Cellphone industry needs growth, lacks leader

Lucas van Grinsven

CANNES, FRANCE: Mobile phone industry chiefs have gathered in the south of

France to try to kickstart vital new mobile services, but lack a leader to show

the way.

Despite the display of wealth with which the mobile industry has taken over

the boulevards of Cannes and an entire fleet of luxury yachts, it badly needs

fresh cash cows to keep growing.

Expansion will not come from more voice calls in saturated markets such as

Europe, and growth is even slowing in emerging markets like China, which

explains why operators and handset makers are trying to bring in data services

such as games, email, instant messages and picture messaging.

But unlike the Japanese market, where one operator, NTT DoCoMo, defined

standards that breathed life into mobile data service I-mode, operators and

handset makers elsewhere seem to be unable to agree on single standards.

Nokia, the world's largest handset maker, is attempting to rally the industry

behind common standards for emerging services such as picture messaging and

email, but has so far failed to include the world's largest software company

Microsoft.

Challenged by journalists and analysts on the opening day of the 3GSM World

Congress here, Nokia senior vice president for mobile software Petri Korhonen

conceded on Wednesday that "interoperability is needed with

Microsoft."

Microsoft on Tuesday unveiled its own Windows Smartphone software that will

download emails and display calendars, with the same look and feel as Windows

desktop computer software. South Korea's Samsung Electronics is currently the

only taker of Microsoft smartphone software among the five major cellphone

makers, but the software company hopes its dominance in the PC market will bring

in more players and make Microsoft a de facto standard.

Lip service

Even though Nokia is paying lip service to open standards, the Finnish

company is so keen to bring back growth to the cellphone industry that it is

launching a picture messaging phone with a built-in camera this spring, six

months before a global standard will have been agreed.

It could mean that a picture message from a Nokia phone cannot be displayed

on a phone from another manufacturer, said Arjen Traas, director of business

creation at the Consumer Communications division of electronics maker Philips.

"These are still very loosely defined standards," he told Reuters

in an interview here. Philips is a small player, selling just 5.5 million

cellphones last year on a world market of 380 million.

Unlike Nokia, which sells almost four out every 10 cell phones, it cannot

afford to launch a product that does not work with other phones and will wait

until the end of this year to launch its own picture messaging phones.

Picture messaging, officially dubbed multimedia messaging (MMS), is one of

the great hopes for the industry, because it builds on the unexpected success of

SMS short text messages.

Telecom Italia Mobile managing director Mauro Sentinelli said he was very

optimistic about revenues from MMS, after the operator sold 1.2 million

MMS-capable phones under a special Christmas offer. A total of 23,000 photos

were downloaded in December using the service.

But even Nokia's rivals, which also stand to benefit from MMS as consumers

need to buy new phones with colour screens and cameras, warn that an early

launch could be disastrous.

"If the consumer has to bother about it, we won't get this industry

going," said Yvonne Verse, vice president for Internet software at

Motorola, the world's second largest cellphone maker which does not plan to

launch MMS phones before the end of the year.

It is a classic trade-off between speed and accuracy, said Pascal Debon, head

of mobile networks at Canada's Nortel Networks.

"We're really pushing the industry to really sort out interoperability.

But it is time-consuming and time to market is vital," he told Reuters in

an interview on the sidelines of the conference.

Many mobile players have little patience, because they have just been through

the worst year in the industry's short history, with cellphone sales falling by

five percent to 380 million units.

Babylon

Different players are now introducing ways they hope will generate some data

revenues before picture messaging arrives.

Motorola said on Monday it will give away mobile portals to any operator

willing to take one, just to get some basic services going over new, slightly

faster data networks that have been in operation for over six months.

Operator Orange said on Wednesday that IBM will build its Orange Life

services in France, another attempt to give mobile users more than just the much

criticised WAP services that have dominated the mobile web for the last two

years.

Operators in Britain, Sweden and Germany in recent weeks have all announced

plans to offer access to email and other corporate information over a plethora

of different technologies.

Analysts and industry players agree that they cannot move on to the

super-fast third-generation wireless networks without having proved they can

make money on the intermediate 2.5 generation data networks that are live now.

But they fear that without common standards it could take longer than

planned. "The development of wireless data looks to have receded for at

least two to three years," said JP Morgan analyst Jamie Wood.

(Additional reporting by Paul de Bendern and Catherine Bremer)