Feature phones to dominate mobile handset sales by 2005

April 13, 2004

As the mobile phone industry pursues its second billion subscribers, a new generation of handsets with integrated cameras, push-to-talk, locating, and other features is taking over the market, forcing operators to pay much closer attention to their device portfolios. That is one of the conclusions of the new 112-page report, Mobile Feature Phones: Consumer & Business Market Segments, released by Datacomm Research Company.

"Handsets play the lead role attracting subscribers by meeting the needs and wants of specific market segments," said Ira Brodsky, President of Datacomm Research and the report's author. "Given the intense competition, operators need to work closely with handset makers and software developers to match their handset portfolios to teens, families, business travelers, field workers, and other key market segments," he added.

Mobile Feature Phones: Consumer & Business Market Segments is the result of more than 25 in-depth interviews with leading manufacturers, operators, software developers, enterprise customers, and technology experts. The report contains sections identifying and characterizing major market segments for Camera Phones, Push-to-Talk, Location-based Services, Multimedia Messaging Service (MMS), Wireless Instant Messaging, Video Streaming, Audio Streaming, Gaming, and Mobile Commerce. More than 70 select vendors are profiled.

Additional conclusions found in Mobile Feature Phones: Consumer & Business Market Segments:

-- The Number One issue confronting feature phones is ease-of-use. New devices won't sell and new services won't be used unless the average subscriber can perform desired functions without consulting a manual and with the minimum number of key clicks. Handset manufacturers, operators, and software developers must collaborate to ensure ease-of-use.

-- Operators understand the critical role devices play in attracting subscribers. However, testing and supporting diverse user devices is a major expense and headache for operators. Thus, operators appreciate devices that can be repackaged for different market segments and tools that help them better manage their device portfolios (e.g., service activation and device configuration tools).

-- Camera phones are outselling pure digital cameras because camera phones are subsidized by mobile phone operators. However, camera phone improvements-such as higher resolution cameras, general purpose flash, and optical zoom-are needed to maintain momentum.

-- Push-to-talk (P2T) could quickly become standard on feature phones. Voice is still mobile phone's "killer application" and P2T takes voice service to the next level. There is strong evidence of a four-pillar P2T market: friends and family, mobile professionals, white collar vertical segment, and blue collar vertical segment.

-- Feature phones are addressing markets once assumed the exclusive domain of smart phones. The market for smart phones is considerably narrowed-as demonstrated by the fact feature phones are already outselling smart phones by a wide margin.