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CTIA Wireless 2006
NPD's Wireless Analysts Report on Conference Highlights

CTIA Wireless 2006 is the premiere U.S. conference for the wireless, mobile computing and wireless Internet industries. As you might already know, NPD was there in full force with analysts Neil Strother, Glen LeBlanc, Charul Vyas and Drew Hull taking to the convention floor to get a first-hand look at the next wave of wireless innovation.

And there certainly was a lot to see, hear, test and investigate.

As content and services continue to grow in consumer awareness and adoption, this industry has increasingly become the showplace for those services and the converged devices on which to consume them. And it’s not just for handset manufacturers and service providers, either. While these two segments of the industry garner the most attention, mainly because they actually touch the end user, the show is really about the entire wireless ecosystem.

Following is an overview of just a few of the scores of key trends, innovations and take-aways for mobile devices, content and services that were noted by NPD’s wireless analysts at CTIA.

Truly useful cameraphones

While cameraphones have been available in the U.S. market for many years now, we are just now beginning to see truly useful cameras on mobile devices. Handset manufacturers are beginning to bring to market devices that can take printable photos, which will help move picture messaging services to a new level.

Cameraphones are moving to a level that challenges the low end of the standalone digital still camera market. In fact, manufacturers at CTIA showed many new models with 1.3-megapixel cameras, moving mainstream models beyond VGA. OEMs also had on display a handful of 2-megapixel models. The photos these devices take are sharper than VGA, and the hope is they will help stimulate more wireless sharing, offloading and printing of images.

Wireless devices take the first real step toward convergence

There has been a great deal of discussion about converged mobile devices (e.g., mobile phone as digital music player and digital camera). And while we have not arrived at true convergence, exhibitors at CTIA showed that the industry is making great strides in that direction.

Major handset vendors showed new models capable of storing and playing full-track digital songs. Most have MP3-AAC format players, and storage levels up to 1 GB. While not iPod killers yet, these phones are just the first wave of mobile phones that nibble at the low end of the MP3-player market. The next wave of devices, scheduled to hit the market next year, will pose the greater threat to the status-quo.

Qualcomm, Modeo and others like LG and Samsung showed off handsets capable of receiving broadcast television signals. These TV-enabled phones are expected to enter the market by the end of the year. Realistically, these phones are more of a 2007-and-beyond story, but no one wants to be late – and these early devices showed promise at the show.

Handsets thin, as the market widens

While consolidation seemed to be the theme for certain segments of the wireless industry, competition appears to be heating up in the handset space. Aside from a host of new handset launch announcements, new handset vendors such as Pantech officially announced their plans to make major inroads into the U.S. device market this year.

Leading manufacturers also made their own news, as Motorola rivals showed they, too, can do thin and are poised to steal share from the ever popular RAZR. If thin is what subscribers want, these handset manufacturers are happy to oblige. And there’s a noticeable consumer side benefit: With demand strong for thinner form factors, handset engineers have been spurred to miniaturize many components, squeezing more functionality into ever-smaller space.

In the end, everybody wins with very powerful and pocketable devices. For example, Samsung’s RAZR-like Blade (a900) was much on display, as was the company’s new ultra-thin t509, which took ‘best in show’ for CTIA’s Wireless Emerging Technologies Award. LG’s VX8300 (a thinner VX8100), UTStarcom’s 9250 and Nokia’s 6175i were among the other models banking on thinness.

New wrinkle: Micro-segmenting the market by age

Soon-to-launch MVNO Disney Mobile announced its first two handsets would come from LG and Pantech. These phones are aimed at young teens and ’tweens (and their parents). One major selling point for these phones is the ability to track the user’s location.

Somewhat under the radar, Samsung showed off its A120 Jitterbug model. Jitterbug is an MVNO aimed at older subscribers and is backed by a little-known San Diego company called GreatCall. The A120 has large keys, a simple software set, and a solid feel. While this is not a brand new strategy by any means (we’ve seen youth-oriented phones for years), this level of laser focus marks a new direction for the industry – and one that is well-set for the aging Baby Boomer market.

UMA (Unlicensed Mobile Access)

Dual-mode (cellular/Wi-Fi) handsets were featured from manufacturers, including Nokia and Samsung. These devices won’t be available until later this year, but they are ready to go, and are a clear sign this new type of phone that can move a call between Wide Area Networks and Wi-Fi hotspots is no longer just a concept. T-Mobile and Cingular are the carriers that are poised to reap the most advantages, since UMA is a standard for GSM operators. The key benefits are better indoor coverage where hotspots are available, and some possible lowering of costs to the end-user.

Mobile content gets more robust

Consumers are beginning to adopt data and ancillary services offered by the carriers. While voice is still king, revenues from non-voice services are no longer predominantly generated by text-messaging. With that trend firmly in mind, virtually every aggregator, publisher or content owner has either officially announced or discussed plans to launch D2C (direct-to-consumer) mobile content offerings. This is an important trend that could change the face of the U.S. mobile content industry as we know it. They all plan to continue heavy emphasis on working with carriers to garner prime deck placement, but they are also developing their own D2C channels, as well.

As far as the content goes, consumers’ choices are growing almost exponentially. Following are several highlights:

Mobile Music – From full-song downloads to sideloads, major record labels to garage bands, music was on a lot of minds (and devices) at CTIA. A major combined announcement from Infospace and Cingular even provides an outlet to sell ringtones for unsigned, independent MySpace.com bands.
Mobile Gaming – Mobile game publishers are consolidating or being acquired by major traditional players in the gaming space. While not new to CTIA, several announcements furthered this trend. GLU Mobile acquired iFone, while Capcom and Vivendi Universal both announced new mobile business units.
Mobile Video – While still in very early stages, the market for mobile video is already a reality. Three out of four Tier One carriers in the U.S. now offer mobile video services. With those initial offerings in market, the focus has now shifted to next-generation services, which focus on improved technology (multi-cast replacing uni-cast), price models (ad-supported or not) and the content itself (live, original, Video-On-Demand, etc.).
Mobile Search – Many of the carriers and solution providers combined to launch multiple location-based services and mobile local search initiatives. It remains to be seen if these companies will back up their bluster with substantial marketing dollars and promotional activity.

NOTE: The following NPD analysts contributed to this bulletin, Neil Strother, Glen LeBlanc, Charul Vyas and Drew Hull.