Tech may still be in the economic trough, but the wireless business is as overheated as ever.
The industry's growth -- on display Tuesday through Thursday at the Cellular Telecommunication Industry Association's Wireless I.T. and Entertainment 2003 show in Las Vegas -- is being powered by color and camera phones, faster chips, new entertainment gadgets and messaging services. Despite the recession, consumers are biting.
"We're seeing a third quarter like we haven't seen in a while, and we're seeing a huge spike in orders for the fourth quarter," said Don McGuire, vice president of Global Marketing for handset maker Kyocera Wireless. "Mobile devices are going to be the hot category this holiday season."
Phone giant Nokia would agree. On Friday, it announced that third-quarter handset sales rose about 15 percent over the previous year, and fourth-quarter sales will maintain the pace. About 425 million handsets were sold last year.
Consumers -- both those acquiring their first mobile phones and those eager to upgrade to the latest multimedia data services -- are behind the surge in sales. While companies are also buying smartphones for their employees, the corporate market is smaller, industry executives say.
The United States, long considered an also-ran to Europe and Asia in cellular phones, has also significantly leveled the playing field. Operator investment in infrastructure is a big reason why.
"We're definitely not considered behind anymore," said Rio Caraeff, Sony Pictures Digital Networks' vice president for wireless services.
While voice remains phones' main attraction, data services such as picture and text messaging are becoming significant in the United States. Voice services account for about $40 in monthly revenue per consumer, and that figure is falling, according to a Morgan Stanley report. Data services account for about $4, and rising.
Young buyers -- purchasing their first phones, eager for the coolest content and eager to send mobile messages to their friends -- are a big part of the surge in data traffic.
Kyocera, MTV and Virgin will make a big play for that market at CTIA, unveiling a new phone called Slider (it slides open) that will feature MTV-branded content, icons and ring tones. The phone will sell under the Virgin brand, but will run on the Sprint network.
Some of Nokia's CTIA offerings are also designed to grab the young: its N-Gage phone, which merges a phone with a wireless gaming platform; its recently launched 3300 music phone, which plays MP3 songs and ring tones; and camera phones that send instant picture messages to other phones or computers.
"The moms and grandparents of the world are also getting on board, particularly with regard to games," said Nada Usina, Nokia's general manager of media and entertainment for the Americas. "It's not just your stereotypical teenager anymore."
The games aren't necessarily sophisticated. Sony's Caraeff argues that old standards like Sony's Wheel of Fortune play a lot better on tiny phone screens than super-sophisticated games like Tony Hawk, a console skateboarding game that's been adapted for phones.
With consumers buying so many phones, chipmaker Texas Instruments expects a booming business for the silicon that makes those phones run, said marketing manger Danni Gladden Green.
That intelligence isn't lost on traditional computer companies, which will also be out at CTIA in force. Intel will showcase a network of wireless developers with products optimized for Intel chips. And Microsoft will demonstrate its latest smartphones and mobile Windows software.
"If you look at the handset sales over the last few years, it dwarfs PC and PDA sales," Gladden Green said. "I'm surprised that it took some of these industry giants so long to come into this area."
