Today's phones can take pictures and play games and music. What's next? Making that more of a useful tool and less of a gimmick.
By LOUIS HAU
Published March 24, 2004
ATLANTA - All together now: A cell phone is not just a phone.
Get ready to hear that refrain a lot more in coming months.
The humble wireless handset is in the process of morphing into a serious piece of high-tech hardware. And there is no better place to get a glimpse of this transformation than at the Cellular Telecommunications & Internet Association's annual wireless conference, which concludes today in Atlanta.
Much of the excitement at the wireless confab isn't about brand-new functions. Rather, the buzz is about dramatic improvements to existing nonvoice services so that they no longer feel gimmicky.
Already downloading ring tones but tired of the tinny sound? Now you can get a phone with a multitone ringer or one that can alert you to an incoming call with an MP3 music file instead. Carrying around both a personal digital assistant and a cell phone? You may want to ditch them in favor of a new "smart phone" with many of the same functions in a single, streamlined package. Enjoy taking snapshots with your handset? Later this year virtually every major handset maker plans to introduce new camera phones with photo resolutions of one megapixel or greater - sharp enough to rival early-generation digital cameras.
For those who aren't interested in the latest bells and whistles, there's Haier America's planned U.S. introduction later this year of a cell phone that is short on exciting features but is as small as a fountain pen.
Then there are the frivolous-but-fun applications that are popping up in the wireless world, such as the name-that-tune service that YellowPepper Inc. of Boston will launch commercially later this year. Record a 15-second snippet of a song on your cell phone and, for a small fee, YellowPepper will match it against its database of 2.3-million songs and will send you a text message identifying the title.
All of these applications are just the start of a new stage in the development of U.S. wireless services, according to Gadi Singer, vice president and general manager of the cellular and handheld group at chip giant Intel Corp.
Intel has developed a new generation of microprocessors that can handle the demands of high-quality audio and video applications without rapidly draining power from a handset battery. These improvements, plus advances in display technology and investments in cellular networks, are leading to an increasing convergence of mobile voice communications with significant computing power, Singer said.
"We have reached critical mass (for premium services) but there is a lot of headroom to grow," he said. "We're in a new phase but we're at the beginning of the new phase."
Simple economics is providing a compelling reason for wireless carriers to push the adoption of new, nonvoice applications. While your monthly wireless bill probably seems big, it's actually far lower than it used to be, at least on a per-minute basis. According to J.D. Power and Associates, a U.S. wireless call cost an average of 13 cents a minute in 2003, down sharply from 56 cents a minute in 1995. Meanwhile, the average number of minutes in a typical calling plan climbed last year to 1,623, up 20 percent from the previous year.
As customers keep getting more calling time for less money, wireless carriers are scrambling to find other ways of growing revenue, said Kirk Parsons, a senior director and wireless analyst for J.D. Power in Norwalk, Conn.
Nonvoice wireless services currently account for just 3 to 4 percent of wireless carriers' revenues, but that figure is expected to rise to about 10 to 15 percent over the next five years, Parsons said.
"That's pure profit because once they have networks and systems in place to handle these services, it's all gravy," he said.
An added bonus of extra services is that they can help build customer loyalty, Parsons said, a critical advantage considering how costly it is for the wireless industry to accommodate disgruntled subscribers to switch carriers.
As proof new cell phone services may prove popular, consider the recent track record of downloadable games for phones, a market niche which is just getting off the ground in the United States.
Even without significant marketing support from wireless carriers, downloadable games in the United States ballooned into an $80-million industry during the past year, according to Kurt Collins, a development engineer and industry analyst for Wireless Gaming Review in Boston.
The recent development of three-dimensional graphics for wireless displays is lending a new air of legitimacy to cell-phone games, Collins said.
"It's been extremely fast-paced," he said. "Knowing that it's grown from almost nothing to $80-million says a lot about where it's going to go."
- Louis Hau can be reached at hau@sptimes.com or 813226-3404.
