Cell phones morph into all-in-one multimedia devices.
By Jerri Stroud
Ken Devine used to carry a laptop,
cell phone, personal digital assistant and a camera when he visited franchisees
for his employer, Panera Bread Co. of Richmond Heights.
He's ditched all but the cell phone -- a PalmOne Treo 600 SmartPhone from
Verizon Wireless. The phone has a built-in camera, organizer, a full keyboard
and messaging capabilities, including e-mail and mobile Internet access.
"It's the best tool -- the best gadget -- that I've ever had," said Devine,
franchise operations manager for Panera. He often needs to take pictures of
buildings and marketing materials for work, but he doesn't need a high-quality
picture, just a record.
His phone is more than a work tool. He's downloaded games that he and his
11-year-old son play, and he's personalized the phone with about 30 ringtones
and family photos.
"I've got ringtones for everybody in my family," and for various departments at
work so he knows who's calling, he said. "Instead of carrying pictures in my
wallet, I have pictures on my phone that I can scroll through."
Devine's phone is one of a growing number that do a lot more than ring and carry
voice conversations. The newest phones are morphing into multimedia devices
capable of playing CD-quality music, taking photographs, serving as game
consoles and even playing and recording short videos.
Customers are personalizing their phones with musical ringtones and graphic
"wallpaper" ranging from Shrek to sports figures to corporate logos. They play
games while waiting in airports, check e-mail on the run and get text alerts on
sporting events, stock quotes and pop stars.
"It's just amazing what's happening in the development of content" for mobile
phones, said Clint Wheelock, director of wireless research for In-Stat/MDR, a
research firm in Scottsdale, Ariz. Mobile phone companies typically offer about
250 games, and at least 317 companies are producing games for the U.S. market.
Six years ago, content developers expressed almost no interest in developing
applications for cell phones, which could display maybe four lines of text and
12 characters per line, said Mark Desautels, vice president of wireless Internet
development at the Cellular Telecommunications and Internet Association. Now
that phones are capable of downloading more than 100 kilobits of data a second,
every major software company is designing cell-phone games, ringtones,
wallpaper, information services or Internet sites. Record labels are licensing
ringtones, and sports teams are offering logos to use as wallpaper.
Wireless companies had been expecting businesses to adopt data services in a big
way, Desautels said. "The fact that consumers are jumping out in front has
caught them by surprise."
Carriers see nonvoice functions as a way to boost revenues and customer loyalty
in an industry where one-third of cell-phone users switch carriers every year.
Collectively, the segment is known as wireless data, but the services deliver a
lot more than strings of 1s and 0s.
"The word 'data' is scary," said Mark Kupsky, wireless data director at Verizon
Wireless in St. Louis. But data really means anything that you can do on a phone
other than talk. Verizon Wireless has more than 500 downloadable applications in
its "Get it Now" suite, including ringtones, wallpaper, games, dictionaries,
weather maps and even a wedding planner.
"We believe that in general, the more services that the customer has with a
carrier, the lower the odds of them leaving that carrier," said John Burris,
director of wireless data services for Sprint PCS.
"As these things become easier and easier to use, more people are getting into
it," Burris said.
For consumers, wireless data was a $520 million market last year -- less than 1
percent of the $60.5 billion consumer market for voice services, Wheelock said.
Analysts expect wireless data usage to at least double this year.
Businesses spend more on wireless data, but their usage is skewed toward
wireless e-mail, telemetry, computer access and machine-to-machine
communication, Wheelock said.
Games and ringtones each accounted for about $100 million in spending. Wheelock
expects games to more than double to $203.8 million this year, growing to $1.8
billion by 2009.
A recent study by Ziff Davis Media showed that the number of households playing
games on their cell phones doubled to 16.3 million this year from 8.1 million a
year ago. Other studies show an explosion of text messaging and picture
"It's getting pretty significant," Wheelock said. "But it's still only a few
dollars per subscriber on average."
Consumer awareness of wireless data applications is growing quickly, too, said
Linda Barrabee, senior analyst with The Yankee Group of Boston.
The percentage of cell-phone customers who said they have text-messaging
capabilities on their phones jumped to 63 percent this year from 27 percent a
year ago, Barrabee said. "We actually believe that it's much greater than that."
Customers who said their phones could download ringtones ballooned to 57 percent
this year from 27 percent last year.
"The most widely used feature is text messaging," Barrabee said. "About
one-fourth of all users say they use it at least once a month." Among teens,
over half said they send text regularly.
Wireless carriers have seen their average revenue per customer stall as more and
more users sign up for mobile phone service, Barrabee said. Wireless data
applications could offset slower growth, although it hasn't been a significant
upward bump yet.
Surveys show that consumers have no strong preference for one data application
over another, although text messaging is certainly the most popular, Barrabee
"Carriers need to provide something that's compelling and easy to access," she
said. As networks get faster and developers provide innovative content,
consumers will be more likely to use services that are priced fairly.
Pricing for data services varies widely. Most companies offer text-messaging
packages for a few dollars a month. Individual messages cost around 10 cents to
send and from 2 to 10 cents to receive.
Most carriers charge a flat fee to download a ringtone, usually $1 to $2.99.
Games average around $5.
Customers incur charges when they download a game, ringtone or other data
service. If they use the Internet browser on their phone to search for ringtones
or games, they also tap their monthly minutes of use. Some services, like
weather forecasts, news, sports scores, movie guides and Mapquest directions,
also incur airtime charges each time they're used or require payment of a
The growth in data is fueled by the popularity of phones with color screens and
cameras as well as by the higher transmission speeds available as cell phone
carriers upgrade their networks.
Five years ago, data speeds on cell phones were slower than most dial-up
Internet connections. As carriers improve their technology, speeds are expected
to approach 1.4 megabits a second -- slower than digital subscriber lines but
acceptable for many applications.
Cell phones are approaching the memory, processing and multimedia capabilities
that personal computers had in the late 1990s, Wheelock said. "It is like a
portable PC. The only drawback is the size and the user interface."
Phone manufacturers are working on the interface:
--Samsung makes several phones that plug into a game pad. Many of the phones
have built-in cameras as well as the usual functions like voice, text messaging
--Nokia's N-gage phone combines a gaming device, MP3 player, FM radio and a
phone. It also has text- and instant-messaging capabilities and allows you to
check e-mail remotely. While the N-gage's multiple functions are appealing, some
critics say it's not a great game interface because it's set up for vertical
format, whereas many games are horizontal.
--PalmOne Treo and Kyocera both make phones that combine the functions of a
personal digital assistant and a cell phone. Some have cameras, and most have a
larger screen that improves the experience of playing a game or surfing the Web.
Most consumers still are opting for a low-cost phone rather than the multimedia
models, which can cost up to $600 before discounts. But competition among
carriers has brought features like cameras and download capabilities to more and
more consumers. And customers are discovering more and more features of the
phones they already have.
"Everybody who has a cell phone now can use text messaging," at least if the
phone is less than two or three years old, Kupsky, the Verizon Wireless data
manager, said. Phones with color screens and cameras have become the standard
for new customers, he said.