You can barely call it a phone

Verizon, Apple and Google are blurring lines between segments of a fast-changing industry

November 29, 2007|By Tricia Bishop | Tricia Bishop,Sun reporter

A little more than 34 years ago, Motorola executive Martin Cooper says, he placed the first-ever public call on a commercial mobile phone - a big, clunky beast that was similar in size to a large brick of Velveeta cheese, only heavier.

He couldn't send text messages or take pictures. The phone didn't play tunes from a personal playlist, look up driving directions or check e-mail. It just made calls.

How dull. And old-fashioned.

This week's announcement by Verizon that it was opening up its wireless network to devices made by competitors underscores just how far removed we are from that world. Consumers will soon be able to add new tricks to their portable phones through add-on software applications, expanding them even more into minicomputers.

Google is developing mobile telephone software. Apple launched the iPhone. And consumers increasingly are downloading videos, e-mail and more to their cell phones. All those developments are shaking up the future of the phone and the mobile market. And they could change the pricing structure that Americans are so used to - namely cheaper phones in exchange for exclusive carrier commitments.

"We are going to see more innovation, more entrepreneurs, more visionaries," said David Chamberlain, a telecom analyst with Arizona-based researchers In-Stat. "Whether they'll last is another question."

With more technology companies getting in on the action, creativity is bound to boom, telecom analysts said, which will raise the bells-and-whistles stakes for all kinds of companies. Phones of the future are likely going to take after the iPhone, which has a bigger screen, greater video capacity and a streamlined look that tosses out the notion that a number pad is necessary.

They're also likely to be less carrier-specific, and possibly more expensive because of it. Today, pledging allegiance to a wireless carrier's services often comes with the benefit of a bargain-basement-priced phone. Choosing the phone first and then the carrier - much like buying a computer and then choosing an Internet provider - could boost the price of the hardware, researchers said, and lead consumers to hang on to their technology longer, rather than trading it in.

This month, Google said it was getting into the phone business by developing free mobile-specific (and advertising-supported) software packages that will work across wireless platforms and make it easier to surf the Internet.

And next year, the Federal Communications Commission will auction off airwave space that telecom companies covet. But to get it, carriers have to promise that a portion of the spectrum will be "open access," meaning that consumers could use any device to access the wireless services.

Some say the moves are adding up to a U.S. mobile phone market that looks more like the computer world, where consumers choose a basic model and load whatever optional software they want. But also like that computer world - divided by Macs and PCs - it's not as open as it first appears.

In the tradition of Betamax and VHS, there are two wireless systems at work in America. On one side are carriers such as Verizon, Sprint and Alltel, which use one version. And on the other side are AT&T and T-Mobile. Phones made for one system will not work on the other, analysts said.

"At the end of the day, incompatible technology is incompatible technology," said Michael Gartenberg, a vice president with Jupiter Research in New York. "A lot of [the open-access talk] is interesting, but it's also very, very dependent on what it means in terms of details."

There's also the question of what consumers want.

A 2006 report from the Pew Internet and American Life Project, a nonprofit research center in Washington, showed that most people are using their phones to place calls and send text messages, but not for much else. Just 2 percent of cell phone users watch video on their handhelds, and 8 percent check their e-mail.

But that is rapidly changing, Gartenberg said. Consumers were once willing to wait until they got home to place a call, send e-mail or listen to music, but not anymore.

"Now I want it all with me in my pocket wherever I go," Gartenberg said. "It's not just about voice anymore; it's about enhanced functions on these devices and enhanced revenue streams for people on the other side of the equation."

There is still a faction that wants a phone to be just a phone, according to some. That has led to a bit of a return to basics for at least one company: California's GreatCall, which was founded by Arlene Harris and her cell phone developer husband, Martin Cooper.

Last year, they launched the Jitterbug, a bare-bones phone that concentrates on calling and is targeted to those over age 55 looking for less-complicated cell phones.

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