CTIA Mantra: Trade In, Turn On, Step Up

Vendors strive to keep assembly lines rolling, add focus on child phones

By Joseph Palenchar -- TWICE, 3/26/2007

ORLANDO, FLA. — Handset suppliers here at CTIA Wireless are demonstrating their resolve to get the cellular-addicted generation to trade in, turn on and step up.

With more than 70 percent of Americans already owning a cellphone, vendors here continue to turn to fashion, music, video, navigation and productivity applications to encourage subscribers to trade in their existing phones for step-up models — and keep the assembly lines running at full throttle.

Suppliers at the March 27-29 trade show are also turning to child-oriented phones and services to expand the industry's penetration rate. (See p. 26.)

The step-up trend will keep factory-level dollar volume growing in the United States at a compound annual rate of 11.4 percent between 2007 and 2010, even though unit sales will grow at a slower 8.7 percent compound annual rate during that period, according to a Telecommunications Industry Association (TIA) forecast (see table, p. 10.)

To encourage trade-ins and step-ups companies such as LG are expanding their selection of music-centric phones with dedicated music keys, and Pantech and Kyocera will show their first.

Suppliers will expand the selection of U.S. market W-CDMA phones, whose faster data speeds enable improved video streaming and faster data downloads. Pantech will show its first W-CDMA phones for the United States, and Motorola will show new models.

As part of this trend, LG will show one of the first U.S. phones that enable one-way live video streaming during a two-way voice conversation. It's designed for use in AT&T's W-CDMA HSDPA (high speed downlink packet access) markets.

Companies will also expand their selection of music phones equipped with Bluetooth stereo for use with wireless stereo headphones. Pantech will offer its first such model.

In addition, Motorola will show some of the first smartphones based on Microsoft's new Windows Mobile 6 smartphone platform.

To expand the children's market, MVNO Disney Mobile will expand its selection to a lower price point with its first Samsung-sourced handsets, and mobile-phone content provider PlayPhone will unveil a Tamagotchi-brand phone. In addition, Daniel Neal, co-founder of tween MVNO Kajeet, will attend the show to make the startup's presence known.

Also at the show, attendees will find the first U.S. market phones carrying the Alcatel brand.

For a look at the future, attendees will be able to view demonstrations of next-generation technologies, including Mobile WiMAX and cellphones that double as contact-less credit/debit cards through the use of embedded near field communications (NFC) technology.

Kyocera, for example, plans a live demo of a PCMCIA Card with embedded Mobile WiMAX and MIMO (multiple-input, multiple-output) technology. During the demo, the card will simultaneously stream three video programs, sending one to a laptop PC and the other two to separate plasma-TV displays.

Kyocera also plans to team up with Visa and Smartmachines to demo "contactless" payment. That term means a Kyocera Jet phone modified to include NFC technology will be used to pay for a soft drink at a vending machine and purchase theater tickets without waiting in line.

Nokia also plans to demonstrate NFC and its free smart2go mapping software, which offers maps and routing instructions in more than 150 countries and, for a fee, turn-by-turn satellite navigation in more than 30 countries. Nokia is offering the smart2go application for free for select Nokia S60 and Windows Mobile 5.0 devices and plans to support most major mobile OS platforms, including PocketPC, Linux and other Windows Mobile devices.

(See pgs. 26-30 for details on these and other announcements at the show.)

U.S. Handset Sales
Factory level

Year	Handset units (millions)	Handset growth (%)	Avg. price ($)	Avg. price growth (%)	Revenue (millions $)	Revenue growth (%)
2000	52.6	56.1	171	-5.0	8,995	48.3
2001	53.4	1.5	162	-5.3	8,651	-3.8
2002	58.7	9.9	138	-14.8	8,101	-6.4
2003	70.5	20.1	130	-5.8	9,165	13.1
2004	84.6	20.0	125	-3.8	10,575	15.4
2005	104.5	23.5	130	4.0	13,585	28.5
2006	121.0	15.8	138	6.2	16,698	22.9
2007	134.0	10.7	143	3.6	19,162	14.8
2008	145.0	8.2	147	2.8	21,315	11.2
2009	158.0	9.0	151	2.7	23,858	11.9
2010	169.0	7.0	152	0.7	25,688	7.7
Source: CEA, Telecommunications Industry Association, Wikofsky Gruen Associates © TWICE 2007