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Market limited for data phones

A Motorola executive warns that the market for cellular phones that provide email and Net connections is still soft.

Motorola (MOT) is planning to announce a new phone that will let users check email and surf the Web. But it doesn't want anyone to get too excited about it just yet.

Vice president of marketing James Caile, speaking at this week's Hambrecht & Quist Technology conference, cautioned that the market for data phones has not really caught fire with consumers yet, despite huge investments from companies like his.

Motorola itself is far from giving up--in fact, it's planning another rollout of a souped-up phone for later this year. But Caile said such products have not yet seen a groundswell of interest from consumers.

"People [in the industry] are working all the angles of it, but don't be overly optimistic of the non-voice market," Caile said.

Nevertheless, Motorola is preparing to roll out its GSM Map phone this year, a cellular that can send and receive calls, faxes, and email, as well as surf the Internet and connect to PC desktops and databases.

Caile's comments were an attempt to manage the expectations of financial analysts who might be looking for a surge in revenue after the GSM Map phone is released. Motorola would instead like Wall Street to view the substantial development costs associated with the product as a long-term investment in a market that will take off eventually, rather than immediately.

Caile himself can't explain why this segment of the industry has not taken off; Motorola and its cellular phone competitors clearly think it should. "Maybe the industry hasn't found the killer application," he said.

He suggested that one of the industry's challenges is to provide a larger display screen. Caile said Motorola's Map phone will have a display window that will be several times larger than the typical window used to display text on cellular phones.