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Wireless Carriers Target Young Texters With Latest Phones

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NEW YORK (Dow Jones) With the mainstream market for wireless service customers maturing, carriers have begun to specifically target young adults prone to text messaging and emailing with their latest lineup of mobile devices.

On Monday, AT&T launched the Duo, which features a slide-down numeric keypad and sideways slide-out keyboard. It closely followed T-Mobile USA's unveiling of the Shadow, a slider phone with a large screen and scroll wheel, which hits stores on Halloween.

The two phones, along with Sprint Nextel and Palm's Centro, are attempting to become "crossover" hits that will attract young adults looking for the latest technology, but also professionals wary of the clunky smartphone form factor.

"Teenagers and young adults adopt new technology more than any other age group," said Avi Greengart, an analyst for research firm Current Analysis.

The phones are attempting to mimic the success of the Blackberry Pearl by Research in Motion. Verizon Wireless and Sprint will bring out the Pearl for their customers in the coming weeks.

They are also an attempt to pry teenagers away from the Sidekick, which offers a full keyboard and text and email capabilities, but isn't a smartphone. Still, many loyally cling to the Sidekick and its exclusive carrier partner, T-Mobile, a unit of Deutsche Telekom.

"I see teenagers putting their Sidekicks away for this," said Kent Mathy, president of the business markets group for AT&T.

The competitive environment for wireless customers has gotten worse with more people already using phones and locked into long-term contracts. Niche service providers have gone after niche markets, from the cheap youth market by Virgin Mobile USA to specific ethnic groups such as the Hispanic population with Movida Communications. The high-spending young adult crowd has been well tread upon by high-end wireless resellers such as Amp'd Mobile and Helio, but many have folded or continue to struggle.

The large carriers are taking a crack at the market. Indeed, AT&T's Duo is a more compact version of the Helio Ocean, both of which were made by South Korea-based Pantech Group Holdings. T-Mobile hopes that as teenagers outgrow their Sidekicks, they move on to the higher-end Shadow.

Carriers like the segment because they can charge pricier data plans that accompany the service. T-Mobile's Shadow costs $149.99 with a two-year voice and data plan, but $199 with just a voice plan. AT&T offers a high-speed third-generation connection with the Duo, and believes most customers will pay extra for the service.

"They're going to be disappointed in the phone without a data plan," Mathy said. The phone costs $199 with a two-year plan.

Data service revenue has been an increasingly important contributor to overall revenue as voice plans get cheaper and more consumers rely on messaging as a form of communication.

Timing has been a factor for carriers looking to get into the youth market. Greengart said that only now have technology and phone prices come down to the point where the devices can be offered at a reasonable price. "It opens up a market who wouldn't have considered a smartphone at $499," he said.

Also taking advantage of the growth in smartphones and quasi-smartphones is Microsoft, whose Windows Mobile operating system is powering many of these devices.

Harry Putz, general manager for the communications sector in North America for Microsoft, said the company sold 11 million phones with Windows Mobile in fiscal 2007, and expects to nearly double that to 20 million in fiscal 2008.

"We're hitting the market from consumers to the business side and everything in between," he said. "We're making a lot of inroads."

-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com

(END) Dow Jones Newswires­

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