Camera phones click in U.S.

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The camera-phone craze appears to have officially hit the United States, with Sprint PCS and Verizon Wireless both boasting of millions of picture messages passing over their networks every month. Indeed, new research released today by advisory firm Zelos Group shows the market for mobile-originated photos will grow from $10.3 million this year to more than $440 million in 2008.

“Camera phones are becoming increasingly more popular as evidenced by the more than 10 million pictures uploaded and sent over the enhanced nationwide PCS Network in the second quarter alone,” said John Garcia, senior vice president of marketing for sales and distribution with Sprint.

“In addition, we’re hearing about creative ways people are using these phones, whether it’s to share a funny moment or prevent a potential crime.”

In fact, the camera-phone market gained attention recently when a New Jersey teen used his camera phone to stop an apparent kidnapping. According to the widely reported story, a 15-year-old New Jersey teen was approached by a man attempting to lure him into his car, but the teen foiled the apparent abduction attempt by snapping pictures of the man and his license plate number using his Sprint PCS camera phone. Police were later able to use the pictures to arrest the man.

The event serves to illustrate the growing interest in camera phones across the country. Indeed, camera phones appear to be selling so well that one industry analyst predicts sales of camera phones could soon exceed the combined total sales of regular digital cameras and those that require film.

“Sales of cell phones with cameras embedded could reach 50 million units, and phones that have cameras as a separate attachment could see another 40 million units,” said analyst Tony Henning with Future Image. “So this year is probably a toss-up as to who sells more, but next year is no contest.”

Looking to cash in on the trend is Sprint PCS, which sold the first integrated camera phone in the United States in 2001. Sprint announced subscribers sent more than 10 million pictures over its PCS network in the second quarter. The carrier also announced it will sell the new PCS Vision Picture Phone VGA1000 by Samsung for $160.

Not to be left out, Verizon Wireless announced its customers shared more than 1 million picture messages in less than 30 days since its service launch July 8.

“Verizon Wireless customers are proving picture messaging is a fun and useful tool with enormous potential, and the remarkable results of the service is proof that customers demand quality, easy-to-use features, and they want them on the best wireless network,” said John Stratton, vice president and chief marketing officer for Verizon Wireless.

However, some issues still need to be ironed out in the camera-phone industry, said Henning.

“The big hurdle in North America is interoperability,” he said. “Right now, the sender and receiver of a cell-phone image have to be on the same network for instant, peer-to-peer messaging. The hurdle is not technical; it’s economic and political. It comes down to money and territory. The various carriers have to decide how to divvy up the revenues.”

Not all analyst firms are in agreement over the mechanics of the market, however. In today’s Zelos Group report, “US Photo Messaging: Internet Services Will Drive Market Acceptance,” the firm asserts that camera phones will not replace the need for digital cameras, and that picture messaging interoperability is not necessary for the market to grow.

“The utility of imaging is immediately obvious to a substantial portion of mobile subscribers,” said Seamus McAteer, the firm’s senior analyst and author of the report. “Consumers will use images captured with camera handsets as a way to add visual context to communications, vs. using them for a long-term memorial record.”

Further, McAteer said messaging interoperability, which allows users to send picture messages from one phone to another, is not an immediate concern as most users simply will send their messages to an e-mail address. McAteer said interoperability won’t likely occur until 2005.

“This is still a nascent market. Only 4 percent of mobile subscribers will have camera-enabled handsets by the end of the year, and they will send about two mobile originated photos per month, on average,” McAteer said. “Photo messaging will be an important incremental source of revenue for mobile carriers and will account for about 2 percent of average revenue per active user in 2008. The proliferation of handsets that support multimedia messaging will also provide another target for delivery of interactive media such as interactive horoscopes, and short animations that will satiate the mobile users desire for diversionary entertainment.”

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