Are camera phones losing their snap?

Camera phones, a giant hit, risk fading into obscurity if problems aren't addressed, Kodak CEO says.

NEW ORLEANS--Cell phones with embedded cameras will go from runaway hit to small-time niche service if major problems remain unaddressed, Eastman Kodak's chief executive told a major wireless show here on Monday.

"Today, camera phones are imaging-capable but photographically disabled," Kodak Chief Executive Dan Carp said during a keynote address at CTIA Wireless 2005.

Cell phones

Carp's remarks throw cold water on the cell phone industry's biggest success story of the last two years. Camera phones are credited with the surging use of wireless data services in the United States, with some wireless operators saying their data revenues have doubled in the past two years. Last year, 180 million camera phones were sold worldwide, a 130 percent increase over 2003. Most analysts believe the growth will continue, with about 280 million camera phones sold by the end of the year, and there may be one billion camera phones in circulation by year's end.

"Mobile imaging may be the biggest breakthrough since the Brownie camera," Carp said, referring to one of Kodak's first camera models.

Yet on Monday, Carp said a Kodak market study found that most camera phone owners find their devices less than satisfying, even though they used the cameras to snap about 70 billion photos last year. Nearly two-thirds of camera phone owners rarely, if ever, upload pictures to a computer. And 70 percent never (or rarely) send photos to other phones. Notoriously short camera phone battery life; photo quality, especially in daylight; and the complexity of printing pictures are causing major headaches for the 180 million camera phone owners worldwide, according to Carp.

"These are all warning signs," he said. "If we're not careful, imaging could fade to niche application in phones. Some think it's happening already."

The industry isn't ignoring the problems, said executives who attended Monday's keynote. Many wireless manufacturers and operators are trying to make inroads to solve the problems, with Sprint and even America Online introducing easier methods to share camera phone photos with friends, or print them. Kodak is now working to let cell phones use the EasyShare printer for digital cameras, which eliminates the need to upload digital photos first onto a personal computer.

Camera phones represent a crossroads for the cell phone industry. Embedding cameras into cell phones has helped U.S. consumers realize that their phones can also access the Internet, whether to post camera phone photos on a public Web site, watch a specially formatted TV show, send a photo to a friend's handset or use any number of offline printing services. As a result, wireless operators are much more interested, and willing, to give new kinds of data services a try.

This scenario is being played out by U.S. wireless operators, which are now using the success of camera phone sales to introduce the logical next step: video services.

One of the most hyped is V Cast from Verizon Wireless, which launched on Feb. 1. On Monday, Verizon Wireless beefed up its lineup of TV shows that subscribers can view on their phones. One new addition is a specially made version of "The Simple Life: Interns," a reality show that follows the exploits of socialites Paris Hilton and Nicole Richie.

"We are pleased with the success of V Cast," Verizon Wireless Chief Executive Denny Strigl said.

Carp, however, called cell phone video a mistake, saying "shifting attention to video could result in lost opportunity for all of us."

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