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Answering Consumer Ambivalence with More Push-To-Talk Handsets?

Recently several new push-to-talk (PTT) handsets have been introduced in the market. They all appear to have the right features and network support, so it seems that for end-users, PTT handset choices have never been more numerous. If so, then why is it that demand for PTT handsets has stalled, according to recent NPD Group data?

Push-to-talk was growing over the past several years. In fact NPD's market tracking data shows PTT penetration at about six percent of phones sold in 2002. In recent quarters, PTT has hovered around 12 percent -- down just slightly from a high of about 13 percent a year ago. So it would appear that PTT has stalled somewhat.

Stuck in a penetration stall pattern, can push-to-talk move beyond "fleet" users and other cooperating teams, and further into the mainstream?

Apparently many leading companies think so. Despite U.S. consumers' demonstrated ambivalence regarding PTT handsets, manufacturers and carriers continue to offer handsets and systems touting this functionality. Some of the newest models include the following:

Samsung d357 -- a clamshell form-factor device with Bluetooth, Java and Multimedia Messaging Service (MMS), price: $100 (after $50 mail-in rebate)
Sanyo RL-4930 -- a "candy bar" phone featuring a rugged case, extra-long life battery and a 130-minute voice recorder, price: $50
LG F7200 -- a slider phone with Java, 65k color display and polyphonic ringer, price: $70 (after $50 mail-in rebate)

There are several types of push-to-talk systems available in the market. Among the most popular are the following:

iDEN, Nextel's well known, digital two-way radio communication system; also used on Boost Mobile, a service aimed at youth
Kodiak, an all-IP packet-switched system offered by Cingular, MVNO Amp'd, and some regional carriers
Push-To-Talk over Cellular, or PoC, an open standard created by the Open Mobile Alliance, uses VoIP technology to stream voice over data networks

Push-to-Anything

Nextel competitors have talked about "push-to-anything," which means having single keys for launching a Web browser, sending an email, downloading a song, or buying a concert ticket. For example, Sprint Nextel launched its Direct Send Picture service, which lets a user send a photo to someone else he is talking to on a Nextel PTT handset, all without interrupting the call.

The photo appears at the same time on both the sender's and receiver's phones during the call, and they can both view and discuss it. The Direct Send Picture service will be free until February 28, 2006. After this promotional period, users will have to pay 25 cents per photo for images sent and received. Also, customers may incur a charge for push-to-talk time for the period of the call before and after the image is transmitted, depending on the rate plan.

This type of push-to-something service has some potential for consumers. But like any new service, it will take users time to try it, understand it, and be willing to pay extra for it.

More Choices, but Intriguing?

Clearly, those who use push-to-talk have more choices, both in terms of handsets and carriers. This competition will help lead to lower prices and the greater availability should lead to more users. But if you're already satisfied with current voice communications, and have little need for the instant style of PTT, you won't be intrigued.

I remain somewhat skeptical of the impact these devices and services will have in expanding the market. A few more percentage points are possible, and carriers can certainly use the added revenue to help boost their bottom lines, and improve their competitiveness against Sprint Nextel, but it's not likely to capture double-digit growth anytime soon. The proposition just doesn't click with a majority of users.

— Neil Strother, Research Director, Mobile Devices