Thursday, April 3, 2008

Mobile Phone Industry Takes Aim at the iPhone

Last year, the wireless industry obsessed over the iPhone. This year, the industry is buzzing about how to beat it.

Touch screens, the mobile Internet and devices packed with multimedia capabilities dominated the discussion here this week at CTIA Wireless 2008, the industry’s largest trade show.

Mobile phone makers seem interested in throwing just about everything into their new models as they try to compete with Apple by making phones that look very much like its iPhone. But there were few blockbuster products or major announcements. Nevertheless, the Nokia booth was packed on Tuesday as Beyoncé and Madonna songs blared from overhead speakers.

Show visitors huddled around a long white table where Nokia, the Finnish company, was demonstrating its N series mobile phones, including the N78, a multimedia phone introduced recently in Europe (for about $500) that is expected to go on sale in the United States in June.

Like many phones on display at the show, the N78 is bursting with features. Not only does it have a 3.2-megapixel camera, but it runs on a high-speed network, includes a navigation function and eight gigabytes of memory, and has Internet radio and easy access to multimedia Web sites like YouTube and Flickr.

“The handset makers are responding differently than they have before,” said Greg Ballard, chief executive of the mobile game maker Glu Mobile.

Meanwhile, at the booth for Samsung, the South Korean company, the Instinct was being introduced. The prototype displayed was not quite ready for the show floor, although the phone, Samsung’s answer to the iPhone, is expected to be shipped in a few months.

The Instinct has many features similar to the iPhone’s, like a voicemail management system, and the devices look remarkably similar. The Instinct, operating on a proprietary network developed by Samsung and Sprint, can be used to watch live TV and as a modem to connect a PC to the Internet.

Industry analysts think it will sell for about $300.

LG, also a South Korean company, introduced the Vu, which has a touch screen and multimedia features similar to the iPhone’s. The Vu will cost $300 through AT&T stores, which have an exclusive relationship with Apple to sell the iPhone. The Vu includes an optional new live television service, for $15 a month, LG said.

Geesung Choi, chief executive of Samsung’s telecommunications network business, predicted that the trend toward multifunction mobile phones would shift over time. The market will fragment as consumers seek out mobile phones with functions that reflect their strongest needs, like browsing the Web or watching television and movies.

“There is a perception that the iPhone is a phone, but it is not,” he said. “It is a multimedia player. Maybe they should rename it.”

Others saw a similar evolution of the market. “It’s not a technology market anymore,” said Robbie Bach, president of Microsoft’s entertainment and devices division. “It’s a consumer market. Everyone’s needs are evolving. Consumers, in the end, will get what they want.”

Just a few years ago, he said, transferring a mobile phone number to AT&T from Verizon Wireless was revolutionary. In contrast, carriers today discuss how far they should open their closed networks to rivals’ products. And the mobile phones they support not only look like minicomputers, they act like them too.

Ralph de la Vega, chief executive of AT&T Mobility, said more phones in the coming months were likely to combine touch screens with a keypad or slide-out keyboard to appease customers who want the convenience of both. “The technology is available,” he said. “But it’s a trade-off.”

It is unclear, though, just how far the big carriers like AT&T and Verizon Wireless will go.

When asked about Google’s new mobile phone platform, Android, both Mr. de la Vega and Lowell C. McAdam, chief executive of Verizon Wireless, expressed interest, even optimism that it might run on their mobile phones one day. That is in stark contrast to the wireless carriers’ reaction when Android was first announced.

“We didn’t know enough about it,” Mr. McAdam said. He said he has visited Google and met with its chief executive, Eric E. Schmidt, and others involved with Android.


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