Point, Shoot, and Dial: Cellular Industry Pins Hopes on Photo Messaging

By CIO Update Staff

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Digital cameras sparked an imaging revolution in the late '90s and attracted buyers in droves. Today, telecom operators are hoping that a new generation of handsets equipped with digital cameras, along with photo messaging services, will do the same for the mobile phone industry.

Worldwide mobile phone sales totaled 98.7 million units in the second quarter of 2002, a 0.8 percent increase from the same period last year, according to research firm Gartner Dataquest. Yet, a report issued last week from from J.D. Power and Associates indicates that wireless subscribers are waiting longer to replace their phones. On average, the typical subscriber owns a wireless phone model for 18 months, compared to 16 months in 2000, the study said.

Carriers are counting on multimedia message services (MMS) to spur sales of new phones and data services, and are heavily promoting phones such as Nokia's 7650 in Europe, which features an integrated camera. Ben Wood, a senior analyst for Gartner Dataquest in Europe, believes the strategy will pay off.

"The frenzy of marketing activity around new services such as picture and photo messaging by mobile network operators in Western Europe is likely to fuel replacement demand for color mobile phones in the second half of 2002," Wood said in a statement.

Digital imaging has already taken off in Japan. Last week, Tokyo-based J-Phone announced that 54 percent of its subscribers have signed up for its Sha-mail photo messaging service, which the company launched just 16 months ago. While no one expects the same sort of adoption rate in the United States, analysts believe that it will catch on eventually.

"I do think that it will be the leading media application for wireless data communications, but a number of ducks need to come into alignment," said Jay Horwitz, an analyst for Jupiter Research. Among them: capable networks and handsets, and amenable data pricing.

Carriers and phone manufacturers are poised to deliver. Sprint PCS, AT&T Wireless and Verizon Wireless already offer picture messaging services, and new handsets are on the horizon. Sprint will offer Sanyo's 5300, which features a built-in VGA digital camera, beginning in November for $399.99. The Nokia 3650, which also includes an integrated camera, will ship early next year and should be under $400, a company spokesperson said. A carrier hasn't been announced yet, but as the 3650 is a GSM phone, T-Mobile and AT&T Wireless are likely bets.

"People will definitely pay for this -- it's compelling functionality that will definitely become a standard feature -- but it's not going to redefine the model," said Horwitz. "Photo-messaging is not likely to save the industry in short order, but it will provide an added reason for consumers to make use of data."