Is mobile the future?

Nickatilynx · 09-07-2005

‘People are not really flocking' to multipurpose cellphones

By Michelle Kessler
USA TODAY

SAN FRANCISCO — After years of baby steps, cellphones and other electronic gadgets are finally becoming one.

As early as this week, Motorola and Apple could launch a long-awaited cellphone with built-in iTunes digital music player. The phone, in the works for at least nine months, is expected to be offered through carrier Cingular Wireless, says equity analyst Albert Lin at American Technology Research. The companies declined comment.

It won't be the first music phone; those have been around in the USA since 2000. But it will be one of the first to marry a very popular consumer product and a phone.

And iTunes is just the latest cellphone add-on. Digital video viewers, video and still cameras, and elaborate messaging systems are all becoming cellphone staples.

But a big question remains: Do most people want these multipurpose devices? The answer may be no, many tech analysts say.

“People are not really flocking to phones with new features,” says David Chamberlain, a mobile phone analyst with In-Stat. “They just want to talk on the phone.”

A recent In-Stat survey showed relatively little interest in new phone add-ons, such as video. Since most people upgrade their phone about every two years, they're looking for an easy-to-use device — not a pricey all-in-one, Lin says.

Still, cellphone companies persist with fancy phones. That's because:

•Data is lucrative. Cellular carriers make big bucks selling text messages, ring tones and other add-ons. In Sprint's most recent quarter, it reported $6.50 in average revenue per user in data fees — about 10% of its total user revenue.

Cellphone ring tones — song clips that play in place of a regular ring — cost about $3 each. That's a lot more than the 99 cents iTunes charges for a full song. Much of the difference goes into carriers' pockets, Lin says. It's unclear how the iTunes phone will deal with this discrepancy.

•The market is huge. There are about 2 billion cellphone users worldwide, Lin says. Even a modest hit in a market that big can be a huge financial success. Take Motorola's trendy, multimedia RAZR phone. It helped propel Motorola cellphone revenue up about $1 billion in its most recent quarter compared with a year earlier.

The gigantic cellphone market can hold even more upside for companies that don't already play in it. For example, Apple has sold about 21 million iPods since the device was launched in 2001. Motorola sold almost 34 million cellphones in its most recent quarter.

But the iPod phone is far from a guaranteed success. It's expected to be expensive, priced somewhere from $250 to $300, Lin says. That's about the same cost as a separate iPod and phone. (IPods run from $99 to $399. Many mainstream cellphones start at $99 before carrier rebates.)

And its capacity is expected to be limited, though theories vary on exactly how many songs it will hold. “I think the potential (for the iPod phone) is smaller than what many people think,” Lin says.

09-07-2005	#1
Nickatilynx Banned Want to see your own Advertising Here! Join Date: Oct 2002 Location: Vancouver Canada Posts: 15,115	Is mobile the future? ‘People are not really flocking' to multipurpose cellphones By Michelle Kessler USA TODAY SAN FRANCISCO — After years of baby steps, cellphones and other electronic gadgets are finally becoming one. As early as this week, Motorola and Apple could launch a long-awaited cellphone with built-in iTunes digital music player. The phone, in the works for at least nine months, is expected to be offered through carrier Cingular Wireless, says equity analyst Albert Lin at American Technology Research. The companies declined comment. It won't be the first music phone; those have been around in the USA since 2000. But it will be one of the first to marry a very popular consumer product and a phone. And iTunes is just the latest cellphone add-on. Digital video viewers, video and still cameras, and elaborate messaging systems are all becoming cellphone staples. But a big question remains: Do most people want these multipurpose devices? The answer may be no, many tech analysts say. “People are not really flocking to phones with new features,” says David Chamberlain, a mobile phone analyst with In-Stat. “They just want to talk on the phone.” A recent In-Stat survey showed relatively little interest in new phone add-ons, such as video. Since most people upgrade their phone about every two years, they're looking for an easy-to-use device — not a pricey all-in-one, Lin says. Still, cellphone companies persist with fancy phones. That's because: •Data is lucrative. Cellular carriers make big bucks selling text messages, ring tones and other add-ons. In Sprint's most recent quarter, it reported $6.50 in average revenue per user in data fees — about 10% of its total user revenue. Cellphone ring tones — song clips that play in place of a regular ring — cost about $3 each. That's a lot more than the 99 cents iTunes charges for a full song. Much of the difference goes into carriers' pockets, Lin says. It's unclear how the iTunes phone will deal with this discrepancy. •The market is huge. There are about 2 billion cellphone users worldwide, Lin says. Even a modest hit in a market that big can be a huge financial success. Take Motorola's trendy, multimedia RAZR phone. It helped propel Motorola cellphone revenue up about $1 billion in its most recent quarter compared with a year earlier. The gigantic cellphone market can hold even more upside for companies that don't already play in it. For example, Apple has sold about 21 million iPods since the device was launched in 2001. Motorola sold almost 34 million cellphones in its most recent quarter. But the iPod phone is far from a guaranteed success. It's expected to be expensive, priced somewhere from $250 to $300, Lin says. That's about the same cost as a separate iPod and phone. (IPods run from $99 to $399. Many mainstream cellphones start at $99 before carrier rebates.) And its capacity is expected to be limited, though theories vary on exactly how many songs it will hold. “I think the potential (for the iPod phone) is smaller than what many people think,” Lin says.