The world's smallest portable phone?

Japan's largest telecommunications company is showing off a telephone embedded in a wristwatch-size device, taking compact cell phone technology to a new level.

At a major industry conference, Japan?s largest telecommunications company is showing off a telephone embedded in a wristwatch-size device, taking compact cell phone technology to a new level.

At Demo 99 in Palm Springs, California, NTT Labs, the research and development arm of Japanese telecommunications giant Nippon Telegraph and Telecommunications (NTT), is demonstrating what is likely the world's smallest portable telephone.

Essentially, the electronics of a cell phone have been embedded in a wristwatch style telephone. By comparison, Seiko Instruments sells a wristwatch PC in Japan that comes bundled with applications for data exchange with Windows 95.

The telephone uses NTT's Personal Handyphone System (PHS), which is used fairly widely in Japan. PHS cells cover a relatively small area, so cells and telephones consume low amounts of power, an important factor in making tiny devices.

PHS was introduced in Japan in July 1995 as a low-cost substitute for cellular phones. It grew quickly to about 7 million subscribers but then usage started to drop off because of price competition from standard cellular phones. Nevertheless, it remains a popular option.

PHS phones, in their most widely used design, are ultra-lightweight cell phones that can serve as both a mobile phone and a cordless phone in the home. PHS can also handle voice, fax, and video signals.

NTT Labs said it is demonstrating these devices as part of its AirWave system, which allows cell phones to function as wireless modems and walkie-talkies.

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