July 30, 2010, 12:38 PM

What, precisely, constitutes mobile commerce?

The question follows Amazon’s announcement that it hit $1 billion in mobile commerce.

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When Amazon.com Inc. last week announced it hit $1 billion in mobile commerce sales in the last 12 months, retailers and industry experts knew it was an important milestone. But there is an important caveat to this massive figure: It includes the sales not only of e-books through the Amazon Kindle e-reader but of the e-reader itself.

Since the e-reader hardware can be purchased through the e-commerce site, which is likely where most are bought, industry observers say, those sales cannot be counted as m-commerce. But then comes the question of selling e-books via portable Kindle devices. Is that m-commerce? Two research firms that follow mobile commerce say no, primarily because an e-reader does not fit their definitions of what constitutes a truly mobile device.

“Mobile commerce must involve handsets that require specialized software to render web sites or run mobile apps that facilitate the purchase of physical or digital goods,” says Mark Beccue, senior analyst, consumer mobility, at ABI Research. “Are laptops, netbooks, e-readers and tablet PCs with wireless connectivity considered mobile devices in this context? No. The reason is because these devices have adequate processing power, memory, browser capability, screen size and resolution to conduct regular e-commerce. Mobile handsets require specialized software for consumers and a separate approach by retailers to enable purchases.”

Using this definition, ABI Research said earlier this year that U.S. m-commerce sales reached $1.2 billion in 2009, with Amazon.com and eBay Inc. taking the lion’s share. The research firm predicts mobile commerce sales will hit $2.1 billion this year and $10.7 billion by 2015. It does say, though, that it is currently working on new projections and may raise those forecasts.

ABI bases its research primarily on interviews with top executives at: eBay; top 20 and other merchants in the Internet Retailer Top 500, names of which Beccue cannot disclose because of confidentiality agreements; and e-commerce and m-commerce technology providers—including such players as Usablenet, Digby and MarketLive—with large client lists that are willing to confidentially share aggregate m-commerce sales figures.

Coda Research Consultancy also bases its projections on handset-only commerce, but it projects much greater growth—a 65% compound annual growth rate. The research firm says U.S. m-commerce sales hit $1.2 billion in 2009 and will reach $2.4 billion this year. It predicts $4.4 billion in 2011, $7.4 billion in 2012, $11.7 billion in 2013, $17.5 billion in 2014 and a massive $23.8 billion in 2015.

Coda bases its research on numerous variables, including smartphone shipments and penetration, mobile web users, mobile web user behavior, content accessed, U.S. Census Bureau monthly and annual retail trade reports, Census Bureau e-commerce reports, retail sales forecasts, e-commerce sales forecasts, previous years’ m-commerce and e-commerce sales, and sales patterns from Japan where consumers have been buying items through mobile phones for years.

Growth will be fueled by an ever-increasing number of retailers launching m-commerce sites and mobile apps, and an ever-increasing number of smartphones users, who expect mobile-optimized experiences, experts say. And the retailers will be looking to the heavy hitters for guidance.

“EBay and Amazon recognize that mobile commerce is vital to their core business, which is web-only. They have a good start on the field in mobile because they are focused,” Beccue says. “Broad retailers like Target think mobile is important, but their first priority is bricks-and-mortar, then online, then mobile. Over the next few years, eBay and Amazon’s market share of mobile commerce will shrink as the rest of the retail world gets serious about mobile.”

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