Subject: [NEXTEL-1] Nextel Walkie-Talkie Calls Become All the Rage to Imitate

From: Marcelrf <[email-masked]>
Date: Wed, 17 Mar 2004 19:21:40 -0500

Nextel Walkie-Talkie Calls Become All the Rage to Imitate
March 17, 2004 4:25pm
Knight-Ridder / Tribune Business News

Mar. 17--It used to be that walkie-talkies were a must-have gadget for
kids.

Then Nextel added the feature to its cell phones to lure business
customers who need to be in constant contact. It has been such a big hit
that Nextel has built a large business customer base and has the highest
average bills of any cell phone company.

Other wireless companies have taken notice of Nextel's success and are
beginning to offer their own walkie-talkie service. But the competitors
aren't just going after business customers. They are targeting the mass
market especially teenagers and young adults.

It may well be that walkie-talkies again become a must-have gadget for
kids.

Boost Mobile, which uses Nextel's network, is going after the youth
market with particular zeal and sees the walkie-talkie function as a way
to distinguish itself from other companies. Boost has signed up more
than 405,000 customers in California and Nevada and said that more than
half its customers' usage minutes are on the walkie-talkie service.

Verizon, Sprint PCS and regional wireless phone company Alltel also are
offering a walkie-talkie service, also known as push-to-talk.

Walkie-talkie services like Nextel's allow users to have a special
number they can give to friends, family and business associates. To make
a walkie-talkie call, users dial the private number and then push a
button on the side of the phone. Users hold down the button to talk and
release it to listen.

"This could be a great way to communicate for families as well as a cool
killer application for kids," said Don McGuire, vice president of global
marketing for Kyocera Wireless, a San Diego cell phone maker that
recently introduced a walkie-talkie handset. McGuire said Kyocera's new
phone is the first low-cost model that will help walkie-talkie service
take off with young people.

Other phone makers are ramping up to meet the demand. Motorola, the main
supplier to Nextel, is branching out to offer phones with walkie-talkie
capability to other carriers, as is Samsung, a South Korean phone maker.

Interest in the feature is being driven by Nextel's success, said Eddie
Hold, a wireless industry analyst for Current Analysis, a market
research firm with offices in Virginia and La Jolla. Nextel's average
revenue per user is $69 monthly compared with the industry average of
$50.

Nextel charges 15 cents a minute for walkie-talkie calls over a set time
limit, or it provides unlimited push-to-talk service for an additional
$20 a month.

"They are all looking at Nextel and they are all saying, 'Well, Nextel
has this great monthly revenue. How do we get it?' " Hold said.

While there were some questions initially about whether walkie-talkie
services would take revenue away from voice calls, most industry experts
say Nextel proves that's not a concern.

Jason Kenagy, senior director of product management for Qualcomm's
Internet Services, said that walkie-talkie and regular cell phone calls
are analogous to instant messaging and e-mail in the Internet world.
Whereas instant messaging, or IM, and push-to-talk service are for short
bursts of information, actual wireless calls and e-mail are for more
detailed exchanges.

Wireless phone companies would salivate at the chance to make
walkie-talkie services as popular as the Internet's IM services, said
Michael King, a wireless industry analyst for market research firm
Gartner Group.

"If they can make it like IM and they can put that kind of cache on it,
then walkie-talkie services could be pretty popular," King said.

But Hold isn't so sure that walkie-talkie services will be such a big
hit.

While it could be popular with young people and in such industries as
construction in which short exchanges of information are helpful, Hold
said the push-to-talk service isn't for the average person. Even
business users, which have long been Nextel's focus, might find the
service not particularly useful and in some cases downright distracting.

"In business meetings, the walkie-talkie aspect can actually be very
intrusive," he said.

For those who are irritated when having to listen to one side of a
cell-phone conversation, two-way conversations that begin with a
walkie-talkie chirp could create as many detractors as it does users,
King said.

"There is a real possibility for backlash," he predicted.

Kenagy, who works on push-to-talk technology for Qualcomm, said it is
important to have etiquette safeguards built-in so there isn't a
negative response to the service. Those safeguards include being able to
decline a call in a polite, quiet way.

"It is frankly quite obnoxious that you can just start yelling at
someone," Kenagy said of the walkie-talkie service.

The fact that one party can control the conversation is also a potential
pitfall, Hold said. With push-to-talk services, just one person can talk
at a time. To talk, the caller holds down the walkie-talkie button, and
the other person cannot respond until the first person releases the
button.

"If I'm in charge of conversation until I push the button, it's just not
that appealing," he said.

Mary Lowell, a spokeswoman for Nextel, said her company encourages users
to put their phones on vibrate when in such places as restaurants and
churches.

But it is not only etiquette that could slow the growth of push-to-talk
services. Technology glitches could make the service not as
user-friendly as consumers might demand. While the walkie-talkie service
of Nextel and Boost work practically instantaneously, other services
have a delay of three to five seconds.

"The whole purpose of the product is immediacy. To wait three to five
seconds, why not just make a phone call?" said Andrew Colley, a
spokesman for Boost Mobile.

Qualcomm and other companies are working on improving the technology so
there is a shorter delay, Kenagy said. But he pointed out that there are
a variety of companies using different technologies, which makes
coordination difficult. He said the benefit of Qualcomm's approach is
that it all works together.

McGuire said Kyocera has no preference when it comes to technology. In
the next few months, Kyocera will have three different phones using
three different technology platforms, he said.

Bob Egan, founder of Mobile Competency, a market research firm, said
that for walkie-talkie services to become more than hype, the technology
will have to work across all wireless phone companies so that someone
with Nextel's service would be able to contact a Verizon customer. He
pointed to the fact that short message service, in which users can type
and send a quick text message on a cell phone, didn't become truly
popular until it worked between wireless companies.

"The industry is still trying to wrestle with what the right approach
is," he said.

http://www.hoovers.com/free/news/detail.xhtml?ArticleID=NR200403171180.3_d189003788b765a8

To see more of The San Diego Union-Tribune, or to subscribe to the
newspaper, go to http://www.uniontrib.com

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