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Internet-ready cell phones taking over market

A new study reports that Web-enabled cell phones are the latest hot item to take off this year, accounting for 48 percent of all cell phones sold at retail.

Sales of Web-enabled cell phones have taken off this year, a new study has found, driven primarily by carrier promotions.

High-end cell phones capable of accessing Internet content--including email, sports scores, weather reports and stock quotes--have soared in popularity during the past year, driven by the popularity of sleek new hardware designs and promotion of wireless services, according to the survey by market research firm NPD Intelect.

In the second quarter of 2000, cell phones offering wireless Internet access accounted for 48 percent of all cell phones sold through retail stores, the survey reported, up from 5 percent during the same period last year.

It's unclear, however, whether owners of these fancy phones are actually using the wireless Internet services they're paying for, according to Peter Arato, manager of the telecom products group at NPD Intelect.

Cell phone buyers are being influenced by growing media enthusiasm for all things wireless, including handheld computers, Arato said. Further, many carriers, including AT&T, Sprint PCS and Nextel, have offered attractive service plans designed to spur interest in wireless applications.

"It's getting a lot of promotion, and the plans are pretty attractive," Arato said.

Wireless carriers generally push these services now because future higher-end applications, including location-based e-commerce and content, are expected to be a lucrative market for these companies in the near future.

These phones typically cost about a third more than conventional cell phones and generally include better displays and are lighter than typical phones, the survey found. However, prices have dropped: The average cost of an Internet-enabled phone fell from $211 a year ago to $164 in the second quarter of this year. Because carriers subsidize much of the cost of the phone, the prices will likely continue to drop.

"This is typical see related story: Companies fight over wireless users of consumer electronics products," Arato said. "Beginning with early adopters, the prices are high. As a product becomes more mainstream--which goes hand in hand with more promotion--the prices start to stabilize."

That is not to say that there is no room for improvement both on phones and services, he said. Data input on phones, which generally use the numeric keypad for all data entry, is clumsy and slow, he said. Further, the connection speeds are still too slow for widespread use, especially as a primary means of accessing the Internet.

"There need to be improvements in both the content and how it's delivered," he said.