Year in Review: Cell phones explode

It was a year of living dangerously with your cell phone.

Badly made or counterfeit cell phone batteries caused an unprecedented number of injuries in the United States in 2004. About a dozen people were seriously hurt by overheating cell phone batteries that exploded or launched shrapnel that burned at 800 degrees Fahrenheit. Handset makers and operators later in the year began to sharpen battery standards.

It was hectic for two major U.S. operators, too. By year's end, the nation's top six wireless operators had nearly consolidated to four. In mid-November, Cingular Wireless closed its $41 billion deal to buy AT&T Wireless. In early December, Sprint said it would buy Nextel Communications for $35 billion. While the billions spent make Cingular Wireless the largest U.S. carrier, former No. 1 Verizon Wireless sank only to the No. 2 slot--without making any moves to counter Cingular's growth.

China passed the United States this year as the world's largest cell phone market. By August, China had 315.1 million phones in circulation, almost twice as many in the United States. It was easy pickings. China still has one of the world's lowest per-capita cell phone rates in the world. In the United States, cell phone operators have very little room left in the way of quick and easy expansion because nearly two-thirds of the nation already owns a cell phone.

Open-source software dialed into the cell phone in February, when Motorola introduced the first platform based on Linux, and said most models will follow suit. It's a major sign of the growing popularity of the operating system outside its stronghold in high-end computers.

By late spring, cell phone makers were introducing Wi-Fi phones, bringing new threats and opportunities to wireless carriers and traditional phone service providers. The highly anticipated hybrid phones let people make connections through a local wireless Internet access point, switching over to a cellular network whenever necessary. The result: greater flexibility in mobile communications.

By year's end, wireless data services began living up to some of the hype they debuted with three years ago. Both Sprint and Verizon projected billion-dollar annual revenues this year from selling data services such as instant messages, or downloading games and ring tones. The precedent isn't much to brag about. In Europe, data is up to a fifth of an operators overall revenues, while in the United States, it generates less than 4 percent.

--Ben Charny