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CAMERA PHONES Selling service not always a snap

Sunday, January 25, 2004

One obstacle is that cell photos can't be shared among service networks.
NEW YORK (AP) -- The photos are grainy, blotchy and blurry, but for millions of people now toting cell phones with built-in digital cameras, it doesn't seem to be about the megapixels -- or at least not yet.
Tens of millions of these less-than-perfect pictures were snapped and e-mailed from cell phones in the United States during 2003, the first full year such services were available.
News organizations are publishing cell photos from their readers to help cover stories. And an untold number of mobile-phone snapshots are being posted daily to "moblogs," a visual form of the online journals better known as Web logs, or blogs.
In short, corny as it sounds, cellular photography seems to be about adding new immediacy to the old Kodak pitch, "share the moment."
But much as this country has lagged Asia and Europe in many facets of the mobile-phone revolution, cell photography is still a rather niche hobby in the United States -- a major challenge for wireless companies desperate to generate new revenues from nonvoice services.
Of the roughly 75 million camera phones shipped worldwide in 2003, only 6 million went to the United States, compared with more than 35 million to Japan, according to Strategy Analytics Ltd., a British consulting company. Likewise, North America accounted for just 1.7 million of the world's 24 million "active" users of camera phones, compared with a combined 21.6 million in Japan and South Korea.
Spontaneity appeal
Clearly, a growing number of cell phone users are charmed by the spontaneity of snapping a picture whenever and wherever the urge hits them, then immediately zipping it off to friends or family.
And precisely because such shots aren't destined for a photo album or frame, there's less need to fret over getting a picture just right, making the process a more casual affair like e-mail rather than taking a photo.
"My friend took a picture of himself in a cab and sent it to me. I sent a picture of a puppy," said Margarita Stofan, 25, a newcomer to cell photography who also shares pictures with three family members who have camera phones. "I didn't plan on getting one because extra stuff in cell phones seems silly. But the salesman talked me into it, and I found it's a fun little feature to have. I take pictures of everyone around me -- just random photos."
But much as that story may warm the hearts of wireless executives, it also illustrates the numerous hurdles that cellular companies face in driving subscribers to a premium service such as picture messaging. These factors include cost, incompatibility among the different carriers, and a limited pool of fellow camera-phone owners with whom to swap photos.
Low picture quality
And for those who can't fathom a camera that's not meant to produce physical prints, picture quality remains a turnoff. The pictures also aren't sharp enough yet to fulfill expectations that camera phones will be used as a business tool by real estate agents, insurance claims adjusters and other professionals.
Though 1- and 2-megapixel camera phones like those available overseas are expected here this year, none of the handsets now sold in the United States offer better than 0.3 megapixels, less than a third of the resolution of the lowest-end standalone digital camera.
Stofan, who works for an investment bank in New York City, found herself in the market for a new phone only because she was forced to buy a new handset when switching wireless companies in December.
Had she not decided to leave T-Mobile for Sprint, it's unlikely she would have been considering a replacement for what she considered a perfectly good handset, let alone spending $200 to do so.
So although first-time subscribers and switchers like Stofan are ripe for the camera-phone pitch, wireless companies face a much harder sell with current customers, who tend to hang onto their handsets an average of 18 months.
"We're seeing very healthy demand, but it's not realistic to think that the installed base will upgrade [to camera phones] overnight," said Glenice Maclellan, vice president for messaging services at AT & amp;T Wireless.
Trimming prices
To fuel sales, carriers have cut camera-phone prices sharply since the first model was introduced by Sprint in late 2002 with a list price of $400. Still, compared with the entry-level, cameraless phones that service providers sell for little or nothing, camera phones generally cost $100 and up with rebates and a two-year contract.
Meanwhile, Stofan's situation was somewhat unusual in that several acquaintances already used camera phones with the same carrier she was joining.
Although the photos taken on a camera phone can also be sent to a regular e-mail address on a computer, many users are drawn by the novelty of sharing photos with other cellular shutterbugs, sending pictures among their handsets. Because subscribers generally pay by the volume of messages sent or received -- Sprint offers unlimited service as part of a monthly Web package -- that's the type of usage wireless companies are eager to promote.
However, to share picture messages successfully with other cell-phone users, those people must all be signed up with the same wireless service.
Until the carriers come to terms on how to pay one another for delivering this new form of communication, picture messaging will remain less like e-mail and more like instant messaging, where users of services from AOL, Yahoo! and MSN still cannot directly chat.
"The frustrating thing is that we've learned these lessons from text messaging," said Joel Quejada of Nokia Corp., referring to the short messaging services, or SMS, now popular on cell phones. "In the late nineties, when SMS interoperability took hold in Europe, their SMS traffic grew 200-300 percent. We have no reason to believe it'll be any different" for pictures and other multimedia messaging services.