The majority of companies that only make content for mobile phones will go out of business within the next four years, said London analyst firm Wireless World Forum.
W2Forum analysts Graham Brown and Josh Dhaliwal spent three months interviewing 400 industry executives and studying the mobile-phone content markets in North America, Europe and Asia Pacific. They found that many independent content providers are cranking out rich media for mobile phones, but have no marketing plans or strategy to get their products out to market.
Many of these companies are convinced their ideas are strong enough to carry the business, but in reality they have "ineffective distribution strategies for payment, marketing and delivery of the product," the report's authors said.
"Most content providers believe they can become a small part of an increasing pie," Brown said, "and that's their weakness."
Brown, however, isn't saying no one will make it in this business or that the public doesn't want any content for cell phones. On the contrary, Brown and Dhaliwal predict that the mobile-phone content market in Europe and North America will grow from $2 billion in 2003 to $4.9 billion in 2006. The Asia Pacific market, which is already worth $3 billion, could explode to $6.5 billion in 2006, they said.
Most of the demand for mobile content will come from video games and downloadable music.
But the analysts warned that entertainment behemoths like MTV, Disney, AOL Time Warner and Universal Music have already made headway into this business. That would leave little room for smaller independent companies without the means to bring their products to market.
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Weak network sales, strong handset sales: Cell-phone sales are expected to soar this year as consumers replace their handsets with faster, sleeker, more robust cell phones, said Independent Research Group.
IRG, an equities research firm, has listed Nokia (NOK) as a must buy. IRG analyst Erik Zamkoff said he expects mobile-phone unit sales to hit 168 million this year -- up 10 percent from last year. He also expects Nokia to achieve 38.3 percent of worldwide sales, up from 37.6 percent in 2002.
He says consumers will upgrade their handsets at a steady pace, especially once November rolls around and they are allowed to switch carriers without abandoning their telephone numbers. The Federal Communications Commission has said that U.S. carriers must let customers keep their phone numbers when they switch service carriers.
Carriers in the United States, however, operate on different networks, which will force customers to buy new handsets -- surely an advantage for a manufacturer like Nokia.
Still, Zamkoff recommended that traders sell their Ericsson (ERICY) stock. A part of the handset manufacturer's business is to sell cellular network equipment. That industry has slowed due to anemic demand for next-generation, or 3G, equipment, Zamkoff said.
A 3G network allows customers to surf the Web on their mobile phones at speeds of up to 2 Mb per second. Network equipment vendors like Ericsson have been focused on improving current cellular systems instead of building out newer and more costly 3G networks, which has limited their revenue, Zamkoff said.
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Cell phones, hearing aids must mix: Breaking up a two-year fight between cell-phone companies and the hard of hearing, the FCC has mandated that the cell-phone industry make its products compatible with hearing aids.
For almost three years, activists for the hard of hearing have been asking the FCC to make the cell-phone industry comply with the Hearing Aid Compatibility Act of 1988, which requires telephone manufacturers to build their products so they muffle background noise and amplify the phone conversation.
Currently, if hearing-aid users were to use a digital cell phone -- realistically, any cell phone on the market today -- they would hear an annoying humming sound or buzz.
Under the FCC's orders, cell-phone manufacturers must sell hearing-aid-compliant handsets to carriers within the next two years. Half of all the digital wireless phones on the market must comply with the new rule by Feb. 18, 2008.
The cell-phone industry has been stalling legislation because it wanted a universal technical standard to make sure its products worked with hearing aids. In its latest decision, the FCC adopted that standard.
Approximately 6 million Americans wear hearing aids, the FCC said.
