Analysts pan screenphones, praise mobile

Screenphones, like the WebTouch from Alcatel, may have won prizes at trade fairs, and kudos from industry insiders, but the latest figures from Alcatel are less than stellar. Alcatel has shipped about 40,000 units to retail outlets in France and Germany since late last year, according to Laurent Lachaux, Alcatel spokesperson. Such sales figures are not unexpected. Bryan Ma, International Data Corporation (IDC) Research Analyst, says: "The screenphone space has stalled somewhat (vendors dropped, business model challenges, distribution issues, consumer awareness, etc), but we still see growth in the category, albeit slowed and in later years." IDC is expecting a world-wide market for Information Appliances worth USD 17.8 billion based on the shipment of 89 million units in 2004. The starting point for the forecast was a market worth USD 2.4 billion in 1999. The forecast includes handheld devices, email terminals, set-top boxes or surf-stations, and screenphones. It makes clear that the numbers primarily refer to set–top boxes and Internet gaming consoles, that "other form factors [such as the screenphone] should follow in volume, but these devices are only now arriving on the scene". Therese Torris at Forrester Research in Amsterdam says screenphones are "too little, too late". Had the screenphone been launched 24 months ago, she argues, when PC prices were still pretty steep, then it could have caught some of the momentum generated by newbie Internet users driving PC sales in Europe. Screen subsidies "It’s too much, actually," says Torris, compared to the telephone equipment market that it sought to replace, namely France’s 7 million Minitel terminals. "Sixty per cent of Minitel calls are to look up phone numbers - - directory services." Other features -- web and email access, are superfluous in that context, she says. The Screenphone manufacturers, including Atlinks, Samsung, and Matsushita, are making deals with retailers and there has been a flurry of channel agreement announcements. But for screenphones sales to take off, service providers (telcos or and ISPs) will have to bundle services which appeal to local markets, and they must make giant marketing efforts, analysts say. These days, telcos are investing in mobile networks and services, and not in fixed networks. Atlinks spokesperson Laurent Lachaux says that even if telcos don’t jump on the screenphone bandwagon right away, new Internet Service Providers (ISPs), such as retailers and banks will drive the market, offering subsidised screenphones to create an online consumer market for their products and services. "In two or three years 40 per cent of Internet users will be using non-PC devices for residential access," says Lachaux who doesn’t like to label it a niche market either, rather calling it "a new segment for alternative Internet appliances". Video sucks What about the benefits of having a screenphone in your kitchen or an extra Web display on the desktop at work? What about the replacement market for the Minitel? What about the fact that it runs PersonalJava and not a Microsoft operating system? (That fact alone is enough for me to love it.) What about its compact size and friendly user interface? There are plenty of reasons why the screenphone should be successful. But these things alone are not enough to propel sales. Torris, who has been tracking technology for the past fifteen years, says: "Not everything that is good and useful is necessarily successful. I have seen lots of examples of this over the years." The analysts are bullish on mobile services and products. "It’s a huge opportunity," Torris enthuses. However, she cautions recent marketing efforts of phone manufacturers touting the wonders of mobile video, all of them do this actually, to stop doing it. It is a mistake to create expectations of high quality video over mobile networks. "Why promote video when the compelling applications, such as airline schedules, car rental reservations, traffic news, and directory services are available today? Besides these [cellular] networks are not made to support video,"says Torris. "Consumers expecting a simple, anywhere, anytime content service experience will be far happier than those expecting full colour, motion pictures," says Mark Selby, CEO of MobileChannel Network, a Geneva-based mobile Internet software vendor. Will people use the mobile phone to access Internet services at home, rather than a screenphone? The answer is yes. Maybe you and I won’t, but take look at your nieces and nephews, or your kids if you’re old enough, to see why the answer is yes. From what I see, no occasion is too intimate, shower too wet, or tram too crowded to warrant turning off the handset. ®