Cell Phones Get Fancier, More Personal.
By Jonathan B. Cox

On a screen the length of a matchbox, a hero fights gangsters. Friends smile from an exotic vacation. Pop diva Beyonce waits in the background to belt out her latest tune.

It happens daily in palms nationwide as mobile-phone customers play games, capture digital snapshots and download ringers that sound like music hits. Once satisfied to talk, a growing number of consumers are doing a lot more with their cell phones -- and boosting industry coffers with their penchant for extras.

Carriers such as Cingular Wireless have spent billions upgrading their networks as they sought to mimic the success of data services in Europe and Asia. It's an important effort to boost revenue as new-subscriber growth slows.

The investment is beginning to pay off. Although the primary interest for most subscribers remains making telephone calls, nonvoice services accounted for 2 percent of the $92.5 billion in U.S. wireless revenue last year, according to the Yankee Group, a Boston research firm. It is expected to grow to 10 percent of the total by 2006.

"Americans may not have the love affair that Europeans and Asians do with their mobile, but the flirtation is getting serious," said Adam Zawel, a wireless analyst with the Yankee Group.

Customers of Verizon Wireless, the nation's biggest mobile-phone company, download more than 5 million ring tones, games and other applications each month. Sprint PCS, the fourth-biggest, says its customers have swapped more than 100 million pictures and short video clips using its wireless network. At the Cellular Telecommunications and Internet Association trade show in Atlanta last week, content was king. Carriers courted game developers. Ring-tone distributors played their tunes, including those that sound like MP3 files and music that callers hear instead of the ring-ring-ring standard after someone dials.

Equipment makers such as Sony Ericsson, which has North American headquarters in Research Triangle Park, and Motorola showed phones with megapixel cameras for better pictures. One company, Wildseed of Kirkland, Wash., demonstrated a "Smartskin" cover that changes the content, pictures and sounds of a phone to fit a specific theme.

"Content and data, specifically entertainment data, is really the big thing, the big headline, neon kind of deal," said Kimberly Kuo, a spokeswoman for the wireless industry trade group. "Content has gotten much more interesting."

At least four Triangle companies are trying to make a go in the cell-phone content business. Anthem Mobile Games of Apex develops games; Summus of Raleigh creates applications and information-processing tools; 2Thumbz Entertainment of Cary sells ring tones, pictures and games from a Web site; and Pinpoint Networks of Durham, recently acquired Power By Hand of Nashville, creates technology to get content to customers.

"It's ultracompetitive," with countless rivals vying for the same customers, said Bob Shireman, president of Anthem Mobile Games. "The stakes are so high."

The trend toward speciality content started in Asia and Europe, where consumers routinely download ring tones, snap pictures and type text messages. U.S. carriers have raced to catch up.

Consumers here began to surf limited versions of the Web via their phones. Then they tapped out text messages. Now, they can look up the latest headlines, find sports scores, monitor traffic reports, buy movie tickets, e-mail snapshots or short videos of their children, and download tunes.

By selling such content and facilitating its transfer, the mobile-phone companies hope to become profitable. Carriers have been forced to upgrade networks and lower prices amid intense competition, hurting their bottom lines. Because more than half of U.S. consumers have a phone, the pace of new subscriptions also has slowed.

Games, the most in-demand content now with titles such as "Wheel of Fortune" and "NCAA Hoops 2004," range in price from about 99 cents to $6. Ring tones are $1 to $3. Wallpapers -- or speciality pictures displayed on color screens -- are about $2.

Why are consumers forking over the cash?

"When you have a personal device that you carry,... you want them to reflect your sense of style," said Avi Greengart, an analyst with Jupiter Research, a market research firm. "Why would anyone spend any more than $4 on a handbag? They do."

Much of the content appeals to younger subscribers. The most popular time for ring tone downloads, for instance, is 11 p.m., especially on Fridays and Saturdays, when many 20-somethings are likely to be hanging out in clubs and bars, overhearing cool ring tones and deciding to download one themselves. The appeal of games, tunes and other data is broadening.

Carriers are encouraging customers to buy more data services by introducing a wider variety of camera phones so pictures are swapped across their networks. They are also giving credits for free ring tone or game downloads on their systems.

Ryan Cooper, a 22-year-old junior at N.C. State University, is helping. He bought a camera phone three months ago and sometimes sends photos to friends at Wake Forest University in Winston-Salem. When N.C. State beat Wake Forest in basketball this year, for instance, he sent along a photo of the score -- to be helpful, of course.

"It's an easy way to talk to them without actually talking to them," he said. Cooper, who is from Winston-Salem, would like to begin downloading ring tones soon. Everyone's phone sounds the same, and he wants his to stand out.

There's one catch: "I'm kind of broke right now," he said.

That's a challenge for the mobile-phone industry. As content becomes more rich and specialized, prices are likely to climb. It could discourage consumers.

What's more, mobile-phone carriers must work to ensure the phones they sell accommodate a wide range of content. Not every game will work on every new phone available, for example.

Exchanging video clips between carriers' systems is impossible now, a problem that could hobble multimedia services. Application providers likely will have to wade through issues of content control, ensuring that consumers don't steal data that they're supposed to buy. Carriers will have to ensure their systems charge appropriately.

"The reason the industry is so energetic is this stuff is catching on like wildfire," said Jud Bowman, the former CEO of Pinpoint Networks in Durham, who now serves as the chief operating officer of Power By Hand.

And everyone agrees that the content is only going to get better. Already consumers can watch jerky television images on some phones. In the future, they will be able to order TV snippets anytime they want.

Games will become more advanced, with better graphics and multiple players. Faster networks, which mobile-phone companies are beginning to install, will provide speeds similar to cable modems and allow large picture and video files to move more easily. Better handsets with sharper screens and cameras will make more options possible.

"It's really just starting out. It's in its infancy," said Gary Ban, the chief executive of Summus. "The next few years here are really going to be exciting, what people can do with their cell phones."