3G networks play catch-up to handsets

April 2002

Although visitor numbers to 2002's CeBIT trade show reflected the overall malaise effecting the industry, there were still a multitude of companies exhibiting technologies to tempt the more optimistic - or desperate - sectors of the market. Among these were the manufacturers of 3G handsets, who are hoping that Europe's next-generation mobile phone industry is about to take off

In Hanover last month, the world's leading handset manufacturers showed early prototypes of third generation handsets, which they said would be shipping across Europe before the end of the year. If they are right, this is good news: many in the industry had feared that handset shortages would slow adoption of 3G mobile networks - a disaster given the billions network operators have bet on the technology.

Nokia, Motorola, Siemens and Sony all used the show to demonstrate early 3G handsets, with Nokia even committing to a launch date of September 26, 2002. However, analysts warn that simply having handsets on the market will not be enough to guarantee the success of 3G.

'It's interesting that companies have committed to the availability of handsets this year,' says Katrina Bond, an analyst with research firm Analysys. 'It may show that handset delays aren't the only reason operators are delaying the launch of services.'

Nokia was showing selected CeBIT visitors a working prototype of its 3G handset, which will be a mass-market consumer product. 'This isn't just a "techno-launch"; we're ready, our customers are ready and our partners are ready,' says Anssi Vanjoki, executive vice-president of Nokia's mobile phone division.

Motorola was also wheeling out a prototype and confirmed that its first commercial 3G handset would be the 2080 model. The devices will be available in the UK and Germany in the third quarter of 2002. Motorola expects to ship some 400,000 handsets in 2002.
'We are working closely with our partners to extend our GPRS leadership into the 3G market,' says Mike Zafirovski, Motorola's president of personal communications. 'We've shipped 260,000 GPRS handsets and have 1.1 million more on order - we've got a strong advantage and we plan to exploit it.'

Although other handset manufacturers were less confident, Sony and Siemens are tentatively planning to ship 3G handsets this year. Samsung currently has products in trial, with a launch planned for the first half of 2003. 'We want to talk with operators to ensure that phones will support the services they offer,' says a company spokesman.

Content conundrum

Those services are now likely to be 3G's sticking point says Matthew Nordan, a senior analyst with Forrester Research. 'With the industry in a downturn, most vendors are focusing on the low hanging fruit rather than longer-term strategic goals. We're going to see a big focus on applications for GPRS and proven services like messaging, rather than really innovative 3G services,' he says.

Certainly, the exhibitors at CeBIT were keen to talk about new applications for MMS (multimedia messaging standard) technology, which will add pictures and animation to basic text messaging services. Additionally, Enterprise software vendors, such as Netscreen Technologies, were launching products for GPRS networks. 'MMS and games, in particular, are getting a lot of attention from companies like Sony, Ericsson, and the application developers,' says Nordan. 'They are hoping to extend the revenue potential of applications that are already successful.'

Deutsche Telekom, for example, unveiled a prototype 3G portal at CeBIT. Demonstrated by DT's chairman of the board, Ron Sommer, the portal's zones included such safe options as weather, news, sport and travel. Thanks to an alliance with Microsoft, subscribers will also be able to access Microsoft Outlook applications wirelessly. 'These services will be available over GPRS, but they're designed for UMTS,' says Sommer. 'Our strategy is to start laying the groundwork now and rolling out the portal from May.' The new portal will go live in Germany in May 2002, and across Europe via the T-Mobil subsidiary through the year.

Realism

Although these might not be the most thrilling applications of cutting-edge technology, Sommer believes that this kind of portal meets a real need. 'People will always wonder why we need technologies, until they arrive,' he says. 'They asked why we need DSL, and we have two million customers today. With 3G, the same thing will happen.'

One notable exception was HP, which demonstrated technology for 3G handsets. The company has worked with Japanese mobile giant NTT DoCoMo to develop streaming media for 3G. The service will deliver the much talked-about video capability to 3G handsets. Tokyo-based NTT DoCoMo, Japan's leading mobile-phone company and developer of the mobile Internet service I-mode, successfully launched its 3G service last year.

While handsets may be available in 2002, most operators will wait for more of this kind of application before providing the necessary coverage. In addition, GPRS is still in the process of being rolled out - and will serve as an ideal testing ground for 3G, according to Analysys's Bond. 'Yes, there will be launches this year and it's encouraging - but nothing has changed. We won't see volume until 2004,' she says. 'In the meantime, look at applications like MMS and peer-to-peer wireless services as a good way to test the opportunity and don't underestimate their importance.'

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