The wireless phone industry is calling this holiday season and hoping Santa will answer and not some Grinch.
Fourth-quarter sales are vital to wireless carriers–a lot of people give cell phones as gifts–and the pressure is keen this holiday season after a lackluster year. For many carriers, the anxiety is heightened because this is the first shopping blitz with new phones sporting full-color screens, built-in cameras and other bells and whistles.
If customers resist the alluring gadgetry this year, then it would seem industry efforts to woo cell phone users for much beyond making voice calls are for naught. Although mostly unspoken, there is a sense that may be the case.
Rollouts of advanced wireless services in Japan have disappointed NTT Docomo, the wireless giant that pioneered the field. In Europe several carriers have postponed launching new data service as they try to work out the kinks.
In North America, carriers are pressing ahead and keeping their fingers crossed that advanced data services–which feature wireless speeds comparable to dial-up modems–will generate renewed consumer enthusiasm.
“Our Christmas sales are extremely important,” said Becky Welch, associate director of data products and services for Verizon Wireless, the nation’s largest carrier. “We’re on the bubble here.”
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Len Lauer, president of Sprint PCS, said his firm is very focused on holiday sales, having stripped away pricing complexities to make it simple to try new services such as using phones to take digital photos and send them to others via e-mail.
Under the new policy, Sprint will give away the new service free for 90 days and charge $10 a month for unlimited service thereafter, Lauer said. Even with its previous complex rate plans, Sprint has attracted more than 120,000 customers to the new service, Lauer said.
“The biggest thing we have is photos,” he said. “We believe that will capture the consumer’s imagination. Our country is big on immediate gratification, and now you can point, shoot and send it off to someone, all easily and fairly quickly.”
Sprint and Verizon have launched their advanced wireless data services nationwide with many features in place and more promised.
Verizon, for example, doesn’t have the capability of taking photos with its phones, but it soon will. It does, however, enable people to move images from computers onto the new phones.
“You can fix it so that when someone you know calls, their picture pops up on your phone,” said Eve Mayer, Verizon Wireless handset and accessory manager. “You can also have the phone ring a special way that’s different for each caller.”
AT&T Wireless, which launched its advanced data network in Chicago nearly a year ago, recently completed rolling out that network across the U.S. Andre Dahan, AT&T’s president of mobile multimedia services, said that about 40 percent of the new customers his firm signs up take the data service.
“We have many cool things attracting them to this service,” he said. “We’ll have close to 100 games and about 1,000 ring tones by the end of the year.”
Another major wireless carrier, Cingular, is in the process of launching its advanced wireless data service in markets across the country and will bring it to Chicago early next year. But Cingular won’t be marketing advanced data features here in time for the holidays.
Analysts are eager to see how consumers react.
“It’s still too early to determine whether data will be a runaway success or a big disappointment,” said Todd Koffman, an analyst with Raymond James & Associates Inc. “This season will be an important test of how well it gets adopted.”
Betting on color screens
Everyone in the industry is hoping for a strong fourth quarter, including those that haven’t fully launched new data networks, said Ken Hyers, a wireless analyst with In-Stat/MDR, because results this year have been so-so. But everyone will be watching the sales of phones with color screens that support advanced services.
Verizon will deploy teams of young salespeople to selected stores specifically to demonstrate the games, special ringing effects and other aspects of its new phones.
Although the handsets offered games in the past, they were simplistic black-and-white affairs, said Juan “Manny” Lucio, a Verizon salesman in a downtown Chicago store.
“Now we have color, graphics and specialized ring tones that just amaze people,” he said. “They say it looks like a tiny TV, and usually that’s what they buy.”
While the new generation of gadgets is attractive, the big question is whether customers will find them easy to use and entertaining, said Hyers, who has tried some of the new equipment with mixed results.
Hyers has downloaded a ring tone so his phone plays the Pink Panther theme and has a Snow White color screen-saver on the phone, primarily to amuse his young daughter. But he found the camera arrangement offered by AT&T cumbersome.
“I spent a long time trying to make it work and finally decided it wasn’t worth it,” he said. “I’m sure they’ll get it right in 2003, but it’s always disappointing when the first effort doesn’t work.”
Differences in technology
On the other hand, the photo-taking features offered by Sprint seem to work reliably with little effort. One reason, Hyers said, may be a difference in technology. The advanced XCDMA operating system used by Sprint and Verizon may offer an edge over the enhanced versions of GSM embraced by AT&T, Cingular and most European carriers, he said.
Andrew Cole, senior vice president at Adventis, a Boston-based consultant, also said that XCDMA seems to be proving superior to other systems. Many problems experienced by NTT Docomo in Japan, Cole said, stem from technical problems.
Photo features on XCDMA networks in Korea and Japan have found consumer favor, Cole said.
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“Initially you had 30 percent of the customers using the photo feature,” he said. “After the novelty wears off, that dropped to 12 percent, but that is still a very large number of people, and it bodes well for the launch of these networks in the United States.”