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$ell Phones: The Unstoppable Market

Advances in style and substance continue to raise stakes and sales in the handset industry.

Date Posted: June 29, 2007 12:00 AM
Author: Lou Frenzel

Ultra-Low-Cost Handsets
To make phones available to the masses at the lowest possible cost, one goal for cell-phone companies is to build the $10- or $20-handset. ULCHs mean low tech, voice-only, and no data features, except for perhaps an FM radio.

The target market would be third-world countries with huge unconnected populations like China, India, Russia, and South America. Some say the potential is for another 2 billion to 4 billion phones. Don't look for low-end phones to sell well if at all in the U.S., Europe, and Asia, where sophisticated features like texting, cameras, and smart phones have become the norm.

Camera Crazy
The latest statistics report that 74% of new phones feature a digital camera with a typical resolution of 1.3 Mpixels— good but not great. Most subscribers report they rarely if ever use the camera, but they do like having it. On this front, three trends have taken hold.

First, resolution is going up, just like standalone cameras. Many of the newer high-end phones already incorporate a 3.2-Mpixel camera.

Also, 5- and even 10-Mpixel in-phone cameras are available, for a price. With such high resolutions available, some experts wonder if camera phones could kill the digital-camera market. Instead, it's more likely that higher-resolution digital photography will be more common.

The second trend is a built-in flash. The absence of a flash accounts for the poor quality of most cell-phone cameras. Some newer high-end phones already have a flash.

Third, try two-camera phones, which are necessary for videoconferencing. One phone is used for the standard digital-camera function while the other camera points at the users so they can appear in the conference. Though not a big feature right now, it's up-and-coming.

Improved Internet Access
Most smart phones offer Internet and e-mail access. While e-mail capabilities have been available for some time, few users report using them. And Internet access is hardly an application at all on cell phones. The small screen and keyboard are stumbling blocks for many users. Some experts say better search features will improve cell-phone Internet access popularity (Fig. 5).

IP Multimedia Subsystem (IMS)
The IP Multimedia Subsystem (IMS) 3GPP standard defines a next-generation network (NGN) architecture that enables the normally available IP network services to be accessible to cell phones or other portable devices. It provides a standard approach with multiple access technologies, user devices, and geographic locations for personal or enterprise use.

IMS converges VoIP, video, data, and other multimedia. As a result, users can access them via the IP network from a cell phone. This complex standard employs older standards (IETF, for example) along with some new ones to let users access the Internet, play online games, or video-conference via a 3G phone from anywhere. It's still in the planning and development stage due to its huge impact on the telecom and Internet networks already in place. One of the big issues regarding implementation is providing an adequate level of security.

Nearly half the cell-phone markets are saturated (an estimated 65% in the U.S., 115% in Europe and some parts of Asia). Today, there are over 2 billion subscribers worldwide. In fact, we've reached the point where there are more cell phones than wired phones worldwide. And more than half of all phones sold today are replacement phones. Thus, the key market shift is toward more smart phones with the latest 3G technology and multimedia.

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