Camera phones are the most rapidly accepted consumer electronics device in history. Yet it appears that wireless carriers-a group many assumed would reap the rewards of a camera-phone revolution-are sitting on the sidelines of this mass adoption, watching and waiting.
Annual sales of camera phones will grow from 18 million units to 189 million units during the next five years, according to one industry research firm. Another research firm predicts 70 percent of all handsets will feature an integrated digital camera by 2009. High-end camera phones now have resolutions rivaling that of standard digital cameras.
Such statistics speak volumes and could lead industry spectators to consider the camera-phone industry a rousing success. However, carriers have yet to enjoy the benefits of this rapid adoption.
“It’s true,” said Keith Mallinson, executive vice president of the Yankee Group’s wireless and mobile research group. Although wireless carriers have spent millions subsidizing the cost of camera phones, in some cases they have missed the expected boost in revenues from the transmission of picture messages.
“We are very excited about picture messaging,” said Paul Palmieri, director of multimedia business development for Verizon Wireless, the nation’s largest carrier. “We are very happy with the results-with the messaging piece as well as camera-phone sales.”
Palmieri declined to provide revenue or usage numbers from the carrier’s picture-messaging service. Further, Palmieri acknowledged that the lack of picture-messaging interoperability is hindering the growth of the picture-messaging market.
“Interoperability is something that we are aggressively targeting,” he said. Palmieri said Verizon would probably introduce intercarrier picture-messaging services with “a couple” of nationwide U.S. carriers by the end of the year.
Others have been more forthcoming.
“I would say that it (picture messaging) has exceeded expectations,” said Jenny Stevens, a Sprint spokeswoman. Stevens said the carrier has recorded more than 100 million picture and video messages traveling its network since the carrier launched the service in August 2002.
Although no one doubts the camera-phone and picture-messaging market is huge, it nevertheless includes a variety of complexities. Camera phones first showed up in Asian markets, where they took users by storm. More than 90 percent of Asian vendor NEC Corp.’s handsets currently include integrated digital cameras. The camera-phone revolution then moved to Europe, where GSM carriers have been working furiously to promote and sell camera phones. Indeed, Vodafone Group plc recently introduced the market’s first megapixel camera phone-a device that records images with more than 1 million points of resolution. Further, Japanese carrier KDDI Corp. recently introduced a Casio Computer Corp. handset featuring a 3.2-megapixel resolution. And Qualcomm Inc. announced a new line of CDMA chipsets that will support camera phones with resolutions of up to 6 megapixels. In comparison, most digital cameras feature resolutions of around 3 to 4 megapixels.
In the United States, the story is much the same, although on a less grand scale. Camera phones first showed up two years ago and have since become a significant part of the market. Most carriers now sell some type of camera phone for $100 or less. Further, most U.S. carriers plan to offer camera phones with megapixel resolutions by the end of the year. Most U.S. camera phones to date feature resolutions of around 300,000 pixels, roughly one-third the clarity of a megapixel camera phone.
Yankee Group’s Mallinson said improvements in interoperability and camera-phone resolution will form the backbone of a successful camera-phone market. Only when users can send high-resolution picture messages (instead of blurry, low-resolution images) to anyone with a camera phone (instead of only other users of the same carrier) will the market reach its full potential.
“It’s not going to take off overnight,” Mallinson cautioned. “You have to build the user comfort.”
“The 1-megapixel camera phone is positioned to represent a key sweet spot for vendors looking to push their brands in the new mobile imaging market and for carriers looking to generate additional revenues from multimedia messaging services,” wrote Current Analysis in a recent research note. The firm also added, “If camera phones are to continue to gain quick acceptance, consumers must be able to take and share photos with users of all types of camera phones on all types of networks.”
There are several challenges, however, to a smooth-running picture-messaging system, Mallinson said. First, carriers will have to hash out the technological hurdles in sending images from a GSM handset of one carrier to a CDMA handset of a different carrier, while also accounting for pricing and billing issues. Second, carriers will have to manage and support the transmission of megapixel images-larger files that could tax data networks.
“Until consumers are convinced of their value, it will be difficult to justify the cost of many of these high-end devices,” wrote Current Analysis.
