SAN FRANCISCO (Dow Jones) -- If the creators of "Dick Tracy" or "Star Trek" were still alive and in Las Vegas in the coming days, they could be forgiven for asking for royalty payments.
Their decades-old ideas for portable communication devices capable of performing other useful and nifty functions will be on full display at the annual Consumer Electronics Show that opens on Sunday. And the deals and innovations being celebrated this time could usher in a significantly larger and more lucrative market for all-in-one hand-held technologies, analysts say.
Chester Gould's vision in the 1940s was for a wristwatch with a two-way radio that helped Dick Tracy stay in constant touch with his police pals. Building on that sensible fantasy, Star Trek's Gene Roddenberry came along in the sixties and imagined a communicator equipped with a global positioning chip -- quite handy for being located and transported off a hostile planet.
Next week, in a city where the only hostile natives are graveyard-shift croupiers, hundreds of consumer electronic firms will be showing off hand-held gadgets that promise to provide untethered access to a broad array of wireless applications -- from e-mail and e-commerce to music and movies.
"There are several reasons why 2007 could be a watershed year for this market," said Andy Castonguay, a wireless analyst at the Yankee Group, a technology research firm.
Among them are a number of engineering-design improvements that have led to longer battery life, brighter screens, expanded memory and more reliable network connections.
Add to that an expected slew of content deals between telecom firms and major media companies and things start to look a lot brighter this year for pushing the idea of the hand-held living room into new frontiers.
Although Castonguay says the wireless industry "is still in the trial and error phase" when it comes to figuring out what consumers want, he predicted that several of the largest handset makers will unveil in Las Vegas this year products "that do a much better job" of combining several functions into one device.
For handset vendors, the stakes are huge. The players range from cell phone superpowers like Nokia and Motorola to organizer specialists like Palm, Research In Motion, to Samsung and the joint venture of Sony and Ericsson.
And although it won't show up at the party in Vegas, Apple Computer won't be far from the minds of the tech executives there. For its part, Apple promises to make plenty of noise this coming week with a pep rally to showcase what's expected to be its own bid to reshape the cellular telephone. The anticipation has held the industry's rapt attention for months.
"With Apple now talking about putting out a mobile phone of its own, I think the pressure is on big time on Motorola and Nokia to come up with a more compelling product," said Daniel Ernst, an analyst with Hudson Square Research.
Last year, global revenue from sales of wireless handsets totaled between $120 billion and $150 billion, depending on which research firm's numbers you view. Some market watchers expect that can rise to as much as $250 billion annually within five years.
An all-in-one device has long been something of a Holy Grail for handset designers. Few industry analysts expect all the handheld markets -- for cell phones, personal digital assistants, media players and devices for retrieving e-mail or browsing the Web -- to converge overnight, if ever.
Rather, analysts say, to get a share of the expanding global market, makers of portable devices will need to hit upon just the right combination of features and pricing targeted at specific market segments -- whether it's mainstream consumers, business users or entertainment junkies.
"It's really hard to build a single product that gets all those features right," said Craig Mathias, owner and principal of the Farpoint Group, an Ashland, Mass.-based consulting firm that works with wireless handset makers and software companies.
Motorola just showed the world how hard it could be to combine functions with bells and whistles. The company had high hopes that its ROKR and KRZR phone models, which both have music players built in, would duplicate the success of its sleek RAZR phone. But the models' memory capacity only left many digital-music fans wanting.
With sales of the KRZR less than expected, and Motorola forced to discount prices on the RAZR as rivals shipped their own thin phones, the company on Friday had to cut its financial forecasts.
Bigger video screens
Nevertheless, analysts say, the wireless-gadget industry has improved upon previous attempts at making multiple-function devices that ended up being either clunky in size or hard to use.
Take the Pearl, which Research In Motion started selling in 2006. Castonguay says the Pearl shows that the market has evolved. It's a personal digital assistant that includes a host of other major functions -- from phone, email and text messaging to a built-in digital camera and media player. Indeed, the Pearl's popularity has prompted RIM executives to offer bullish sales forecasts and investors have pushed the company's shares up to record highs.
Mathias and Castonguay both expect handset vendors at the Las Vegas show to display phones with bigger screens -- a nod to growing consumer demand for downloading movies, music videos and television shows.
This market opened up in 2006 after Walt Disney agreed to make some of its shows available through Apple's iTunes store so consumers with video-enabled iPods could watch them on the go.
Since then, movies studios along with broadcasting and music companies have rushed to cut their own licensing deals with wireless operators like AT&T's Cingular Wireless and Verizon Wireless.
For all the attention that gadgetry will get in Las Vegas this coming week, some analysts believe that deal-making with media companies could steal much of the spotlight. Keynote speeches are scheduled for Disney CEO Robert Iger and CBS chief Leslie Moonves, underscoring the importance that electronics makers place on finding hot content to play on their devices.
"There are numerous devices now that can play content from your mobile phone up to your TV set and everything in between, and getting content to them is the key thing," said Ernst of Hudson Square Research.
Some on Wall Street expect Research In Motion to unveil its latest product, the BlackBerry 8800, which will feature a larger keyboard for easier typing of emails or instant text messages.
Meanwhile, Palm will announce that its delayed Treo 750, the latest offering from its popular line of products that combine a cell phone, organizer and remote email device, will now be available for Cingular Wireless users. It will also include a media player.
While investors have been more skeptical of Palm's ability to weather the changes that the convergence of features is having on the handheld market, its Treo 650, which supports Microsoft's Windows Mobile operating systems, has gained traction among business users.
Still, the latest devices from RIM and Palm -- known as smart phones and priced at more than $250 -- are considered expensive by consumers who simply want a mobile phone and aren't interested in playing with digital photos, music or movies.
"The bulk of users still want a phone that's either cheap or free" when they sign up for a service plan, said Mathias, who's followed the wireless industry for 15 years.
That's part of why handset giants like Motorola, Nokia and the joint venture run by Sony and Ericsson have pushed into the market with inexpensive phones that now also send and even receive email, play music and browse the Web.
Some of these latest products, including the Nokia Series 60 models, have browsers that "come close to approximating the experience of surfing the Web on your PC," Mathias said.
Improving Internet access for handheld users is part of a broader push to give users access to their data no matter where they are.
"The goal is anytime, anywhere," Mathias said. "Ultimately, you won't need a desktop. You'll be able to access all your applications remotely," he said.
Bringing the carriers along
Before "anytime, anywhere" can happen, though, wireless carriers will need to simplify their pricing plans, which now often charge users a monthly fee for premium data services and then bill them again when they either send or receive large data files.
And that's just one way that operators like Verizon, Sprint Nextel and Cingular Wireless unit need to refine their approach to a market where growth from basic phone service is slowing.
For example, Verizon has rolled out a media download service called V Cast, with a monthly fee. By contrast, Apple's market-leading iTunes service charges consumers for each song they record.
Still, it is Apple that may be put on the defensive more than anybody else as the convergence trend moves on. As more handset makers build a digital music player into their devices, they're taking dead aim at Apple's iPod line, which has more than a 75% share of the market.
Not surprisingly, Apple chief Steve Jobs will likely unveil the company's first product that will combine a media player with a phone. Jobs, whose company annually ignores the C.E.S. show, is expected to show off the device at the company's MacWorld Exposition in San Francisco.
But whether Jobs or any other product visionary can get that product convergence right -- or whether consumers will want it -- is still an open question.
"There's some debate about whether these devices will be one size fits all," Mathias said. "Think of a Swiss army knife. You could do a lot with it, but you still want to have a knife around the house to cut bread with."
(END) Dow Jones Newswires"
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