The Brave New World of Wireless

The nascent boom in next-gen wireless services promises increased sales for mobile outfits -- and stiff competition for a share of those revenues

by Olga Kharif

Microsoft (MSFT) Chairman Bill Gates struck a familiar note when he took the stage at the Consumer Electronics Show on Jan. 4. He said he dreamed of a day when he can begin watching news coverage of an event from his TV or PC at home over breakfast, and then continue viewing from his mobile device as he travels to work and goes about his day. Another tech CEO making yet another speech about the seemingly endless possibilities of wireless technology.

CONVENIENCE CENTRAL.

The funny thing is, that vision is getting a lot closer to reality -- and CEOs espousing pie-in-the sky notions of wireless "convergence" and "seamless mobility" are sounding increasingly, well, down to earth. More than ever, cell phones are functioning in sync with, and sometimes instead of, PCs and TVs.

That's great news for the wireless carriers such as Verizon Wireless and Sprint Nextel (S) that have invested billions making networks able to carry a host of new services, and the handset makers such as Nokia (NOK) and Motorola (MOT) that have spent lavishly to develop and market the latest in multifeature phones.

A sampling of the fruits of those efforts: In November, Sprint Nextel and cable companies Comcast (CMCSA), Time Warner Cable (TWX), Cox (CXR), and Advance/Newhouse committed $200 million to a joint venture. When the service debuts later this year it will offer users a single mailbox for wireless and wireline phones and the ability to program home digital video recorders (DVR) with mobiles (see BW Online, 11/03/05, "Sprint Nextel's Watershed Deal").

TUNED-IN CELL PHONES.

Some wireless devices are already able to play music and video, run PowerPoint presentations, use global positioning systems (GPS), and trade stocks (see BW Online, "How Cell Phones Roil Japan's Stocks"). And the quality of transmission is only improving, says Jeff Hallock, vice-president for product marketing and strategy at Sprint: "We are on the threshold of quality that, frankly, exceeds consumer expectations."

As various wireless technologies converge on a single mobile device and the new services sharpen, their use is expected to skyrocket. Some 5 million people in the U.S. watched video on their cell phones at the end of 2005, and that tally may double by the end of the year, says Charles Golvin, an analyst with tech consultancy Forrester Research. And according to consultancy Informa, by 2010, more people worldwide -- some 124.8 million -- will watch mobile TV broadcasts than there are U.S. TV households today (see BW, 4/18/05, "I Think I'll Watch TV -- On My Cell Phone").

Analysts expect to see the same boom in such services as mobile gaming, location-based services, and the newly introduced over-the-air music downloads. Microsoft is working on enabling mobile-phone players to post game scores and, eventually, go head-to-head with players using a PC or an Xbox 360. The U.S. mobile gamer community should grow 40%, to 39 million, by the end of 2006 from 29 million last year, according to consultancy IDC. And later this year, Verizon Wireless plans to introduce a service allowing parents to track locations of their kids equipped with mobile phones, via a PC (see BW Online, 1/23/06, "The Great Communicators").

ALL ABOARD.

The boom in next-generation wireless services -- assuming it pans out -- won't come a moment too soon for service providers. Subscriber growth in North America and other developed markets is slowing. U.S.