Vodafone made its long-awaited entry into the third-generation (3G) mobile market last week, having spent £22bn over four years developing its services.

The launch was a high profile affair that concentrated its efforts on enticing consumers away from existing 2G handsets and packages.

Vodafone is hoping the lure of services such as video calling, music downloads, 3D games, video and film clip streams and Vodafone Live! streams will prove compelling enough for consumers to pay up to £300 for a handset and £60 a month subscription fee.

Rival operators will have been watching closely as they angle their own 3G offerings. And businesses will be trying to understand what 3G could offer them.

3G is unlikely to make great inroads into the business sector at any point soon, but Vodafone chief executive Arun Sarin describes the transition to 3G as 'an evolution and not a revolution'.

Vodafone is the first of the established operators - excluding 3 - to launch 3G access via anything other than network data cards for laptops, but analyst Forrester describes the launch as 'incomplete'.

Jaap Favier, Forrester research vice president and editor of a recent paper entitled, 'Vodafone Live!'s Incomplete 3G Upgrade' warns: 'The clock is ticking.'

'We believe Vodafone just wanted to be first to market,' he added, suggesting the operator may have cut corners on putting together a complete service. 'It took a couple of 3G elements, put them together and said, "Okay, we're going to launch".'

But Vodafone has stressed this is a consumer launch.

'We have great products for business customers like the Blackberry and, in the 3G space, the mobile Connect data card,' said Sarin. 'I believe there will be a number of applications we have launched here today that many types of users will find attractive, like video calling, for example.'

The consumer focus of the launch was intended to compliment Vodafone's existing business offerings including its email-compatible Blackberry handset and 3G Connect data card.

'This is primarily a consumer offering,' said Peter Bamford, Vodafone Group chief marketing officer. 'But I can imagine many businesses where these services would be of use - to an estate agent for taking video of properties, for example.

'As ever with the customer segmentation we apply, people will find a number of different uses for our 3G services.

But Vodafone is hoping this early mass-market charge will establish a customer base from which to broaden its 3G offerings incrementally.

'It has targeted the young, dynamic early-adopter market, but that doesn't mean nobody else can buy it,' said Favier. 'This is a smart choice - a backlash from limited services would be much bigger on the business side. And chief financial officers really need to see a return on investment from a full-blown service.'

Vodafone has yet to establish full GPRS navigation but Favier believes it would give mobile business users a more compelling reason to upgrade.

Businesses will monitor 3G's progress in the consumer sector closely before committing.

A British Gas spokesman told Computing he has reservations about 3G's business capabilities.

'3G doesn't suit our needs right now,' he said. 'The reality is we've invested in a system at the moment that meets the best operational needs we have in the field and for our office staff. That's not to say we wouldn't look at 3G in future but it's probably two to three years off.'

'These big [new 3G] phones come with a camera and MP3 player. But the problem is that the young, dynamic early adopters already have iPods and digital cameras, as well as small, light fashion-item phones,' said Favier.

Whether it be business or consumer users, Sarin has set a target of reaching 10 million Vodafone Live! 3G customers worldwide by March 2005. 3 had just 200,000 customers whne it went live in March 2003. 'We now have 1.2m,' said Dave Cooper 3 chief technical officer.

At research firm Canalys, analyst Rachel Lashford says it is important to compare customer numbers in the context of the operator's existing customer bases.

'3 had none, whereas Vodafone is looking to migrate old customers as well as sign up new ones,' said Lashford. 'That's going to be an advantage for all the other operators over 3.'

Having spent £22bn on a 3G licence and developing its network, terminals and offerings, Sarin says the cost of the infrastructure upgrade will make the success of this launch crucial to Vodafone's long-term survival.

The launch and the continued infrastructure rollout, will cost one-third of the Vodafone Group's capital expenditure this year and next.

The upgrade of 60 per cent of its UK network base stations is already complete, initially promising a seamless experience in main cities and towns. Vodafone has promised 80 per cent network coverage will follow by 2007, beating the UK watchdog OFCOM's licence conditions.

But this may be a contentious point for some business users, according to British Gas.

'We have a GSM and GPS handsets that suit us because they give very good national coverage. We have to think about this when we have engineers out in the Highlands of Scotland or other remote areas,' said the spokesman.

Users will be able to roam between 2.5G and 3G network coverage when making traditional voice calls in the UK and will have video-call roaming access in nine European countries and Japan.

The Live! 3G service launched simultaneously across 13 countries, including the UK and has made new premium services and handsets available in tailored offerings to each local market.

Orange and T-Mobile and O2 - Vodafone's main global competitors - are expected to follow suit shortly with mass-market 3G launches of their own.

'The operators will sign up significant numbers initially if they launch before Christmas like Vodafone, and perhaps even poach customers from 3,' said Lashford.

Favier added: 'There is always a clear first-mover advantage. But the others have got to get to market as soon as possible. The cost of the investment in licences alone is costing them one billion euros (£700m) a year.'

3G networks: how they compare

• 3 - launched 3G services in March 2003; offers same prepay or contract tariffs to business and consumers (but small-to-medium sized business offering is in the pipeline); 80 per cent UK network coverage; 1.2m users; limited international roaming available;
  
  
  

• Vodafone - launched 3G services in November 2004 and 3G Mobile Connect data card in February 2004; offers same prepay or contract tariffs to business and consumers; 60 per cent UK network coverage; number of users not applicable; limited international roaming available;
  
  
  

• T-Mobile - launched 3G network in February 2004, multimedia net card (for wireless large area network or WLAN enabled laptops) in July 2004 and Fusion card (with in-built WLAN) in October 2004; consumer offerings are due to be launched this Christmas; UK coverage and user numbers not available; limited international roaming available;
  
  
  

• Orange - launched 3G Mobile Office data card in July 2004; consumer offerings to follow before the end of the year; 66 per cent UK network coverage; no user numbers available; limited international roaming available;
  
  
  

• O2 - launched 3G data card in October 2004; a 3G service launch is expected before Christmas 2004; 50 per cent UK coverage is promised by summer 2005; no international 3G roaming is available.