Camera phones are proving hugely popular. According to Nokia, demand for camera-enabled mobile phones is set to increase rapidly over the next few years. As a result, the company is planning to integrate cameras into nearly every Nokia handset by the second half of 2004.

This chimes well with Motorola’s plans too. Although late to the camera phone scene, the company has just launched new models into this segment and sees it as a “crucial” part of the handset market as it develops over the next few years.

Mobile retailers are certainly looking for a camera phone shaped Christmas. Demand is currently reported to be outstripping supply and models like the SonyEricsson T610, the Samsung E700, the Siemens SL55 and Nokia 6600 are already said to be “flying off the shelves”.

Market researchers also see this segment taking off. According to Yankee Group, for example, sales of camera phones are forecast to reach almost 430 million sets, or 73% of the total, by 2007 compared with about 28 million last year. Indeed camera phones are also said to be comfortably outselling smartphones, by a margin of at least 4 to 1 this year with the gap set to widen considerably. This is particularly interesting since Microsoft, given its efforts to move into the mobile phone market, is certainly visible in the smartphone segment but not yet in the camera phone segment.

So, when you come to trade in your tired old handset (which on average will be under two years old), the chances are your next phone – or certainly the one after – will be camera enabled. So just how significant are camera phones and what are we going to use them for?

Texting plus

For a start, they are closely identified with MMS (Multimedia Messaging Service), the service that mobile operators everywhere are now rolling out and hope will supersede SMS text messaging. MMS is a system for the delivery of rich content such as audio, pictures and video in a messaging context through wireless networks between mobile terminals.

This is an important new service for mobile operators as they move to 2.5 generation and third generation mobile networks. They are counting on it as a key revenue generator and to help accelerate the rather slow uptake of packet services such as General Packet Radio Service (GPRS) and CDMA2000 which, to date, have suffered from a lack of broadly appealing applications for the consumer market.

Although technically very different from SMS, from an end user point of view it can be understood and marketed as the next step in mobile messaging. In order to take full advantage of MMS, users require advanced handsets, preferably (but not necessarily) equipped with cameras. Yet the service is unlikely to really take off until the population of MMS-enabled phones reaches a suitable level of penetration. Within the industry this is reckoned to be in the region of 20% to 30% of phones before MMS will be successful. That resembles the situation with SMS capability when launched on GSM networks: it was not until there were enough handsets capable of originating SMS messages (as opposed to just receiving them) that SMS usage really took off. Hence the desire by suppliers to get them out in large numbers as soon as possible. A further problem at present is interoperability – sending messages from one operator’s network to another. At present, this cannot be done with MMS although we are assured this will soon be fixed.

Europe playing catch-up

Although Europe prides itself as being in the forefront when it comes to mobile, such is not the case for picture messaging. Some countries are already well ahead of Europe in this area, in particular Japan and South Korea which have had picture messaging for several years. It is therefore instructive to see how they are fairing, and suppliers and market researchers alike have been quick to draw comparisons.

Mobile phones with digital cameras have been available in Japan since late 2000, when J-Phone launched its “Sha-Mail” service. NTT DoCoMo’s popular i-mode was available before that, although that provided e-mail, mobile Internet access and games rather than picture messaging and has only more recently catered for cameras.

Multimedia capable handsets are therefore already the norm, although the services from each operator are based on proprietary technologies that are different from MMS and do not allow for messaging between different operators. Nevertheless, a recent survey by Nokia interviewed users in Japan who claimed that, when they first got their camera phones, they were sending typically 25 picture messages per month. Now that is down to 18 per month as the novelty has worn off. However, with a growing overall number of camera phones being used, the growth in multimedia messages is clearly growing apace.

Other MMS-type picture based applications include downloadable services like travel information, news, games and screensavers. Surveys by Nokia and others suggest that these too will be popular in Europe and the US and will capture traditional media spends for specific services – like breaking news, travel and weather reports – from television, the Internet and other media.

Business use

There are also indications that camera phones are becoming useful for business users too. Picture imaging is becoming useful for maintenance and repair, workflow control and reporting, inspection and audit, security and safety and sales in a wide range of industries.

Japan again provides some good examples. Such diverse users as the cranial nerve surgery department of Askahi University's Murakami Memorial Hospital, manufacturer Tokai Senko KK and construction company Takenaka Corporation are all reported to use mobile imaging to allow "a lesser skilled person to zap a picture into headquarters for review".

One can see it being useful for field support technicians, property surveyors and real estate agents as well. A series of photos taken by an estate agent could be relayed interactively to potential purchasers who may be many miles away, for example. Field support technicians could get additional expert opinion on a problem in the field within minutes – all at low cost.

Just the entrée

Yet MMS with still pictures is just the beginning, as far as Nokia and others are concerned. MMS will enter a new phase of advanced features, including message presentation capabilities, video and content protection. Nokia believes that users will discover mobile video by trying out video capturing and sending video messages from their own mobile devices. This will be followed by content that can be purchased or is sponsored and delivered to the users ’ devices. Mobile users could then also view video content in several other ways, including video download via browser and streaming. The reckoning is that this will be popular for both consumers and business users.

All this suggests that where mobile operator ‘3’ is now, the others will surely follow. It really is a question, though, of the penetration of devices in the market and users becoming more comfortable with the new services before it can really take off.

It also looks like a fork in the road in mobile handset development is upon us. On the one hand, cameras look like the way forward for the mass device. On the other, smartphones are growing more slowly and aim to cater mainly for business users. That is unless you want both sets of features in the one handset – in which case you may need another pocket for the instruction manual.

It’s time to pay your money and make your choice.

 © e-principles 2003

Robin Duke-Woolley