The cell phone industry is about to unleash a wave of new phones that are capable--at least theoretically--of tasks ranging from e-mail retrieval to video and music streaming. These combination cell phones/personal digital assistants include the Nokia Communicator, which debuts mid-2002 and will let consumers wirelessly download video e-mails. Microsoft's Stinger-based phones will be unleashed in March with a specially designed Web browser and a way to get to corporate e-mails on the go.
But consumers who shell out the extra cash for these phones--some costing $500--will have to wait, in some instances for years, to use all the features in the ways that the manufacturers intended.
Analysts say existing cellular networks simply are too slow to provide the speed needed to exploit phones' new features, such as reading e-mail with attachments, viewing a Web site's graphics, downloading music or playing graphic-rich games. The limitations could hamper sales at a time when the wireless companies are counting on the advanced phones to create new revenue streams.
"Even as an eager early adopter, you are not going to pay for and carry around a phone unless the new services are enabled and have some degree of functionality," said Bill Lesieur, an analyst with business journal and consulting service Network Business Quarterly. "If the functionality or quality of the service is lacking, it cannot be easily made up with ultra-cool hardware."
Partly because of such concerns, forecasting the sales potential for these smart phones is difficult. Typically, cell phone sales projections lump every type of phone--from the toss-and-talk phones to the smart phones--into one category. Industry analyst Strategy Analytics predicts that by 2006, one out of every four people will own a cell phone, but the company has yet to forecast how many of these will be smart phones. Gartner wireless analyst Bryan Prohm expects there will be 1 billion cell phones by 2003, with about 1.3 billion by 2005.
Smart phones are one of the items upon which the wireless industry is pinning its hopes. Wireless carriers want consumers to buy the phones, then use them to do things other than make phone calls, like send e-mails or instant messages, watch videos or play games. Those extra minutes on the phone using "premium" services mean extra cash for carriers.
To make this all possible, wireless carriers are spending billions of dollars on new networks to license the needed radio spectrum. But in recent months, a financial crunch has forced some into bankruptcy, and many others are trying to make do by sharing the so-called third-generation, or 3G, networks they are building.
"It's not as though (this technology) will fall over; it just won't be able to do everything it wants," said Robin Hearn, a wireless analyst with industry watcher Ovum. "Things just won't get there all that quickly. These things are going to take time. This is rocket science."
Verizon Wireless and Sprint PCS will be launching the higher-speed networks at the end of the year but only in select cities. Verizon services will be launched first in New York, and a full national offering isn't expected until late 2002 or early 2003. Other North American carriers, such as Cingular Wireless, expect to launch their own high-speed networks even later.
Vodafone, the world's largest mobile phone operator, also is adding speed to its network, but last week threw another factor into the complex wireless 3G equations. The company admitted that the higher-speed network it plans to build won't match the hype. Instead of cell phones getting service at broadband speeds, it will be more like a dial-up connection.
Industry insiders say smart phones will indeed work when they are released, and in most instances consumers will notice a huge difference in what wireless players call "core functionality," such as making a voice call. But they add that consumers will have to wait an uncomfortably long time for some of the functions to run. Those waits will only affect a "small percentage" of software applications intended for the phones, they say.
"The entire wireless community is definitely feeling some growing pains," said Ed Suwanjindar, a Microsoft product manager in the mobile devices division. "And we're not immune to some of these speed bumps either."
This situation could last for years. Most carriers are building new networks to offer the broadband-like speeds for phones, the 3G networks that have been long on hype but short on promise.
"There is going to be a lot of functionality in current networks. But we expect to grow the functionality as the new networks roll out," said Nokia spokesman Keith Nowak. "High-bandwidth streaming, multipurpose conferencing--today that's going to be hard."
While there may be a period of suffering and consumer angst, Lesieur predicts some modicum of success. It just won't happen as fast as carriers throughout the world are expecting.
"Common sense often gets lost in the hype of new technology trends and direction," he said. "Like many new technologies, the massive hype cycle ends with diminished expectations by users and the industry. But then technology slowly works its way into everyone's everyday life, and then we don't know how we would have lived without it."