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The Mobile Industry Responds to the iPhone--Touch Screen Phones to Ship 178 million units by 2011 Print E-mail

SCOTTSDALE, Ariz. April 8, 2008 - MultiMedia Intelligence Brief- The launch of the iPhone was the story of 2007. Clearly, Apple identified that handsets were suffering from the lack of an intuitive and efficient user interface.

Apple’s adoption of the touch screen was the first truly innovative feature since the introduction of camera phones based on CMOS image sensors. In 2007, phones with touch screens were a “rounding error” in context of the overall handset market. By 2011 however, phones shipments with touch screens will reach 178 million.”

“The major handset vendors demonstrated at the CTIA tradeshow that they have heard the battle cry of Apple and have responded . . . with one very notable exception,” according to Frank Dickson, Chief Research Officer for MultiMedia Intelligence. ”The touch screen interface is here to stay as it is a tremendous innovation in handsets. However, it is not perfect. It is not ideal for all usage paradigms. Qwerty keyboards, sliders, and plain, old standard keyboards have their fans as well. Additionally, touch screens add considerable expense of the handset bill of materials.”

The favorite new phone of the show for MultiMedia Intelligence was the Sony Ericsson XPERIA. Granted, Sony Ericsson is not going to win any major awards for originality as the phone could be subtitled, “Danger Meets Apple.” It has a touch screen, tiled user interface similar to the iPhone, and an arc slider reminiscent of the Sidekick. However, they eloquently executed the combination with some subtle improvements that enhance usability. The demo that we saw still had a few kinks in the software to be worked out, but nothing that seems challenging. The phone has a 3-inch, clear, wide VGA display and a full QWERTY keyboard. Interestingly, the phone runs with a Windows Mobile OS, the first Sony Ericsson phone with a Windows Mobile OS that we can recall. The phone is also loaded with multimedia and connectivity options.

Sprint and Samsung had a surprise introduction, the Instinct. It has full touch-screen functionality and creates a “virtual QWERTY keypad” and other functions using the touch screen. The phone also provides support for corporate and consumer (POP3) email, multitasking capabilities, a 2.0 megapixel camera with camcorder and expandable microSD memory of up to 8GB. MultiMedia Intelligence was not able to actually get our hands on a demo, so we have little comment on the usability of the device.

LG came to CTIA with the Vu. The Vu has a three-inch touch screen display. It has all the features that one would expect in a new touch screen phone offering. What makes the handset special is that it also provides access to AT&T’s mobile TV offering, with an extendable antenna for improved reception. When one combines downloadable music from eMusic, sideloadable music from Napster-to-go, and streaming music from XM, the “phone” offers a compelling mobile multimedia experience.

Other vendors such as Nokia with their N96 and HTC with Touch Dual were offering new touch screen phones as well. However, the loudest message may have been sent by Motorola. Sometimes silence speaks volumes. Silence is what we heard from Motorola. We failed to see any really new, innovative mobile handsets designs. All the major vendors except Motorola seem to have answered the iPhone challenge.

This Intelligence Brief is based on MultiMedia Intelligence’s new research report, “Wanted: Multimedia Handsets—Consumer Desires Meet Operators ARPU Needs” provides research, analysis and forecasts for music phones, multimedia handsets and handsets with multimedia specific features such as phones with touch screens, camera phones, mobile TV handsets, radio phones, and phones with a host of alternative connectivity options. The report begins by looking at the wireless industry trends that are driving the need for feature rich handsets. It then looks at basic multimedia handsets and their growth. It turns its attention to feature rich multimedia handsets, including the technology driving them, and unit forecasts and revenue outlook. Finally, it examines and forecasts handsets with specific multimedia features.

Rick Sizemore

(480) 213-4151

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