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NOVEMBER 11, 2003
SPECIAL REPORT: NEW MOMENTUM FOR WIRELESS

The Brainwork behind Smart Phones

Researchers are devising pricey new features, extending battery life -- and trying to get subscribers to buy and use all these new gadgets
If more than 150 million Americans already have a cell phone, how do you sell them more? The wireless industry's answer: Be everything to everybody. In
the past few months, handset maker Nokia (NOK ) has launched the N-Gage, a GameBoy-meets-cell-phone gadget; the 3300, an MP3 player-meets-cellphone model; and the 7700, a TV-meets-cell-phone device.
These new gizmos come with huge promise. According to Scottsdale (Ariz.) research firm InStat-MDR, the compound annual growth rate in sales of socalled smart phones will be 94.5% through 2007. In Japan, which has the highest take-up rate of such devices, one-thirteenth of the digital-TV transmission
band has been set aside for broadcasting to mobile devices.
NETWORK TRICKS. The many features that Nokia, Ericsson (ERICY ), and wireless carriers such as Verizon (VZ ), and Vodafone (VOD ) want to add to the

previously humble mobile phone are keeping researchers busy in the labs. Two main areas of development are hardware -- beefing up processing and
power management -- and the much-talked-about customer experience, which focuses on how to make features more compelling and easier to use. In
short, researchers are scrambling to find ways to give new features better functionality and, more important, to make them so appealing that customers won't
think twice about paying for them.
Until this new generation of feature-packed phones, the hardware problem had been largely solved through clever network management. The GSM telecom
standard, which is used almost exclusively overseas and by some networks in the U.S., is designed so that most of the heavy-duty voice processing is done
on the cellular network, not the phone. During a three-minute conversation, a phone sends and receives digital packets for only a total of 30 seconds.
Less demand for power means the battery lasts longer. The result: Over the past 10 years, battery performance has improved more than three-fold. The
Nokia 2110, released in 1994, had standby time between recharges of 20 hours and talk time of up to 1 hour 50 minutes. Today, those figures for Nokia
phones are 60 hours and 5 hours 20 minutes.
POWER HOG. Watching TV on your phone is an entirely different demand, however. The network can help minimize power usage when the video is

downloaded from the carrier's server to the phone. But once the download is done, the phone itself has to process and display the information.

ST claims. is a 10-fold power savings because each chip segment focuses on what it does best. they'll begin paying to send the shots over the network to friends and family. "That puts power back on the agenda. IDEO and others run focus groups to better understand how consumers think and to devise streamlined pricing plans designed to acquire and retain customers. another for audio. all-dancing handsets.Frost & Sullivan estimates that usage will skyrocket from 186 billion messages per year in 2003 to 365 billion in 2006 -. researchers are working on a new generation of chips." says Richard Chesson. For too long. color screens. That's why handset makers and wireless carriers are asking researchers to study how to entice consumers to accept the new features -. or text messaging. their strategy needs to be refined. engineers have developed a distributed processing system. FINDING THE "SWEET SPOT." ACCIDENTAL SUCCESSES. At ST Microelectronics (STM ) in Geneva. "The constraints are people and the business model." One approach monitors the energy flow through the battery. "It's not so much technology anymore. customers will come." To solve the power problem. Each 25-million-transistor chip is divided into several sections." Getting the phones to work is one thing. then take them home to e-mail them or just save them to show later. Consequently. according to InStat-MDR. they still need to be used as a phone." says Alexander Grunsteidl. which now accounts for 10% of European carrier revenues. still isn't clear. "The goal is to find the sweet spot between super-low power [operation] and powerful processing capability. video playback. says Grunsteidl. dubbed application processors. Take SMS. too. handset makers and carriers have believed that if they build it. Early data suggests this isn't the case. But as cell-phone use reaches saturation point. getting consumers to use them is another. That means no additional revenue to the operators. because the capability was built into every phone and it costs far less to send a text message than make a call. Even better for carriers. still another for voice." says inCode's . Compare that to what could be an impending debacle with camera phones. and consumers expect them to last all day. Grunsteidl and others have been asked to help develop pricing models that make consumers feel that they're getting value from the features and services available. and high-quality sound chew up battery life in a way that simple voice transmission does not. then makes choices about how the power that remains will be allocated. according to research firm Frost & Sullivan. though. The best way to do this. vice-president for operations at San Diego-based wireless research outfit inCode Telecom. a video phone might show a lower-resolution picture when power is waning. Just in time. says Dunsby.and pay for them." says Martin Dunsby. Wireless operators heavily subsidize camera phones because they imagine that once people start taking pictures. SMS was never intended as a mass-communication tool. director of marketing for ST's multimedia platform. "Whatever the functionality of these new all-seeing. SMS messages are sent over channels dedicated to administration. So as text messaging continues to grow -. games. Though 1 in 10 cell phones sold now includes a camera. UNEXPECTED USES. it was set up to allow carriers to reconfigure devices or update directory information over the air. Outside of voice service. one dedicated to processing video. consumers seem happy to snap pictures.voice channels won't be overtaxed. The result. "The challenge is always that people won't use phones in the way you expect them to. For example. that aim to support fancy features like video playback without zapping the battery."The new generation of devices with cameras. most of the biggest wireless successes have been accidental. Instead. However. the technology took off. a researcher at design firm IDEO in London.

pick out an address. "If it's too difficult to send. All rights reserved. By Jane Black in London Copyright 2000-2004. Terms of Use Privacy Notice . or costs too much. by The McGraw-Hill Companies Inc. consumers simply won't use it.Dunsby. propping up falling prices by selling more expensive phones and services is what cell-phone R&D is all about. And that's going to hurt operators' bottom lines. After all." Avoiding this is worth no end of research and testing.