Mobile:

Mobile Feature Phones: Consumer & Business Market Segments

Datacomm Research
Market Study April 2004

Handsets with built-in cameras, push-to-talk, GPS locating, and other features are taking the mobile phone market by storm. Operators must pay closer attention to their subscriber device portfolios, matching handsets and other devices to target market segments. Based on more than 25 in-depth interviews, this report examines the features and market segments that are reshaping the mobile phone market. Essential reading for operators, manufacturers, and third-party software.

As the mobile phone industry pursues its second billion subscribers, a new generation of handsets with integrated cameras, push-to-talk, locating, and other features is taking over the market, forcing operators to pay much closer attention to their device portfolios. That is one of the conclusions of the new 112-page report, Mobile Feature Phones: Consumer & Business Market Segments, released today by Datacomm Research Company.

“Handsets play the lead role attracting subscribers by meeting the needs and wants of specific market segments,” said Ira Brodsky, President of Datacomm Research and the report’s author. “Given the intense competition, operators need to work closely with handset makers and software developers to match their handset portfolios to teens, families, business travelers, field workers, and other key market segments,” he added.

Mobile Feature Phones: Consumer & Business Market Segments is the result of more than 25 in-depth interviews with leading manufacturers, operators, software developers, enterprise customers, and technology experts. The report contains sections identifying and characterizing major market segments for Camera Phones, Push-to-Talk, Location-based Services, Multimedia Messaging Service (MMS), Wireless Instant Messaging, Video Streaming, Audio Streaming, Gaming, and Mobile Commerce. More than 70 select vendors are profiled.

Additional conclusions found in Mobile Feature Phones: Consumer & Business Market Segments:

The Number One issue confronting feature phones is ease-of-use. New devices won’t sell and new services won’t be used unless the average subscriber can perform desired functions without consulting a manual and with the minimum number of key clicks. Handset manufacturers, operators, and software developers must collaborate to ensure ease-of-use.

Operators understand the critical role devices play in attracting subscribers. However, testing and supporting diverse user devices is a major expense and headache for operators. Thus, operators appreciate devices that can be repackaged for different market segments and tools that help them better manage their device portfolios (e.g., service activation and device configuration tools).

Camera phones are outselling pure digital cameras because camera phones are subsidized by mobile phone operators. However, camera phone improvements—such as higher resolution cameras, general purpose flash, and optical zoom—are needed to maintain momentum.

Push-to-talk (P2T) could quickly become standard on feature phones. Voice is still mobile phone’s “killer application” and P2T takes voice service to the next level. There is strong evidence of a four-pillar P2T market: friends and family, mobile professionals, white collar vertical segment, and blue collar vertical segment.

Feature phones are addressing markets once assumed the exclusive domain of smart phones. The market for smart phones is considerably narrowed—as demonstrated by the fact feature phones are already outselling smart phones by a wide margin.

Table of Contents

121 pages. 31 tables & figures.

EXECUTIVE SUMMARY
     MARKET SEGMENTATION
     FEATURE PHONE FORECAST
     STRATEGIES FOR OPERATORS
     STRATEGIES FOR MANUFACTURERS
     STRATEGIES FOR THIRD PARTIES
     MAJOR CONCLUSIONS
INTRODUCTION
     THE ULTIMATE IN CONSUMER ELECTRONICS
     ROLE OF ODMS
     REGIONAL MARKETS
MARKET SEGMENTS
     KEY EMERGING APPLICATIONS
     WORLD PHONES
     3G WIRELESS
     CAMERA PHONES
     MULTIMEDIA MESSAGING SERVICE (MMS)
     PUSH-TO-TALK (P2T)
     LOCATION-BASED SERVICES
          Location-based services in Korea & Japan
          The Korean Market Experience
          The Japanese market experience
          LBS for enterprises
          Case study: SK Telecom’s 'Friend-Find’ service
          Case study: SKT 'GPS fengsui world'
          Case study: DoCoMo's 'ZENRIN keitai MAP'
          Case study: SECOM's 'COCO-SECOM EZ'
          Case study: KTF 'Mobile SafeCard'
          Enterprise services
          Case study: KDDI's 'GPS MAP'
          Lessons of the Korean & Japanese LBS markets
     VIDEO CONTENT
     GAMING
     AUDIO
     MOBILE COMMERCE
          Overview
          “Phone Bill” payment system
          Mobile banking service
          SK Telecom’s Nemo
          KTF’s nPayMagic: K-merce Banking
          LG Telecom’s Bank On
          Smart card-based payment service: “Mobile Card”
          Payment via short-range wireless
          LG Telecom’s Zoop
          KTF’s K-merce
          SK Telecom’s MONETA
          Trials and errors, lessons and prospects
     WIRELESS INSTANT MESSAGING
          Wireless IM for enterprises
          Wireless IM for Consumers
          Wireless IM market drivers
     INDOOR NETWORKS & PROXIMITY SERVICES
     MACHINE-TO-PERSON AND MACHINE-TO-MACHINE (M2M)
     TELEMATICS
KEY TECHNOLOGIES
     MOBILE ANTENNAS
     RADIO LOCATING
     BLUETOOTH
     WI-FI
     INFRARED
     HANDSET OPERATING SYSTEMS
VENDOR PROFILES
     MOBILE ANTENNA DESIGNERS/MANUFACTURERS
          Ace Technology, Inc.
          Amphenol T&M Antennas
          Antenova Limited
          Centurion Wireless Technologies, Inc.
          Etenna
          Ethertronics
          Eurotec Systems Limited
          Filtronic / Filtronic LK USA
          Fractus S.A.
          Galtronics
          GigaAnt/Moteco/Perlos
          Hankook Antenna Korea (Santena)
          Meerae Tech, Inc.
          Skycross Inc.
     MMS VENDORS
          Alatto
          Brainstorm
          Comverse
          Ericsson Mobility World
          Funmail, Inc.
          Lightsurf
          LogicaCMG
          NMS Communications
          Openwave
          Tecnomen
          TeleDNA
          WatchMark-Comnitel
          Wizcom
     SELECT HANDSET VENDORS
          Kyocera Wireless Corporation
          LG Electronics, Inc.
          Nokia
          Samsung
          Sanyo
          Sony Ericsson
          Toshiba
     PUSH-TO-TALK SOLUTION VENDORS
          Fastmobile
          Kodiak Networks
          Mobile Tornado
          Motorola (Winphoria)
          Qualcomm Internet Services
          Sonim Technologies
     GPS LOCATING SOLUTION VENDORS
          Sirf
          SnapTrack
     WI-FI TELEPHONY SOLUTION VENDORS
          Cisco
          Global IP Sound
          HelloSoft
     LINUX SOLUTION VENDORS
          MontaVista Software
          Trolltech
     ODMS
          Arima
          BenQ
          Compal
          Elcoteq
          Flextronics
          Inventec
          Lite-on
     AUDIO/MUSIC SOLUTIONS VENDORS
          BeMusic
          Chaoticom
          Crisp Wireless
          GraceNote
          MIDIRingtones
          Mobliss
          Modtones
          Moviso
          Musikube
          Musiwave
          Nellymoser
          Reaxion
          Upoc Networks
          Wicked Wireless
          WiderThan
          Xingtone
          Zingy

Tables

Table 1: Major consumer and business market segments for leading types of feature phones

Table 2: Consumer market segmentation

Table 3: Business market segmentation

Table 4: Enterprise market segmentation

Table 5: Low, mid, and high tier camera phones

Table 6: SMS-based MMS versus instant messaging-based MMS

Table 7: MMS market segmentation

Table 8: Field test comparison: four push-to-talk services

Table 9: Low, mid, and high tier for P2T handsets

Table 10: Comparison of consumer location-based services in

Korea

and

Japan

Table 11: Comparison of enterprise location-based services in

Korea

and

Japan

Table 12: ‘Friend-Find’ service menu

Table 13: Consumer, business traveler, and enterprise market segments for location-based services

Table 14: User-created versus professionally-created video

Table 15: Handset versus dedicated console gaming

Table 16: Enhanced audio features and services for consumer and business markets

Table 17: Korean mobile operators’ micropayment services

Table 18: Micropayment usage limits

Table 19: ‘Mobile Card’ service roadmap

Table 20: Consumer, enterprise marketing, and business traveler market segments for mobile commerce

Figures

Figure 1: Forecast for feature phones, smart phones, and basic handsets, worldwide sales, 2003-2007

Figure 2: High level call flows for (a) optimistic and (b) guaranteed talk permits

Figure 3: KDDI’s gpsOne handset and navigation screen shot

Figure 4: Screen shots from DoCoMo's 'ZENRIN keitai MAP'

Figure 5: Micropayment market positioning

Figure 6: ‘Phone Bill’ service flow

Figure 7: ‘Nemo’ service concept

Figure 8: ‘Bank On’ service concept

Figure 9: ‘Mobile Card’ concept

Figure 10: ‘IrFM’ service flow

Figure 11: OEM mobile antennas shipped during 2002, in millions of units

and service vendors.

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