Do more than just talking on your mobile phone

CIOL Bureau
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By Sinead Carew and Eric Auchard

NEW YORK: Mobile phones with color screens and cameras are set to become star gadgets in the holiday shopping season, say U.S. industry analysts, mobile gear makers and the wireless service providers marketing them. With all of the top six U.S. mobile carriers ready to offer a range of new services over higher-speed voice and data networks, the second half of 2002 promises to be the first big retail season for Internet-friendly mobile devices.

On Thursday, Sprint Corp. unveiled its long-awaited plans to offer customers the ability to easily check e-mail and surf the Web from their mobile phones, a move analysts said was likely to fire up a competitive battle in the U.S. wireless market. The new breed of gadgets is designed to convince consumers they can use mobile phones for more than talking.

"Previously there has been this massive divide between what you could do with a desktop computer and a mobile phone," said Keith Mallinson of Yankee Group. "These new services begin to bridge the gap," he said. They include everything from funky phones with Internet browsers to handheld computers that come with phone features and Web-surfing capabilities as well, and cards that can slot into laptop computers to provide wireless Internet access.

Other gadgets in the retail pipeline include:

-- Danger Inc.'s Sidekick, which combines a mobile phone, handheld computer and a sizable display screen in a device no bigger than a compact cosmetic kit. Handspring Inc. has drawn rave reviews for its combination phone and Palm-based handheld computer organizer.

-- Finland's Nokia, the world's largest mobile phone maker, is pushing a new combination camera and mobile phone, betting that picture-taking and swapping is the next big thing. Sony Ericsson, a joint venture of Japan's Sony Corp. and Sweden's Telefon AB L.M. Ericsson already offers a phone with a clip-on camera attachment.

-- Asian manufacturers are poised to enter the U.S. market in a big way this year, following the lead of South Korea's Samsung Electronics Co. Ltd. Phone makers from Korea. Japan, the world's most advanced mobile markets, also will sell smaller phones, with brighter screens and higher-quality sound than most Americans have seen so far.

-- Handheld computers based on Microsoft Corp.'s PocketPC operating system are set to come into their own, as the faster networks allow corporate travelers and field service workers to take advantage of big programs that only desktop or notebook computers once had the power to run. Many analysts believe that brighter, color screens and graphic images will be the key attraction for a new wave of phone buying that would replace older black-and-white- screened phones that are basically geared for voice-calling.

"Color is more compelling," Mallinson said. "When you consider that the screen is small in the first place, anything you can do to make that little porthole better is a big improvement." Jane Zweig, chief executive officer of wireless consultant firm Shosteck Group, said that should the price be right, color screen phones will be a big hit with consumers. That would be so even if they used the new phones just for talking and failed to sign up for pricey plans that would allow them to surf the Web as well, she said.

Many suppliers also hope that high-speed network services will drive the sales of the phone and handheld computer combinations known as personal digital assistants (PDA). But analysts believe these devices will not sell in huge volumes. "Initially, we'll see more handsets (phones) than PDAs because more people are comfortable with handsets," International Data Corp. analyst Kevin Burden said.

Handspring, Motorola Inc. and Audiovox Corp. have said they would launch handheld/phone combinations for high-speed mobile networks. AT&T Wireless Services Inc., which already sells the Sony Ericsson camera phone, sees photo snapping and swapping as one attraction for customers using its high-speed data service.

AT&T's rivals are also banking on phones with built-in cameras and data organizing capabilities. The Verizon Wireless venture of Verizon Communications Inc. and Britain's Vodafone Group Plc , the Cingular Wireless venture of BellSouth Corp. and SBC Communications Inc., and T-Mobile USA, a unit of Germany's Deutsche Telekom that was formerly known as VoiceStream, are all preparing high-speed services of their own.

Other trends AT&T Wireless sees include musical ringtones, text messaging, and location-finding services, which let subscribers know when friends are in a caller's vicinity. Verizon Wireless, the No. 1 U.S. wireless company, also sees a big market among business customers who will be able to use phones to send and receive text, e-mail and spreadsheet data, which formerly would have required a desktop computer or laptop.

According to retail market researchers NPD TechWorld, some 62 percent of handsets sold in June were equipped for wireless Internet access. But only a fraction so far are actually used for any data services, NPD analyst Peter Arato said. "PDA phones haven't set the world on fire so far," Arato said. "Phone companies will need to provide useful services that are very specific to time and place," he said, pointing to features like the ability to change travel plans on the fly.

(C) Reuters Ltd.