Subject: [NEXTEL-1] Cameras Heat Market, But Network Deals Cool It

From: [email-masked]
Date: Wed, 17 Sep 2003 15:17:22 -0400

Cameras Heat Market, But Network Deals Cool It

Sales of camera-equipped mobile phones are painting a high-value picture across
the worldwide wireless landscape. It's too bad that service providers' investments
in network technology needed to get the most from wireless image-sharing aren't
reflecting the same rosy picture.

Total wireless-infrastructure contract values were down roughly 40 percent in the
first half of this year, compared with the first six months of 2002. This largely
is because North American TDMA network operators rushed to sign on the dotted line
to commence transitioning their footprints to GSM/GPRS as the first step toward
the 3G level of wideband- CDMA. In fact, those TDMA-to-GSM/GPRS projects fortified
what would otherwise have been a substantially down market in 2002, according to
technology market research firm ABI.

The first half of 2003, however, didn't enjoy that same boost. The number of
GSM/GPRS and W-CDMA contracts signed between January and July accounted for 13
percent of all deals, but overall infrastructure vendors generated slower sales
from the same period a year ago.

More than $1 billion in GSM/GPRS W-CDMA network contracts have been signed since
the beginning of the year, and the number of awards grew consistently. A
significant portion of those awards, though, have been 2G GSM and 2.5G GPRS
equipment, which means the carriers adding that gear aren't planning to foot the
bill too soon for W-CDMA gear. In the long run, however, the vendors supplying the
GSM/GPRS gear to those carriers have the inside track to be their W-CDMA suppliers
eventually."Long-term success will only be brought by early contract wins,"
observes Edward Rerisi, ABI's senior wireless market researcher.

ABI reports Ericsson leads the W-CDMA market with 44 percent of all contract
awards this year. However, infrastructure vendors most likely should be prepared
to wait for their 3G rewards. It also likely that some carriers will want to
re-work contracts for 3G networks--W-CDMA or the CDMA2000 variety--they've already
awarded. Erik Zamkoff, senior communications analyst at Independent Research
Group, tells Wireless Data News those developments will contribute to the mobile
network equipment market being down 10 percent to 15 percent this year and down
around 5 percent in 2004.
"I don't think carriers are taking the 'If you build it they will come' approach
to 3G," Zamkoff says. "I think they're going to build it out gradually and slowly.
That's going to lead to some re-bids that going to lead to continued deterioration
of that market."

2002: Just A Snapshot

The 25 million camera-enabled phones sold worldwide in 2002, including 13 million
sold in Japan, were just the start of what is expected to be tremendous growth for
the next five years. Industry analysts at ARC Group predict that by the end of
this year, more than 55 million wireless customers worldwide will have camera
phones, including add-on devices as well as those that are embedded.

Existing mobile users will drive growth as they act on pitches by handset
manufacturers and network operators to replace their handsets with more
feature-rich models. ARC analysts report 15 percent of handsets sold this year
feature built-in cameras or add-on camera accessories.

In 2005, 130 million handsets with camera capability will be shipped globally. ARC
also expects that, with 3G network rollout eventually accelerating and with
high-speed mobile wireless service available to more people, the number of camera
phones shipped globally will reach 210 million by 2008. The Asia Pacific region
will continue to lead in camera- phone sales, while European markets will increase
their percentage of the total through customers' sustained interest in messaging
services and carriers' promotions of multimedia capabilities.

Vodafone [NYSE: VOD] already is generating strong camera-phone sales partly
through promoting its Live! Web service. As camera-phone sales accelerated
throughout 2002, 36 percent of the sales were through a Vodafone carrier, Strategy
Analytics reports. In the fourth quarter last year, 7 percent of total handset
sales, or 9 million units, were phones with cameras embedded, and the number of
embedded models sold throughout 2002 reached 18 million.

It will be difficult, though, for service providers to grow their average revenue
per users totals as fast as they add camera-phone customers. Strategy Analytics
reports that most customers slow their camera-phone usage after the first three
months with the capability. Nonetheless, global monthly APRUs linked to camera
usage and other multimedia capabilities will be around 90 cents by 2007; the
number will be closer to $1.20 in North America.

http://www.telecomweb.com/wirelessdata/feature.htm

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