Changing face of the cellular handset

The cellular handset market is enjoying explosive growth as manufacturers carve it up into a range of lucrative segments and niches. But end-users are still not exploiting the high-end features of their phones to the fullest degree.

Market researcher, Instat, offers a statistic that puts the size and growth of the global handset market into fascinating perspective: if the $110 billion wireless handset market was a sovereign country, it would be the 53rd largest economy in the world (just behind Ireland) with a growth rate twice that of China.

It`s hardly surprising that such a large and dynamic market sustains a great deal of innovation. Manufacturers jam new features into their handsets at a faster rate than end-users seem able to keep pace with. In this fast-moving market, a value-added feature in a high-end phone becomes standard functionality in mass-market phones within a matter of months.

It wasn`t that long ago that integrated digital cameras, multimedia messaging and colour screens were found only in the priciest phones; now, they ship standard with nearly any phone that one can get on a standard contract from any of the networks.

The handset market is booming, thanks to increased cellular penetration in Africa and Asia, coupled with the migration towards 3G networks among mobile operators in First World countries. Manufacturers have carved the handset market up into a range of segments and niches.

Operators and cellphone makers alike perhaps need to take a step back and ask users what they want rather than trying to dictate the services and features that they should use.

Mark Taylor, MD of Nashua Mobile

There`s a variety of handsets available to cater for a broad range of subscribers and their needs, ranging from the youth market to older, less technology savvy people, from those who care most about fashionable form to those preoccupied with function, and from sophisticated high-end users in the First World to poor subscribers in developing countries.

Phones that support network technologies such as GPRS and 3G in addition to GSM are relatively common among contract subscribers in SA; phones that support WiFi and HSDPA (the next evolution of 3G) are surely on their way.

Operators and cellphone makers don`t want users to think of their phones only as devices for voice calls and SMSes, but also as tools that they can use to browse the Internet, listen to MP3s, watch streaming video or mobile TV, take photos, do their banking and play multiplayer games.

But handset manufacturers and their network partners must be asking if all this innovation and activity is for naught. Handsets come bundled with a wealth of features that are tied to affordable operator services, yet most consumers use their phones for little more than SMS messaging and voice calls. So where has it all gone wrong?

The explanations the industry turned to three years ago still stand. Although the technology has improved markedly over the past two years, battery life and processing power still hold back the development of function-rich cellphones that deliver a really good user experience. Cellphone MP3 players and cameras have become so much better in the past few months, but they still don`t compare to standalone music players and digital cameras.

Another explanation is that handset manufacturers and their operator partners still haven`t achieved the right balance between adding new features that add value to the consumer`s life while eliminating the cost and complexity of features that are simply confusing and unnecessary from the consumer`s point of view.

For example, research from the likes of Instat indicates that value-added features such as Bluetooth connectivity are extensively used while many end-users are also interested in location-based services.

Yet they aren`t as drawn to music downloads, mobile TV and multimedia messaging - the very things that operators regard as future money-spinners. Operators and cellphone makers alike perhaps need to take a step back and ask users what they want rather than trying to dictate the services and features that they should use.

That could mean that cellphone manufacturers will need to segment their offerings even more to tailor them to particular end-user requirements. Just as a chef or hunter wouldn`t be satisfied with a Swiss army knife, a cellphone user might want a good MP3 player or push-to-talk in his phone without a lot of other complicated functionality around it.

The data services that continue to be most popular in SA, and most of the continent, are SMS-based offerings such as `please call me` messages and services that allow subscribers to transfer airtime to other users. There are other packet-based services that will have enormous potential for the low-end prepaid market going forward: push-to-talk, for example, could prove popular since it allows subscribers to make cheaper voice calls.

Innovation in the handset market is likely to continue at a rapid pace. We can also expect to see some interesting developments in technologies such as batteries and compact storage media.

One hopes that some breakthroughs also take place in important areas such as the interface. If less tech-savvy people are to begin using cellphones for more than voice calls, they need to become easier to use.

One suspects, however, that the tug of war between features and user-friendliness, between functionality and simplicity, will be a feature of the mobile handset market for years to come.

After all, personal computer manufacturers have yet to resolve these conflicts and they`ve had decades to do so. End-users have just learnt to live with PCs and the imperfections that are inherent in their design as all-purpose devices.