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Photo Phones Test the U.S. Waters



They're Big in Japan But U.S. Consumers Lukewarm So Far to Cell Phones that Double as Digital Cameras

by Dan Havlik

Walk the streets of Tokyo these days and you're likely to stumble across what would be an unusual site in the United Statesgroups of school kids snapping pictures with a device that bears a striking resemblance to a cell phone. The situation is similar in London, Paris, and most major cities of Europe, where it's not that out of the ordinary to see someone pull out their mobile phone and aim it at Big Ben or the Eiffel Tower.

No, the rest of the world hasn't gone crazy (though it may seem that way to many Americans sometimes.) What the Japanese and Europeans are having so much fun with lately are, in fact, cell phones. But these phones are for more than just making callsthey're also for taking pictures.

According to recent statistics from market research firm InfoTrends, over five million people in Japan now carry cell phones embedded with digital cameras. While the proliferation of these new photo phones isn't as high in Europe, with new wireless services for sending text and images now being deployed on "The Continent," that may soon change.

An InfoTrends study released last August predicted that the number of wireless imaging users worldwide will grow from 6.6 million in 2002 to over 160 million by 2007, creating an expected compound growth rate of 93%. Most of the growth, so far, has been in Japan, where 98% of the current wireless imaging users reside.

But what about the U.S.? Well, up until four or five months ago, very few people in this country had even seen a photo phone, let alone used one. That's starting to change, however, with almost all of the major mobile phone companies in the U.S. now offering cell phones with digital picture taking capabilities. Perhaps even more importantly, the root of a cellular network to support such devices is starting to take hold here. Wireless providers Verizon Wireless, T-Mobile, Sprint PCS, AT&T Wireless and Cingular have either implemented, or are planning to implement Multimedia Message Service (MMS), a technology that allows cellular photo phones to send captured images to the Internet or to similarly enabled cell phones.

Despite the growing interest, analysts say behavioral patterns have to change before wireless imaging really catches on in the U.S. For example, in Japan and Europe, sending emails via cell phone, i.e. SMS (Short Message Service), is very common but in the U.S., wireless text messaging is not as popular.

"People in the U.S. are very accustomed to sitting at their PC for the Internet and for email but in Japan they use SMS for text messaging all the time," said Jill Aldort, a research analyst at InfoTrends. "So in the short term, it's going to be more a novelty."

Aldort added that if the prices on cell phone cameras come down, the service could catch on with young people and then spread by word of mouth. However, the only cell phone available in the U.S. with a built-in digital camerathe Sanyo 5300 which was released jointly with Sprint PCSretails for $399, a price point Aldort says is still too high for most people. Aside from the 5300, most other wireless imaging cell phones on the market require a pricey camera attachment in order to take pictures. The only exception, so far, is T-Mobile, which is offering the Sony Ericsson T300 for only $100 (after mail-in rebate), with a free camera attachment.

While photo phones have been making headway in the mass merchant retail channel, only a small number of photo specialty stores are stocking them. Mostly that's because images captured with these phones are still of a low, VGA quality that's suitable for sharing but not for printing.

"As of now, the quality of images captured by camera phones is nowhere near the quality of a two, three or four-megapixel digital camera," Aldort noted. "I don't think any of the photo specialty stores are going to be effected right now, because consumers are still going to be purchasing higher-end digital cameras to get prints from." She added that the place where photo phones might grab some market share is in the single-use camera category.

That hasn't stopped some photo retail stores from testing the waters of the emerging photo phone market. Ritz Camera, which has 1,300 locations in the U.S., has started carrying the phones, but with mixed results.

"We have just recently started to carry cell phones with built-in cameras," Richard Tranchida, a spokesperson for Ritz, told PTN. "Sales are very slow, but they are a new item for us. I do not believe they will have an impact on photography, but it is a great and easy way to email images. The resolution of the images is too low to have any impact right now on consumer printing."

Some companies might beg to differ, including online processor Snapfish, which together with AT&T Wireless, has launched "Snapfish Mobile," a new service that allows AT&T Wireless mMode customers to view, share and print images from their mobile phone. "It's like carrying your entire set of photo albums with you," said Rajil Kapoor, president and co-founder of Snapfish.

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PTN Dailes HERE