications in these areas are collision warning, 

hazardous location notification, and enhanced route 

guidance. When we looked at the economic 

background, we realized that innovative business 

applications are necessary to drive the emergence of 

C2X communication systems. The discussion in the 

corresponding section showed that there will not be one 

groundbreaking C2FC application suitable for the 

introduction of C2CC. Nevertheless, there are a 

number of applications from which vehicle customers 

might like to profit. The C2CC technology should thus 

be seen as a platform on which numerous applications 

requiring wireless connectivity to the vehicle can be 

realized. Finally, we had a look at some of these 

applications from the viewpoint of different parties 

such as private and business customers, car 

manufacturers, government agencies, and insurance 

companies. 

Having now a broad overview of the field of C2X 

communication and of the results produced so far by 

projects as the “Network on Wheels” [9], we expect 

some interesting outcomes delivered by the running 

project “PRE-DRIVE C2X” [10] that started 2008 and 

will end in June 2010, as they are not only developing a 

detailed specification for such a system and a 

functionally verified prototype, but also will describe 

sustainable business cases from safety- to infotainmentapplications.


References 

[1] Festag, A., Noecker, G., Strassberger, M., Lübke, A., 

Bochow, B., Torrent-Moreno, M., Schnaufer, S., Eigner, R., 

Catrinescu, C., and Kunisch, J. (2008). NoW - Network on 

Wheels: Project Objectives, Technology and Achievements, 

Proceedings of 6th International Workshop on Intelligent 

Transportation, Hamburg, Germany. 

[2] CAR 2 CAR Communication Consortium: 

http://www.car-2-car.org/ 

[3] Official IEEE 802.11 working group project timelines 

http://grouper.ieee.org/groups/802/11/Reports/802.11_Timeli 

nes.htm 

[4] EU reserves frequencies for Car-to-x communications, 

EE Times 

http://www.eetimes.com/news/latest/showArticle.jhtml?articl 

eID=209903568 

72 

[5] CAR 2 CAR Communication Consortium: CAR 2 CAR 

Communication Consortium Manifesto, project report, 2007. 

[6] Martin Goralczyk, Jens Pontow, Florian Häusler, Ilja 

Radusch (2008). The Automatic Green Light Project – 

Vehicular Traffic Optimization via Velocity Advice, Adjunct 

Proceedings of the First International Conference on The 

Internet of Things. 

[7] Kirsten Matheus, Rolf Morich, Andreas Lübke (2005). 

Economic Background of Car-to-Car Communication, Audi, 

Volkswagen, Germany. 

[8] Yuanshan Lee (2008). Applications of Sensing 

Technologies for the Insurance Industry, Seminar on 

Business Aspects of the Internet of Things, Zürich. 

[9] NoW - Network on Wheels: 

http://www.network-on-wheels.de 

[10] PRE-DRIVE C2X: 

http://www.pre-drive-c2x.eu


Abstract 

Last few years saw the emergence of new 

business models and improvements to the existing 

ones based on services directly tied to the network 

connected devices. The new trend has been adopted 

in large variety of industries from medical devices 

and power plants manufacturers to consumer 

electronics producers. The provided services range 

from monitoring and improving maintenance, 

reducing inefficiency to bringing new and fun ways 

of using the everyday electronic devices and they all 

have one thing in common: they fuel the new streams 

of revenue for the companies offering them. In this 

paper the impact on various industries will be 

analyzed as well as different business models, which 

are currently found in real world. 


The business world has seen a large shift towards 

providing additional services with the product sold in 

the past few years. This shift has occurred mainly 

due to the increased competition and larger number 

of similar products all competing on the price field. 

Some companies have introduced the services 

wrapped around their products, providing the added 

value to their customers. A small number of 

companies has moved even one step further and are 

offering the “smart services”. The term smart 

services describe the services, which go beyond the 

usual product updates and create an added value for 

your customers on one side and provide the company 

the cost effectiveness on the other side [1]. In this 

paper we will analyze some of the successful 

business models based on this approach in several 

different industries. 

In the power industry we will assess the ABB 

products and services and in the medical industry we 

will look at Siemens medical equipment. The 

application for small and medium business will be 

seen through the application of fleet tracking and 

management service. As the smart services are not 

only found in the expensive industrial products or 

B2B market but also in the consumer market we will 

additionally assess the approach of Nokia with their 

new push in the services market with the product 

called Ovi, the already well-established iTunes 

Things and Services 

Sanjin Goglia 


ETH Zurich, CH-8092 Zurich, Switzerland 

goglias@student.ethz.ch 

73 

approach from Apple and a newcomer to this market 

Amazon’s Kindle. 

2. Industrial Equipment 

As a world-leading supplier of power plant 

automation and electrical solutions, ABB offers an 

unmatched portfolio of systems, products and 

services to meet the needs of almost any type of 

plant. With their advanced and cost-effective 

services and solutions they can preserve and increase 

the value of customers facilities. Their service 

spectrum covers the entire energy supply path from 

the power plant through the substation up to the enduser 

outlet. At the same time ABB manages to lower 

their operational costs. The key to this success has 

been the use of remote monitoring and selfdiagnostic 

systems which are now days a de-facto 

standard in this industry. The ability to gauge 

maintenance frequency, coupled with enhanced life 

cycle costs, offers a golden opportunity to improve 

reliability of supply and minimize unscheduled 

disruptions. 

For example generating electricity is seen as a 

fundamentally inefficient process. The efficiency of 

existing European generating capacity averages at 

about 35%. On a global scale, this drops to 30%. In 

essence, 65-70% of the potential energy in all fossil 

fuels is wasted. With fuel accounting for around 75% 

of the operating cost of a coal-fired power station, 

the need to ensure optimum energy efficiency is 

critical. The power generation process is at its most 

efficient when the plant is in constant operation. If a 

plant is well maintained and runs smoothly, it will 

achieve better combustion efficiency. By measuring 

and monitoring not just the boiler chemistry, but also 

other areas around a power plant, ABB is able to 

have a better overview of current conditions. When 

incorporated into a planned preventative 

maintenance programme, this information can help 

to substantially reduce the risk of unplanned outages 

[2]. The improvement in efficiency is another benefit 

of a well-designed and applied monitoring system. 

For example most of the power plants have 300 to 

1,500 electric motors, pumps and other equipment 

running, and in many cases they aren’t anywhere 

near as efficient as they could be. Energy monitoring 

and control systems in a plant can range from several


meters to a comprehensive software setup and 

thousands of measuring points. Most advanced 

systems provide scalability, real-time data, and thirdparty 

device compatibility via protocols such as 

Ethernet, Modbus, Profibus, DeviceNet, LonWorks, 

BACnet and OPC. 

Most systems use the Internet for remote access 

to multiple locations within a plant or between 

multiple locations using Web browsers on a PC or 

wireless devices such as a PDA or laptop. 

Applications include alerts and alarming, load 

analysis, cost allocation, bill verification, asset 

management, trend analysis, equipment monitoring 

and control, and preventive maintenance. 

Other companies in this industry have similar 

solutions to the problem. The energy1st monitoring 

and control system from Stonewater Control Systems 

uses intelligent gateways installed at customer sites 

to collect information and push, rather than pull, 

information from the local devices over the Internet 

to Stonewater’s network operation center. Toyota 

Motor Sales, U.S.A., Inc. used such a system to 

reduce its energy consumption within its corporate 

and regional offices and distribution facilities. 

Toyota exceeded its goals of reducing energy 

consumption by 5% by the end of its fiscal year 

2003, and by 15% by the end of fiscal year 2005 [3]. 

Many other examples can be found in an article by 

T. Houc “Put power under control” [3]. 

Somehow similar examples can be found in a 

completely different industry – the medical devices 

industry. Siemens Medical Solutions of Siemens AG 

is one of the world’s largest suppliers to the 

healthcare industry. The company is known for 

bringing together innovative medical technologies, 

healthcare information systems, management 

consulting, and support services, to help customers 

achieve tangible, sustainable, clinical and financial 

outcomes. The product Symbia E is one of the 

Symbia family of SPECT and SPECT•CT (computed 

tomography) imaging systems. It provides users with 

a high-quality SPECT imager that can lead to 

improved clinical confidence, reliability and 

versatility. 

Maximizing workflow plays a critical role in 

providing efficient, cost- effective, high-quality 

patient care, as validated in a recent industry survey 

[4] that found workflow to be one of this year's top 

business priorities for imaging and IT professionals, 

whether they were from imaging centers, or large or 

small hospitals. Siemens answers this need by 

delivering workflow solutions that are role-based, 

context sensitive and knowledge-driven, providing 

access to tools that support quick and intelligent 

access to information, enabling more precise 

diagnosis, treatment and care. 

To ensure the highest customer satisfaction and 

system uptime, the Symbia E is equipped with 

Siemens’ Remote Services capabilities. The Siemens 

74 

Remote Services program enables Siemens to check 

the system status through full remote access and 

remote diagnostics. This level of proactive 

monitoring and trending of key performance 

indicators will allow Siemens to service and update 

the system before small problems turn into big 

downtime. The end result is that Symbia E users will 

experience interruption-free imaging while having 

the support of a network of nearly 1,000 trained field 

engineers. 

3. Logistics 

As fleet operating costs continue to rise and the 

Transport & Logistics market place becomes 

increasingly competitive, the need for operations to 

get the most out of their vehicles and drivers whilst 

meeting customer service level expectations is 

paramount to the overall success of any transport or 

distribution business. 

Several companies are now offering solutions to 

address this issue. One of such companies is 

Safefreight (http://www.safefreight.com). A 

company specialized in helping their customers 

improve the efficiency and effectiveness of their 

organizations through the innovative application. 

Their offering covers an extensive range of skill sets 

to evaluate, design, implement and support complex 

technological solutions which seamlessly integrate 

into their clients’ line of business applications. Their 

SmartFleet 360° Professional Services solution helps 

to answer strategic and tactical questions like which 

orders should be combined in a route (on a daily or 

even real-time basis), what is the best sequence to 

deliver (and pickup) orders in a certain route, which 

resources and equipment should be utilized, what are 

the most efficient driver start times, etc. By 

integrating the real-time communication of manifest 

to vehicles and real-time dispatching & scheduling 

functions, the solution provides an accurate and 

flexible decision making platform, which 

continuously optimizes the schedule based on real 

time information from the fleet. The system allows 

their customers to reduce fuel and fleet costs through 

accurate planning of routes and schedules reduce 

empty mileage, improve customer service through 

accurate arrival time planning, proactively re-plan in 

real-time based on exception management, reduce 

fleet operating and maintenance costs, etc. 

By moving away from the traditional and very 

expensive model for such applications where the 

customer had to purchase the complete system, 

Safefreight managed to make the online system and 

offer this service under subscription. A previous 

investment, which was in a range of 5’000 USD per 

vehicle, can now be obtained for as little as 40 

USD/month including the hardware. By serving the 

maps are served from Safefreight’s secure web 

server, they enabled their customers to locate and


view fleet and other mobile assets, review historical 

fleet reports and monitor asset location, condition 

and security status in real time. 

By using this solution their customers have 

reported many benefits from it like: cutting fuel bills, 

increased productivity and increased motivation and 

less stress among their workers. 

Similar businesses exist now days in various 

countries. 

4. Consumer Market 

Just like in the industry many companies have 

introduced various services bundled with their 

devices, which provide additional streams of revenue 

for these companies as well as offering their 

customer an added value and long lasting 

commitment to their products. 

One of such companies is also Nokia. It is easy to 

see why Nokia wants to move into services. The 

handset market is maturing. In many rich countries 

there are more mobile subscriptions than people. 

Rapid growth is limited to emerging markets. 

Handsets are becoming a commodity with shrinking 

margins. Nokia could focus on increasing its market 

share, which stands at nearly 40% worldwide. The 

more promising bet, however, is mobile services, a 

market that is finally taking off [5]. This kind of 

business is not new to Nokia. A few years ago Nokia 

introduced the Club Nokia, a mobile store for ring 

tones and mobile applications. The Club Nokia has 

been labeled as a failure mainly due to complaints 

from the mobile operators who saw this new offering 

as a threat to their customer relationship. The second 

attempt by Nokia has been a launch of Ovi in August 

2007, which attempted to provide a global one-stop 

shop for mobile services. Now Nokia wants Ovi to 

become even more - a hub that integrates mobile 

services between handsets and personal computers, 

by providing the digital maps, photo sharing 

services, a music store and a synchronization tool 

between the mobile phones and the PCs. By learning 

on previous mistakes, this time Nokia managed to 

convince mobile operators to provide support for Ovi 

and offer it’s services together with their own. The 

new streams of revenue Nokia sees in advertising, ecommerce 

and subscriptions to premium services. 

Another example is Apple with it’s iTunes store. 

Now already recognized as one of the largest service 

business in the world of consumable electronics. As 

it is widely known iTunes store provides a possibility 

for the users of Apple products to download music, 

video and games to their devices. In August 2007 

Apple announced that iTunes has sold over 3 billion 

songs in the last 4 years, since it’s launch, and that it 

recently surpassed Amazon and Target to become 

the third largest music retailer in the US [6]. 

Previous attempts to sell music on the Internet were 

primarily based on a subscription service model and 

75 

used proprietary formats. The record industry went 

overboard on copy protection schemes, and the 

public wouldn't buy it. One of the commercial music 

services not only prevented consumers from burning 

CD's of music they downloaded, but it also required 

consumers to pay a monthly fee in order to keep 

listening to music they had already downloaded. This 

essentially made it impossible for consumers to 

collect their own copies of music. It only allowed 

them to rent it. 

Apple was the first major business to understand 

that consumers want music purchased on the Internet 

to have the same properties as music they bought at a 

CD store. These days that means portability. 

Consumers want to be able to make MP3 files, CD's 

or even cassettes of the music they buy. Apples 

success provides valuable lessons for all marketing 

on the Internet. As expected, Apple provided a 

seamlessly integrated system that required very little 

effort for the consumer to use. More importantly, 

however, Apple provided a product with terms 

familiar to consumers. Apple sold music instead of 

renting it. Apple didn't try the use the situation to 

force consumers to give up rights they were used to 

having, and consumers appreciated it [7]. 

Amazon has taken a similar approach like Apple 

by launching their mobile book, newspaper and 

magazine reader - Kindle. Amazon Kindle is a 

software and hardware platform for reading 

electronic books (eBooks), developed by 

Amazon.com. The Kindle hardware devices use an 

electronic paper display and download content over 

Amazon Whispernet using the Sprint EVDO 

network. Kindle hardware devices can be used 

without a computer, and Whispernet is accessible 

without any fee. These devices also provide free 

Internet access to Wikipedia [8]. Upon the initial 

launch of the Kindle, Amazon's Kindle Store had 

more than 88,000 digital titles available for 

download, with the number of titles steadily 

increasing. Amazon's first offering of Kindle sold 

out in five and a half hours and the device remained 

out of stock until late April 2008. 

With Kindle, Amazon tries to reinvent the book 

and newspaper publishing just like Apple reinvented 

the music sales. According to the estimations done 

by Citi analyst Mark Mahaney, the Kindle could 

contribute 3% of Amazon's overall revenue in two 

years. By combining device and book sales in an 

iPod/iTuneslike model, Mark says, the Kindle could 

add $750 million to Amazon's top line in 2010 [9]. 

By offering different models from purchasing books 

to automatic delivery of newspapers to the device 

based on the subscriptions Amazon has managed to 

cover a whole range or “reading users”. Whether this 

approach is going to be successful or not is still to be 

seen.


5. Conclusion 

The pressure from the market and competitors, in 

form of lower margins on the devices and saturation 

of the market with similar products, has forced 

companies to look at combing their products with 

services to achieve differentiation from the 

competition. By intelligently combining the new 

services with existing products the analyzed 

companies have created a new value for the 

customers, improved customer relationship and 

retention as well as protected themselves from 

competition with proprietary protocols and 

technologies. It has been clear from the past 

experiences by large companies that survival of the 

company’s business nowadays largely depends on 

the offering not only top products but also binding 

these products with a verity of services which 

improve the customer experience and add value to 

the product itself. 

As we have seen from various examples, many 

companies have managed to move their business to 

higher earning levels by introducing the services for 

the connected devices in the market of industrial 

equipment. In addition to that these companies have 

managed to differentiate themselves from their 

competitors and create a long lasting relationships 

with their customer. The introduction of services not 

only adds to the revenue streams by direct sales of 

these services but also allows the companies to 

closely monitor their customer’s behaviors and 

changes in trends. By doing this it allows these 

companies to respond faster to the changes, build 

better new products and even more improve their 

customer’s satisfaction. 

On the other hand we have seen completely new 

business ideas in the fleet management and tracking 

for small and medium businesses where initial costs 

have been dramatically cut down and therefore 

allowed the providers of these services to access 

various new market segments. By doing this they 

have also provided an additional benefits for their 

customers who have seen cost cuts and better 

overview of their workers. Such an approach would 

not be possible without advances in the technology 

and the possibility to interconnect the devices in a 

larger, intelligent network. 

In the end application of services in the consumer 

market has been seen on the examples of established 

business like Apple’s iTunes, which managed to 

become the largest on-line music store by smartly 

combining the services with their products. On the 

other side the reinvention of the one stop shop for the 

mobile phone applications and downloadable 

products coming in a form of Nokia’s Ovi is still to 

prove it’s business model. On the same side as Ovi 

stands the new product from Amazon – Kindle. By 

trying to replicate the success Apple had with iTunes 

and applying the same approach to books, 

76 

newspapers and magazines it is still to be seen 

whether Amazon will manage to repeat the success 

of iTunes. 

Providing the services in the today’s market has 

not only become an advantage but an essential 

addition to the devices sold. The companies who did 

not recognize this new trend on time have observed 

decline in sales and loss of customers, which 

switched to other suppliers and became locked in to 

the competition by the newly acquired technology. 

Based on these findings it can be concluded that each 

company in the future will not only have to think 

how to make their product better but also what kind 

of additional services they could and should provide 

to their customers. 

6. References 

[1] G. Allmendinger, R. Lombreglia, “Four Strategies for 

the Age of Smart Services”, Harvard Business Review, 

October 2005 

[2] J. Plumley, “Improving power plant efficiency using 

analytical instrumentation”, 

http://www.abb.co.uk/cawp/seitp202/f95b7920b6f64682 

c1256f8d0055b672.aspx, January 2005 

[3] T. Houc, “Put power under control”, 

http://www.plantservices.com/articles/2005/539.html? 

page=1, 2005 

[4] Top Trends Survey, Health Imaging & IT Magazine, 

October 2007 

[5] “Ovi go again”, The Economist, December 2008 

[6] J. Heller, “iTunes Success Impact on Digital 

Marketing”, 

http://thedigitalblur.com/2007/08/01/itunes‐successimpact‐ 

on‐digital‐marketing/, August 2007 

[7] G. E. Morris, “The Apple iTunes Music Store: How 

Apple 

Got it Right”, 

http://thedigitalblur.com/200 

7/08/01/itunes‐successimpact‐ 

on‐digital‐marketing/, 2007 

[8] “Amazon Kindle”, 

http://en.wikipedia.org/wiki/Amazon_Kindle, Wikipedia 

[9] H. Blodget, “Amazon Kindle a $750 Million iPodLike 

Business By 2010”, The Business Insider, May 2008

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